The Indian Premier League T20 tournament has not exactly turned out to be the money spinner for the Board of Control for Cricket in India (BCCI) as everyone believes. The second edition of the widely followed IPL in 2009 that was held in South Africa made a Rs 41.9-crore loss for the BCCI, plunging the cricket administrator's profits to Rs 21.2 crore in 2009-10.
In 2009, the BCCI had abruptly shifted the venue of the tournament to South Africa on a short notice as its timing clashed with India's general elections.
The franchisees had at that time demanded compensation of revenues for the abrupt relocation to South Africa, since they believed the relocation had led to loss of marketing opportunities, with several on-ground sponsors threatening to walk out of the tournament.
When contacted, BCCI President N Srinivasan said: "I can't comment on the data; the board regularly files its documents to the concerned authorities."
The total receipts of the tournament was Rs 780.7 crore, well short of total spending of Rs 822.6 crore, data filed with income-tax department shows. The tournament featured 59 matches spread across six venues. IPL is a part of BCCL, having no separate legal status as per the income-tax department.
The first edition of the IPL that saw Rajasthan Royals emerge winner made a profit of Rs 14.9 crore for the BCCI. The income-tax department is investigating allegations of tax evasion and undisclosed investments by the various stakeholders in the IPL.
The department had conducted first survey on IPL on April 15, 2010, and followed that with on many of the IPL teams to investigate source of investments and tax on investments.
All the eight IPL teams that participated in the inaugural IPL made a loss in 2008-09. BCCI's profits had hit over 300 crore in 2007-08 on an income of over Rs 1,000 crore.
Its surplus dropped to a modest Rs 63.2 crore in 2009-10, which was further eroded by the Rs 42-crore loss made on account of IPL.
The profit could drop further as assessment of income returns of 2009-10 are still pending. One of the richest sports bodies in the world, the BCCI has had to pay taxes after it lost its tax exempt status.
It has paid Rs 131 crore in taxes for the year 2007-08 and Rs 118 crore in the year before.
Its money management has also come under scrutiny. The Directorate of Enforcement is investigating a possible 88-crore violation of Foreign Exchange Management Act, 1999 (FEMA).
Parliamentary Standing Committee of Finance is also examining allegations against the IPL and many of the teams. The authorities are particularly worried about the sources of funds for the investments made by the various IPL franchisees.
Soon after it was announced that IPL was being relocated to South Africa, while Religare had pulled out as associate partner of GMR-owned Delhi Daredevils, Bajaj Allianz had terminated its sponsorship deal with Emerging Media's Rajasthan Royals and Coca-Cola which was on the verge of signing a sponsorship deal with Deccan Chargers had stalled its plans.
In addition, almost all existing sponsors re-opened deals with their respective team franchisee partners, either seeking compensation, more privileges for the same money, or better deals for season three in cases where they have inked multi-year deals. (Economic Times)