Pakistan Cricket Board (PCB) has issued a warning to PSL franchises as the deadlock over the financial model persists between the concerned parties.
Last year in September, the franchises had filed a case against the PCB in the Lahore High Court (LHC) after suffering major losses, due to the current financial model, over the course of the last five years.
Later, in the proceedings before the Lahore High Court (LHC) an out-of-court settlement was agreed upon between the parties to deliberate and discuss the disagreements and other issues associated with the financial model of the PSL.
As far as the PSL financial model is concerned, the PCB had send two proposals to the franchises on December 22 and also a third and final one after further discussion on December 30.
After the final proposal, the PCB had clearly told the franchises that they should accept or reject the proposed model by January 6 while also stating that no further discussion will take place.
Earlier this year, PCB had given franchises a three-week deadline to submit the annual fee for the sixth season of PSL. The franchises have been upset with incurring consistent losses from the league.
The PCB on its part had threatened severe action against the franchises, which included termination of contracts, in case the fee was not submitted by the given deadline. After which, the franchises agreed to submit the fees.
After the postponement of PSL, PCB Chairman Ehsan Mani recently held a virtual meeting with the representatives of PSL franchises, where the board chairman made it clear that the franchises have to accept the new proposed financial model or else the current one will be followed.
It must be noted that the current contract between the PCB and the PSL franchises is of 10 years, after which the franchises fee will increase by 25 per cent. In terms of commercial contracts, the revenue sharing ratio is between 60-95 per cent in favour of the franchises.
Whereas, according to the revised financial model, the exchange rate for fees is fixed in line with the dollar value as of December 31, 2020, at Rs161 for the next 14 years.
The dollar rate has been cited as a major cause of concern for the franchises, due to increasing expenses, because the rate was Rs104 when they had bought the team. Few days back, the PCB had agreed to fix the rate at Rs138 however, that is no longer the case.
The process of taking annual fees will continue also till the PSL central income pool has risen to Rs7 billion, after subtracting expenses for PSL season. During the stated period, franchises will get 92.5 per cent share from commercial contracts while the remaining sum will be kept by the PCB.
After completion of the aforementioned phase, the PCB will not take franchise fee for the next 30 years but share of commercial contracts will switch to 70 and 30 per cent between the PCB and franchises, respectively. The franchise owners are not convinced with such a plan. However, their main reservations are regarding the dollar rate.
Meanwhile, PSL franchises also asked the PCB to clear their dues for the fifth edition of PSL. In reply they were told that PCB is awaiting payment from several stockholders. Once PCB receives payment from these stockholders, they will be in a position to clear the dues of franchises.
After receiving this information, one owner asked, “If a company had not paid their previous dues, why were they handed the contract for the sixth editon?” However, PCB officials maintained that this matter will be resolved soon.