Cricket Rights Coverage: The Economics Of The Deal


The Economic Times has some details on the economics of the deal.

The deal details
: Harish Thawani-led Nimbus won the contract for cable, broadband and direct-to-home rights of cricket for $612 million (Rs 2,755 crore). The $612-million bid refers to the amount that has to be paid by Nimbus to the Board of Control for Cricket in India (BCCI) over four years. Details of the payment schedule were not available. An upfront payment of around 15-20 per cent is usually part of the contract.
The impact: The cost of buying cricket for advertisers is bound to go up.
Costs and breakeven: Even if you consider a moderate margin that Nimbus would like to make on an investment of $612 million, the break-even for it will come close to $800 million (around Rs 3,500 crore), which translates into $200 million per year. The $200 million is almost a sixth of the entire Rs 5,500-crore ($1.25 billion) revenue for all television advertising, and includes even distribution revenues.
How will the returns come: For four years of 165 days of cricket (55 ODIs and 22 Tests), it works out to $4.84 million per day. To cover this huge amount, Nimbus will have to do some serious strategies. Can they do it?
Challenges: –

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