"In addition to this," "every team in the Super 12 stage," "that wins any match," "will get a prize of $40,000 for winning
each match." "This is the
reason why despite India being out of the World Cup," "since India won 3 matches," "$40,000 per match," "the Indian team will get a cash prize
of $120,000." "In total, the
prize money amounts to $5.6 million"
that will be given in this tournament.
And who will bear the cost of this prize money? ICC. The
International Cricket Council. The
international governing body of cricket.
"Apart from this, there will be several other expenses to be borne
by the ICC." The salary of the
umpire. The salary of the commentator. ICC has to pay for all of this. Because this entire tournament is organised by the ICC. ICC has formed an elite panel of Umpires and has classified the commentators into 3
categories. "For example," the annual salary of an umpire can be "in the range of $35,000 to
$45,000." That is approximately
₹2.4 million to ₹3.1 million.
"In addition to it, for every match, the umpires get a
fee." "For a T20 match, the
average salary of an umpire is about $1,000." But from where does ICC get funds for these
expenses? What are the sources of
revenue of the ICC when the World Cup is
organised? The primary source of income
for them is broadcasting rights. That is
sold to TV channels and streaming services.
"Basically, the permission to stream this match on their
channels." Through which you can
watch the match. "In exchange, the
TV channels and streaming services,"
pay the ICC. "For example,
nowadays you watch the matches on Star Sports" because ICC has struck a deal with Star
Sports that all the major tournaments of
the ICC will be exclusively broadcast on
the Star Sports channel. This deal will
be in effect until 2023. "As
consideration, Star Sports paid ICC $1.98 Billion." Almost ₹140 Billion. "Additionally, ICC gets money from their
sponsors." "Nissan, Oppo, MRF
Tyres," "Booking.com, Byju's
and Emirates" are the global
partners of the T20 World Cup 2021. These
are the top sponsoring companies. It is
an ad for the company "for this
sponsorship, they pay the ICC." There
are various types of sponsors and they
are divided into categories as well. "Like
the Global partners, Category partners,"
and social media partners. "The
exact amount that ICC gets from these sponsorship," is not publicly available. "But at the end of the Blog, I'd tell you a fair guess" of the income from sponsorship. "But everything I've told you till
now," was from the perspective of
the ICC. "Now, let's understand the
things" from the perspective of the
host country. "The country where
the tournament is organised," what
does the country get? What does the
government of the country get? The
answer to this isn't straightforward. There
are many indirect benefits that are difficult
to be calculated. "Directly," "obviously, the money from
tourism." "The country that
hosts this World Cup," is visited
by foreigners that want to watch the match in the stadium. "And when there is an influx of tourists
in the country," "then obviously,
tourism brings in money as well." "In
short term, a lot of employment is generated." Because of the huge influx of tourists in the
country. "Businesses around the
stadium such as the restaurants, bars, hotels," see a lot of growth. The hotels get booked out. And you get to see 'full house' in all the
restaurants. "Obviously, the
economy of the country," "the
GDP of the country," undergoes a
potentially positive impact. "In
addition to it, if the country can prove to the rest of the world"
"that it has successfully hosted the World Cup," it proves the stability of the country. The soft power of the country increases. "Because of this, more people would want
to invest in the country." Leading
to a growth in foreign investments. "And
during the preparation for the World Cup,"
"the infrastructure needs to be upgraded," Good roads need to be built. Cleanliness has to be maintained. "Like the 2010 Commonwealth Games held
in Delhi," saw a major change in
the infrastructure of the entire city. "But,
in order to do this," "to
upgrade the infrastructure," "to
prepare for the tournament," the
country has to bear huge expenses. "Do
you know what is the biggest expense for the country, apart from this?" When a World Cup is hosted. Tax Exemptions. "During the T20 World Cup, often the
country hosting it," gives tax
exemptions to the ICC. And it isn't for
cricket only. It's the same during the
FIFA World Cup as well. "The
hosting country for the FIFA World Cup,"
declares itself to be a Tax-Free Zone for FIFA. And millions of dollars are spent on tax
exemptions. "In fact, for the
football World Cup, it is a given condition" "that the country with the winning bid
to be the host," will have to grant
tax exemption to FIFA. "For
example, the 2006 FIFA World Cup was held in Germany," it is estimated that around €250 million of
tax exemptions were given then. By the
German government to FIFA. But the
benefit from the perspective of the government is that "overall, the revenue from tourism" is more than this. "Like in the 2006 FIFA World Cup," the German government reported that "the tourism revenue due to the World
Cup," was around $400 million. This was a clear-cut profit for the
government. "If you want to save on
taxes too," "and are fed up
with complicated tax filing," there
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"And because TaxBuddy.com has sponsored this Blog,"
there is a special discount for you guys. You'll get a 35% discount if you use their services. The link to it is in the description below. Do check it out. And let's return to the topic. "Friends, every country isn't so
fortunate." "Like in the 2014 FIFA
World Cup in Brazil," there was a
lot of unnecessary construction there
were many protests and allegations of corruption. And it is said that Brazil had to bear an overall loss for hosting this
World Cup. The expenses borne by the
Brazilian government was of $15 billion. But the revenue was estimated at only $13.2
billion. "Additionally, there were
many protests" in which the
government was criticised "questioning
the government's rationale to waste money on stadiums," while education and healthcare desperately
needed money in Brazil. A similar
situation was seen in South Africa. When
the FIFA World Cup was held in South Africa.
"Although, the government of both countries claim" "that when the World Cup took place in
their country," it was a success.
"The T20 World Cup taking place now," has an interesting story too. If you look at it from the perspective of the
hosting country. It was originally
planned that this World Cup will be held in Australia. But then the Covid-19 pandemic broke out. "Because of it, the World Cup was
initially postponed." It is taking
place in 2021 instead of 2020 as planned.
Then India offered to host this World Cup in India in 2021. But then there were some problems. Newspapers ran with reports that BCCI may have to pay taxes as much as ₹9.06
billion. If the Central Government
refused to give complete tax exemptions to
host the ICC World Cup. Even if the
government gave partial tax exemption the
BCCI would still have to pay ₹2.27 billion as taxes. For hosting this T20 World Cup. "Interestingly friends," the Indian government has always been quite
slow at such things. For offering tax
exemptions. "Even for the 2011
50-Over World Cup held in India," the
Manmohan Singh government had not approved tax exemptions till the last moment. "But at the very last minute," it was granted when the then Prime Minister
Manmohan Singh intervened. "After
that, in 2016," "when India
hosted the T20 World Cup," the
Narendra Modi government gave 10% tax
exemptions only. "Then, $23.75
million was withheld by ICC" from
the money that BCCI was supposed to get.
"And this issue between the two," "between ICC and BCCI," that hasn't been resolved yet. "As I told you about FIFA," it is the same with the ICC. ICC tries to secure the tax exemptions
upfront in whichever country the World
Cup is supposed to be hosted "Only
after that, the hosting rights are given to the country." But BCCI failed in securing tax exemption
from the Indian government.
"Following this, it was decided" to host this T20 World Cup in the United Arab
Emirates and Oman. It is assumed. "Officially though, BCCI has given only
one reason," Covid security and
safety concerns. "Because of this,
this World Cup didn't take place in India." "Instead, it was held in the UAE and
Oman." But several experts believe that the main purpose was securing tax
exemptions. "Now, look at things
from BCCI's perspective." BCCI is
the Indian cricketing body. And distinct
from ICC. BCCI has its own source of
income. "First, they get a
broadcasting revenue share from ICC."
ICC does so for every cricketing board.
It appropriates a part of its revenue to the other cricketing boards. But BCCI's main source of revenue is sponsorships.
"The main kit sponsor of BCCI," is MPL Sports. Their deal was made till 2023. BCCI gives them the right to sell merchandise. The base price of MPL for this is ₹6.5
million per match. And ₹30 million per
year. That is paid to BCCI. The merchandise partner and the jersey
sponsor aren't the same. The jersey
sponsor is the one whose name is printed
across the jerseys of the Indian Cricket Team.
"In this case, it is BYJU'S."
There's an interesting history of the jersey sponsors of the Indian
cricket team. The company that was the
Indian cricket team's jersey sponsor for the longest time was Sahara.
They started in 2003 and remained the jersey sponsor till 2013. Here comes the interesting fact. "In the 2003 cricket World Cup," there was no jersey sponsor for the Indian
cricket team then. "This is because
there is a rule by ICC," "that
the companies from which ICC gets sponsorships," "the other cricket boards," cannot get sponsorships from any competitor
company. The main sponsor of ICC at the
time was South African Airlines.
And the company Sahara was also involved in the airline
business. This led to a conflict of
interest. And so there was no sponsor on
the jerseys of the Indian team. Sahara
remained the sponsor till 2013. "After
that, Star India became the sponsor for 3 years." Then Oppo for 2 years. And now BYJU'S. "Overall, according to the reports it is
being estimated" "that from
this T20 World Cup alone," the BCCI
will earn around $12 million. Till now
you've looked at this business model "from
the perspectives of the ICC, the hosting country and the BCCI." Who remains?
The Broadcaster. The TV channels
that broadcast the matches. "For
us, the TV channel is Star Sports."
"As I told you at the beginning of the Blog,"
Star Sports has paid millions of dollars to ICC to get the broadcasting rights. What is Star Sports' source of income? "The answer to this too, friends, are
the sponsors." "For this
present T20 World Cup," the main
sponsors of Star Sports are "BYJU'S,
Dream11, Vimal and Coca-Cola." "An
interesting thing here," "2,700
seconds of commercial airtime is allotted"
for one T20 World Cup cricket match.
"Meaning that for the one World Cup match that you watch," "you watch 2,700 seconds of advertisements." "But in IPL, this time is increased to
3,000 seconds." "If you've
noticed, there are more ads on TV channels in IPL," as compared to the T20 World Cup. What is the exact rate of sponsorships? "It is reported that for this World
Cup," it is around ₹1 million to
₹1.1 million for every 10 seconds of ad. If a company wants to play a 10-second ad.
"If a company had to co-present this tournament," it is estimated at ₹550 million to ₹600
million. "And for associate
sponsorships," it is estimated at
₹300 million to ₹400 million. "It
is estimated that in this case, the broadcaster" can expect to earn ₹12 billion to ₹12.5
billion in ad revenue from this specific
T20 World Cup. "Since the TV
channel is Star Sports," the rights
for online broadcasting has been given to
Disney+ Hotstar streaming app. "Here,
you can clearly see" why IPL is
more profitable. "The simple reason
is that for each match," more
inventory is given to the ads. It means
that IPL rakes in more sponsorship revenue.
"And the next time you're wondering why there is so much focus on
IPL," the direct answer to this
lies here. I hope you found this
different type of blog. "If you
want to watch more such blogs on Business models," tell me by commenting below. Which other company's or event's business
model would you like to watch? Let's
meet in the next blog. Thank you very
much!