IPL media rights: Did simultaneous e-auctions help BCCI get a better value?
According to people in the know, the simultaneous e-auction ensured that each of the players put their entire purse on the table before they pulled out
The Board of Control for Cricket in India's (BCCI) strategy to conduct simultaneous e-auctions for Packages A and B followed by Packages C and D has helped it to extract the maximum value for the Indian Premier League (IPL) media rights, a source close to the development has asserted.
The source, who was closely involved in the e-auction process, noted that each individual bidder had entered the e-auction with a certain purse which was approved by their respective boards. He further added that the simultaneous e-auction ensured that each of the players put their entire purse on the table before they pulled out. This, the source said, helped the BCCI to get incremental value for each of the packages.
"BCCI followed a simultaneous auction methodology. The BCCI could have done Package A first followed by Package B. But the BCCI was advised to do a simultaneous e-auction for Package A/B and Package C/D. Hypothetically speaking, when a media company wants to bid for Package A, let's say that the company is willing to go up to Rs 55 crore per match. In a simultaneous e-auction, the media company can keep on increasing the bids if they see that digital is also going to come their way," the source elaborated.
A senior official with one of the big 4 networks said that a simultaneous auction might have played a role in the sharp increase in the value of Package A and B rights. "Each player had a purse so maybe the simultaneous auction might have played a role in increasing the value of IPL media rights," the official said, requesting not to be named.
The IPL media rights for the 2023-27 cycle have been sold for Rs 48,390.32 crore, with the value of digital rights overtaking TV for the first time. The media rights were divided into four packages namely Package A (TV rights for Indian sub-continent), Package B (digital rights for Indian sub-continent), Package C (non-exclusive digital rights for Indian sub-continent), and Package D (Rest of the World media rights).
Disney Star India won Package A rights for Rs 23,575 crore while Viacom18 paid Rs 23,758 crore for Package B and C rights. Package D attracted bids worth Rs 1058 crore from Viacom18 and Times Internet. The overall base price for IPL media rights stood at Rs 35,803 crore including Rs 20,090 crore for Package A, Rs 13,530 crore for Package B, Rs 1,568 crore for Package C, and Rs 615 crore for Package D.
As is known, the e-auction kept rolling over after every 30 minutes with incremental bids of Rs 50 lakh per match which in raw terms translated to an increase of Rs 205 crore per match (Rs 50 lakh x 410 matches) for the BCCI. The e-auction saw participation from Disney Star India, Viacom18, Sony Pictures Networks India (SPNI), Zee Entertainment Enterprises Limited (ZEEL), and Times Internet.
The source informed that the bidding for Package A started at Rs 49 crore and at one point stopped at Rs 53 crore because everyone started bidding for Package B, which went up from Rs 33 crore to Rs 46 crore in no time.
"All this while there was no bidding on Package A. It had stopped at Rs 53 crore for two hours while the digital rights went up from Rs 33 crore to Rs 46 crore. When the digital rights started hitting the ceiling, people again started bidding for Package A which went up from Rs 53 crore to Rs 57.5 crore," the source noted adding that the Department of Telecom (DoT) had earlier conducted the spectrum auctions simultaneously.
What would have happened if each package was auctioned separately? The source said that the value of TV rights might have ended on the lower side. "If simultaneous methodology had not been followed, Package A would have halted at Rs 53 crore. Let's assume, the Disney board had approved Rs 40,000 crore for the auction for both packages. The simultaneous auction ensured that Disney was putting Rs 40,000 crore on the table before they backed out," the source stated.
It is believed that Disney Star had bid aggressively for both Package A and B rights while Sony and Viacom18 were keen on Package A and Package B rights, respectively. ZEEL was also in the race to buy Package B rights along with key contenders Disney and Viacom18. Package C saw a tough contest between Disney and Viacom18 since the former was desperate to bag rights to the 18 to 22 non-exclusive games for its streaming platform Disney+ Hotstar.
Argus Partners was the legal advisor to BCCI and assisted in the entire tender process. While KPMG was the advisor to BCCI, MJunction Services provided the platform for the smooth conduct of the e-auction.
Instagram, LinkedIn, Twitter, Facebook & Youtube