(I am not Financial expert, just posting as layman)
Was BPL or SLPL a success ?
No! Why not? They have all ingredients like foreign players, home grounds, crowd, big sponsors but they couldn't sustain. The issues of salary, many players remain unpaid.
Many of us as cricket fan are unaware of success criteria of sports league.
Inclusion of foreign players is only one step toward success but it itself is not success of PSL.
From BPL or SLPL, it must be understood that if you have money, which PCB has thanks to ICC tournaments and TV rights, gathering foreign players, have sponsors on board and arrange a tournament is not very difficult task. But the real task is its sustainability and progress to heights.
My question is
1)What are the details of PSL financial model?
2) Does PSL possess sustainable financial model?
3) Will first edition will reach break-even or loss or how many years it will take PCB to go into profit?
If anybody has detailed study, please let us know.
You, my friend have asked a very complex and technical question that cannot be answered without complete information.
However, I will give it a shot and try to keep it as simple as possible.
First concept: This is an investment that should have a "Return of Investment" and a "Break Even Point"
Initially, when you make an investment, you need finances for that investment to go through. Most of the times such initial capital comes from Financial Institutions in the form of up front loans.
Based on the equity model we can say that there are certain liabilities that exist.
For such a mega event, the return of and on investment period is longer than a few years. It may be 5 years but such financial models are all prepared beforehand and presented to investors.
They are calibrated yearly and adjustments are made accordingly.
Since it is a Franchise based model, PCB wants to create stake holders that also partake in the liability holdings. If they have a well devised strategy, they will be able to create liability partners above and over the budgeted estimates. That will mean that the PSL model will have immediate success as liability distribution will ensure that cash is available at hand to keep investors and lenders happy.
Hence the first target or marker for PSL's profitability is the value at which franchises are sold.
The second major investment is going to come from media partners. That again is going to determine whether it will be a long term project or not. A deal of 5 years will be a break through deal and can help the PSL to sustain.
The logistics, marketing expenses come at the end. Since this even carries an excessive cost of holding PSL in a foreign country, the logistic expenses will be extremely high. The worst part is that it is being held in a country of higher per capita income resulting in negative forex benefit for PSL. However, as a standard US$ levels the field to a certain extent.
(If it was held in a country which had a weaker currency than Pakistan, the cost benefit would have been massive)
So far on the marketing front, PSL has achieved remarkably little or nothing. They really have to increase their marketing budget and ensure that they are targeting the right audience. It is also viable to know about their media partners and media strategy outside the physical limits of Pakistan. Targeting the English community say for example can be beneficial however such calculations are extremely internal and cannot be guessed by me.
All in all, the model's success is not dependent on costs, the success is dependent on the investors and the initial plan to reach break even.
Sports franchises are often considered as difficult to run operations and many franchises are investor groups - take EPL example and other sports as well where franchise owners are billionaires and have interest in the sport rather than a money minting operation. If we manage to get one or two such owners, the brand gets developed and the initial model is strong, there is no doubt in my head that PSL can be successful over a long period of time.
However, if it is all paper work based on shoddy budget estimations, it will be another one of those failures that we continue to see everywhere in Pakistan.
I hope that answers your question to some extent
