PSL's financial sustainability: Are the franchises at fault? PCB at fault? Improvements?

[Savak]

In 2015, the PSL financial model which was agreed upon by the PCB and the Franchises for the first three years from 2015 to 2018 was like this

- the PCB will put 85% of the PSL's media rights revenue which they say was around $10 million into a central revenue pool

- 50% of the title sponsorship rights money into the central revenue pool, this was $5 million in 2015, it is now $15 million

- 50-60% of the gate money into a central pool, lol this must be very insignificant given the grounds in UAE are empty but will result in sizeable amounts if the entire PSL is played in Pakistan in front of jam packed stadiums

The total revenue from this central revenue pool was to be distributed equally among the 5-6 franchises, the two main franchises i.e. Karachi and Lahore are demanding that the revenue should be distributed according to the ratio of the franchise fee beeing paid by each franchise rather than equally

The Franchises have all complained about incurring big losses for the past 3 years, that they came together in national spirit and spent a lot of money, that they have been sucking money from their parent companies but they cannot continue to bear the losses and the PCB has to find ways to make the league more sustainable

The Franchises have also been complaining about the fact that in addition to the franchise fees that they have to pay to the PCB every year, they also have to pay a 16% tax to the provincial government and a 10% tax to the federal government

The Franchises are demanding that the Provincial and Federal Government give them tax exemption for a few years till the point they become financially strong and viable. Options are being looked into for this i.e. registering the PSL in the most low tax rate region of Pakistan i.e. Gilgit-Baltistan or as an offshore company

The other problem the Franchises have complained about is the declining PKR-USD Exchange rate, in 2015 the E/R was 105 to $1 but now it is 140 to $1 and this is causing an even bigger burden considering the fact that they have to pay their Franchise Fees to the PCB in USD and Salaries to the Foreign and Local players in USD, they are demanding that either they be given the same E/R that they had in 2015 or be allowed to pay the same amount to the PCB and players that they signed for in 2015 in PKR in the same amount that they signed for.

The PCB for now is demanding that all franchises pay their Franchise Fee to the PCB for this year by December 3 and failure to do so will mean the PCB will encash the bank guarantees that the Franchisors delivered to the PCB.

Basically the PCB uses the Franchise fees they collect from the Franchises every year and use most of that amount to fund the PSL in UAE and then in Pakistan. My question is that if the PCB is now forced to cave in to the demands of the Franchises and agrees to give 80-90% of the funds in that central pool to the Franchises, what is the PCB going to be left with from the PSL?

Also, should the Franchises themselves be responsible for their finances, i don't believe it is the responsibility of the PCB to baby sit them anymore and trust me if the PCB had plenty of bidders coming forward for teams, they would have told some of these Franchises making noise to take a hike, but that doesn't really appear to be the case right now.

Najam Sethi in an interview mentioned a few interesting ideas for the PSL

- To establish the PSL as a publically listed company where the entire nation of Pakistan could invest in it to make it financially strong and viable

- The PCB establishing its own cricket channel and where it would have the right to show all Pakistan Cricket matches including domestic matches which in the long run would result in massive revenues for the PCB

But it appears that the episode with Multan Sultan's has jolted confidence and now we see some panic.

 

[Hedz]

Atm getting tax exemption for the Franchises would be enough to satisfy them for PSL4
But in the long run, the PSL management and PCB should be looking for an alternative to keep all stakeholders happy

 

[Sher Khan]

We need this tournament to be played completely in Pakistan with big name players. Tax exemption is not the right way forward. It is not fair. For other business, as they have to pay tax in Pakistan.

 

[Angrez Pakistani]

I wouldn’t give franchises any kind of tax exemption. However I do think that PSL should be run on Rupees not Dollars.

 

[Angrez Pakistani]

When you pay players in dollars then it’s our depleted resources in dollars that is going out of our economy.

 

[Varun]

So much ado about a Tontee Tontee league.

Every board around the world can hold one of these for 3 weeks a year without much thought, so should Pakistan.

 

[Savak]

So much ado about a Tontee Tontee league.

Every board around the world can hold one of these for 3 weeks a year without much thought, so should Pakistan.

Lol so what happened with South Africa and Sri Lanka? Why haven't NZ been able to hold it? Why did Bangladesh have to take gaps between the BPL?

 

[ARK Rafay]

Franchises can't demand to share revenue among those teams that are sold expensively. It was an auction and target teams like Karachi and Lahore paid more because they also have an advantage and more people towards them supporting the team.

Regarding Tax exemption, it should've been down for the 1st 3 years. If PSL can afford they can exempt tax for PSL 4.

When the PSL will be played completely in Pakistan revenue will come.

 

[Reddy]

Lol so what happened with South Africa and Sri Lanka? Why haven't NZ been able to hold it? Why did Bangladesh have to take gaps between the BPL?

He just hates T20 leagues, he has been asking to shut down IPL since many years now. Typical Test match elitist behaviour.

 

[cricketjoshila]

Try to raise the revenues. 10mn for broadcast rights? Really? 15mn from sponsorship? This is unsustainable going forward as teans have to pay franchisee fees plus taxes plus player and fees plus all expenses of team in UAE plus the ancillaries.

Wonder what is the total cost of running the team.

 

[USofA]

Try to raise the revenues. 10mn for broadcast rights? Really? 15mn from sponsorship? This is unsustainable going forward as teans have to pay franchisee fees plus taxes plus player and fees plus all expenses of team in UAE plus the ancillaries.

Wonder what is the total cost of running the team.

Between the broadcast rights $$ and the title sponsorship $$ it comes out to about $15-$16 million to the central pool. That would be about $2.5 million per team in incoming revenue. Plus whatever other sources each team has.

That's a small amount of money to run a sports franchise.

 

[Hasan123]

Too much over analysis about PSL. As long as we get cricket and good overseas players, this sfuff shouldn't concern us.

 

[cricketjoshila]

Between the broadcast rights $$ and the title sponsorship $$ it comes out to about $15-$16 million to the central pool. That would be about $2.5 million per team in incoming revenue. Plus whatever other sources each team has.

That's a small amount of money to run a sports franchise.

Also PCB added one more team so the revenues got divided further.

 

[zn426]

It shouldn't just be about broadcast rights and title sponsorship. Each team needs to be focusing on apparel and cricketing gear sales, ticket sales. Just TV rights alone do not make or break most professional sports teams.

 

[Ummii]

I have a feeling that ARY is going to sell their team.

 

[cricketjoshila]

It shouldn't just be about broadcast rights and title sponsorship. Each team needs to be focusing on apparel and cricketing gear sales, ticket sales. Just TV rights alone do not make or break most professional sports teams.

Majority of revenues is always going to be broadcast rights and sponsorships. If thats not going to make the teams profitable then its going to be financially unviable.

 

[cricketjoshila]

When you pay players in dollars then it’s our depleted resources in dollars that is going out of our economy.

Players will always be paid in $. But the bid can be in PKR in future,thats possible.

 

[Reddy]

Players will always be paid in $. But the bid can be in PKR in future,thats possible.

PKR has lost 40% value in the last 100 days, this is massive and can even bankrupt some PSL teams or maybe lead to some selling their teams to get out of this massive dollar denominated expenses and losses.

 

[zn426]

Majority of revenues is always going to be broadcast rights and sponsorships. If thats not going to make the teams profitable then its going to be financially unviable.

Please. I live in America. Broadcast rights are just one piece of the pie. If you aren't selling millions of Kohli shirts and selling out stadiums then TV is not going to make you profitable.

 

[Reddy]

Please. I live in America. Broadcast rights are just one piece of the pie. If you aren't selling millions of Kohli shirts and selling out stadiums then TV is not going to make you profitable.

Your America comment says everything, Many Sports are completely dependent on TV revenues and not on shirt sales, specially cricket where most of the times Puma, Nike etc don't even launch the shirts in all the shops and they just do soft launch and leave it as it is only a TV sponsorship logo deal for them with not much shirt sales.

This is the same with Formula 1, Most of the money is made with TV deals and track hosting fees, this is why almost all F1 teams are fighting more share of the TV pie instead of trying to sell more shirts.

 

[Savak]

Try to raise the revenues. 10mn for broadcast rights? Really? 15mn from sponsorship? This is unsustainable going forward as teans have to pay franchisee fees plus taxes plus player and fees plus all expenses of team in UAE plus the ancillaries.

Wonder what is the total cost of running the team.

My question for the PCB is that if at the end they are going to be giving away 80-90% of the Revenues to the PSL franchises, what is left for the PCB in holding the PSL?

To be honest, the Franchises themselves are to blame for not being able to develop a sustainable business model for their franchises for now

 

[Bhaijaan]

The PCB requested international broadcasters to pay $21 million for a jampacked home season covering 3 years for Pakistan where you are going to have teams like Bangladesh, Sri Lanka England, New Zealand, West Indies, Tri Nation ODI series featuring South Africa, New Zealand, the Champions Trophy from 2024 to 2026. The best offer the PCB got was $7 million for 3 years.

Now apparently Sky is not interested in broadcasting the England tour of Pakistan next month and the PCB is struggling to find any interest among UK broadcasters.

If this is not a warning sign for the PCB to pull up their socks then i don't know what is.

The ICC money of $34 million per annum will likely not materialize as Star is refusing to pay ICC the $3 billion it promised and wants to re-negotiate the deal down to $1.5 billion and the ICC share of every nation will be negatively impacted therefore whatever development projects the PCB is planning will have to be revised.

Savak bhai,
How has it been so bad for Pakistan. Sometimes it is hard to comprehend. The BCCI literally did everything which the PCB just needed to successfully emulate.

It has to be down to the Pakistan economy because I refuse to believe the PCB can be this bad at even copying BCCI’s formulas to riches.

Where are the Pakistani media networks, the sponsors etc. In Bharat, the sponsors have been extremely generous at supporting BCCI. I think one Pakistani poster even mentioned here that the last dozen something sponsors of BCCI all made losses eventually while raining money on the BCCI. How is the same not the case in Pakistan.

 

[Savak]

Savak bhai,
How has it been so bad for Pakistan. Sometimes it is hard to comprehend. The BCCI literally did everything which the PCB just needed to successfully emulate.

It has to be down to the Pakistan economy because I refuse to believe the PCB can be this bad at even copying BCCI’s formulas to riches.

Where are the Pakistani media networks, the sponsors etc. In Bharat, the sponsors have been extremely generous at supporting BCCI. I think one Pakistani poster even mentioned here that the last dozen something sponsors of BCCI all made losses eventually while raining money on the BCCI. How is the same not the case in Pakistan.

Pakistan's economy is on the ventilator right now. Things are very bad. Everything has a cumulative effect. Factor in the low quality output of the Pakistani team and the defensive, uninspiring brand of cricket the players have been playing.

The fact there are no takers should not be a surprise.

 

[Bhaijaan]

Pakistan's economy is on the ventilator right now. Things are very bad. Everything has a cumulative effect. Factor in the low quality output of the Pakistani team and the defensive, uninspiring brand of cricket the players have been playing.

The fact there are no takers should not be a surprise.

What about billionaire Pakistanis.

Also Pakistan has historic relations with Saudis. I thought maybe you could attract some investments from them in cricket. That also doesn’t happen. Saudi Aramco wanted a major stake in IPL

 

[Kianig89]

In Marketing a product goes through 4 stages in a cycle.

Intro -> Growth-> Maturity-> Decline

Successful product have a long Growth period and and they try to sustain Maturity to avoid decline.

Sadly PSL Still after so many years is at introduction stage as no marquee players are keen to join it. While on the other hand the threat of competitiors has increased manifolds with CPL, SAT20 , LPL and Hundred also making waves.

Mohsin Speed has to think out of the box to revive PSL

 

[Savak]

In Marketing a product goes through 4 stages in a cycle.

Intro -> Growth-> Maturity-> Decline

Successful product have a long Growth period and and they try to sustain Maturity to avoid decline.

Sadly PSL Still after so many years is at introduction stage as no marquee players are keen to join it. While on the other hand the threat of competitiors has increased manifolds with CPL, SAT20 , LPL and Hundred also making waves.

Mohsin Speed has to think out of the box to revive PSL

Well Mohsin Speed is gambling that co existing with the IPL where apart from IPL no other international cricket is played, the PSL could benefit trying to woo the unpicked good quality IPL players who may end up being better than the present foreign stock in the PSL right now.

Problem is that the PSL Franchise Owners, atleast the vast majority of them do not have the stomach, cajones to take the risk.