BUSINESS MODEL y A Business Model describes the rationale of how an organization creates, delivers, and captures value- economic, social, or other forms of value. The process of business model design is part of business strategy. In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. Hence, it gives a complete picture of an organization from highlevel perspective. Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management¶s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit. Business models are used to describe and classify businesses (especially in an entrepreneurial setting), but they are also used by managers inside companies to explore possibilities for future development. Finally, well known business models operate as recipes for creative managers y y y IPL as a Business Model The Indian Premier League is a T20 cricket competition promoted by the BCCI and is modeled on the same lines as football¶s EPL or basketball¶s NBA. It works on franchise system wherein the teams (presently 8; going up to 10 from the next season) representing different cities are auctioned and the highest bidder is awarded the rights to own and run the team for ten years. Over a span of just three years, it has become a business phenomenon, even overshadowing what it stands for, that is cricket, involving leading business groups, bollywood stars and the entire nation alike. IPL as a business model has following major stakeholders: BCCI Franchises Sponsors Players Spectators the major source of revenue for IPL is not stadium ticket sales but media rights. we can break the cash flow for each of the stakeholders as inflow and outflow as follows: BCCI inflow: The biggest source of revenue for the BCCI so far has been the proceeds from franchise bids amounting to a total of $1. Product Management Team bidding . proceeds from stadium tickets. BCCI outflow: Apart from the revenues generated from the bidding of franchises.42bn. an undisclosed amount for media streaming rights awarded to Youtube. a part distributed as prize money and the remaining is divided equally among the franchises based on a pre agreed model. Finally. merchandise sales etc.) form another big chunk of the revenues. A part of the revenues so raised are retained by the BCCI. To understand the exact structure of the business model. Coca Cola etc. almost all other revenues are shared with the franchises in different proportions. the sale of franchises and licensed merchandise and products. complete the list of major sources of revenues for IPL.Unlike its counterparts such as EPL or NBA. Other sources of revenue for IPL are title sponsorship. Title sponsorships (DLF. Another major source of revenue is media rights that were awarded to Sony for $1bn for a period of 10 years and starting from IPL-3. is the . y Estimating the value of a player having different attributes using hedonic price equation Where is the final bid price paid to a cricketer I for the IPL tournament and value of the attribute j of the cricket player i. off-the-field performance.Player Valuation y Cricket player valued for his on-the-field and perhaps. FINANCE MANAGEMENT OF IPL Media Rights Central Revenue IPL Bid Amount Franchise Rights . 5.02bn (-) US$ 108mn(promotion expences) US$ 316mn (Broadcasting rights first 5 yrs) US$ 608mn (Broadcasting rights 5yrs) Ad Revenues Advertising revenues for Broad caster have seen a steady increase since inception of ipl y y y IPL 2008-3 Lakh for every 10 secs IPL 2009-4 Lakh for every 10 secs IPL 2010-5 Lakh for every 10 secs .r.Player revenues y y y y y Firm v/s Basic Agreement Prize Money Bonuses w.World sports consortium for US$ 1.100s per day The Broadcasting angle The BCCI created history when it sold television rights of his yet un tested format to Sony.Second only to NBA Daily Allowance by IPL.t position at which the team finishes Salaries 2.02bn US$ 1. love sex aur dhoka etc. Multiplexes like Cinemax and PVR screen all the matches. U me aur ghost. Tals are also on to tele cast the semi-finals and finals in 3D.IPL Sponsors y y y y y y y y Vodafone Citi Hero Honda Pepsi ITC-welcome group S-max DLFA Building india Kingfisher Airlines IPL 20% Media Rights Prize money 8% BOX OFFICE y y y y y franchise 78% There¶s a decline in the number of releases owing to IPL IPL fever has a negative rub off on the revenues of the movies at the box office Some of the movies releasing in the IPL session are. . match of a particular team in its city. Opening and closing ceremony gala. Advertisements on various t. IPL season3 : 200cr Direct Tax: Rs 100cr Tax reducted at source(TDS) from the remunereation paid to players .Are anticipated to be a mojaor source of revenues.umpires.Franchisee Revenues y y y y Media rights ±To be shared equally amongst franchises after removing IPL¶s share. Timing of the matches was those when the public was generally free and at home. Government Revenue y y y IPL season1 : 91 cr IPL season2: major loss of revenues as the IPL held in South Africa. . Franchisees taken by films stars and well known industrialists. Auctioning of Players.60% of the amounted collected to be distributed equally amongst the franchises. marketing and consultancy services MARKETING MANAGEMENT Marketing Strategies: y y y y y y y y y y Auctioning of franchises.v.Team sponsorships revenves Gate receipts.e. Live concerts. Rivalry with ICL. and radio channels Worldwide telecast of the matches Locations of the matches i. Service Tax: Rs 100 cr Advertising. Local sponsorships.20% of tickets are to be allocated to IPL.coaches and commentators. Sponsorships(IPL Sponsors).