Warriors' withdrawal a smart business move

Decision will save the Sahara Group a lot of money.

Opting out.Pune Warriors' withdrawal from the Indian Premier League is a smart busiess move that will save the Sahara group Rs. 400 crore annually, a Business Standard report has claimed.

The savings have been estimated keeping in mind Sahara's departure from the Twenty20 league and the assumption that they will not re-bid to sponsor the Indian cricket team when the contract ends in December.

Huge losses

The company is expected to incur losses to the tune of Rs. 100 crore this year from its IPL franchise. Sahara had earlier agreed to pay a massive Rs 1,700 crore to buy Pune Warriors in 2010 for a period of 10 years, the report stated.  So far as sponsoring the National team is concerned, Sahara had paid Rs. 661 crore since renewing the contract with the BCCI in 2010.

From the current IPL, Sahara will earn Rs. 110-115 crore revenue, including profits from broadcasting revenue (Rs 55-60 crore), in-stadia ticketing (22 crore) and team sponsorship (Rs. 25-30 crore). BCCI, however, was yet to pay even the first instalment of the broadcast share money for this season.

Payouts

Sahara had to shell out Rs. 170 crore annually as payment for the Pune Warriors franchise. There had been rumblings of a split regarding the payment of this annual amount even last year. Sahara had argued that the number of matches each team had to play in the IPL League had been reduced by BCCI, cutting their avenues for revenue.  Sahara paid Rs. 55 crore as the first instalment this year, and then ceased all payments until arbitration was done.

Sahara made an alternative offer to pay 15-20 per cent more than what the Sun group had paid for the Hyderabad franchisee this year (Rs 850 crore). This would have enabled Subrata Roy's enterprise to cut their burden annually by about Rs. 70 crore. But BCCI chose to encash Sahara’s bank guarantee. Sahara's payments also include Rs. 30 crore on player fees. The group has paid two instalments and Rs.10 crore remain in dues, The total cost of maintaining a team annually is about Rs.200 crore.

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