PSL News

Real reason behind spat between PSL franchise owners and PCB revealed

The fourth edition of Pakistan Super League (PSL), to be held in February-March next year, will have a lions’ share of the matches being hosted across all three international venues in the UAE — Dubai, Abu Dhabi and Sharjah.

With two months still to go, the Pakistan Cricket Board (PCB) released the schedule of their marquee event to be held from February 14 to March 17 next year on Friday. The business-end of the tournament — the last eight of the total of 34 matches — will be held in Lahore (three) and Karachi (five) with the latter hosting the final.

Prior to the tournament, Pakistan Super League (PSL) franchises are unhappy with Pakistan Cricket Board (PCB)’s share in the revenue generated from sponsorship and broadcasting deals.

The franchises are unhappy with board’s 50 per cent share in the sponsorship deal and have decided to raise the issue in the upcoming governing council’s meeting in Islamabad on November 21.

The franchises don’t have any other substantial source of income so they rely heavily on the revenue from sponsorship and broadcasting deals.

Another issue which is a cause of concern for the franchises is the broadcasting deal. PCB is expected to generate $75 million in the broadcasting right deal, out of 85% will be distributed among the franchises. The board has also not finalized the title sponsorship for the league as well.

Pakistan Cricket Board (PCB) declined Pakistan Super League (PSL) franchises’ demand to increase their share in the revenue.

Pakistan Super League (PSL) franchises were not pleased with Pakistan Cricket Board (PCB) over the ‘unjust’ share of revenue.

Franchise owners raised their concerns with the board in the governing council’s meeting in Islamabad on Wednesday, November 21.

The meeting was chaired by the Pakistan Cricket Board’s chief Ehsan Mani who saw an intense exchange of verbal spat between the officials of the board and Pakistan Super League (PSL) franchises owners.

According to some reports, a few PSL team owners have also threatened to quit the league if their demands were not met.

The Pakistan Super League (PSL) franchises did not clear their dues despite the issuance of invoice by the Pakistan Cricket Board (PCB).

Franchises were demanding for the exemptions of taxes from the fees, which the board is not willing to accept.

In order to bring PSL Franchise owners on track, Pakistan Cricket Board (PCB) threatened to cash bank guarantee if Pakistan Super League (PSL) franchises failed to deposit their annual fees by 2 PM on December 3.

The situation became tense suddenly when PCB’s Chief Financial Officer Badar Manzoor sent an email to all the franchises.

According to Daily Express, he used some threating words in the email and gave the deadline of December 3 to clear all dues or the board will cash their bank guarantees.

Later, The Pakistan Super League (PSL) franchises have declared a war against PCB as they have formed an unofficial alliance in order to safeguard their interests.

According to Daily Express, the franchises — except for one — have signed a Power of Attorney (POA) document which gives one unnamed franchise owner the right to take decisions on their behalf — including legal action.

The franchise may differ on PSL’s revenue-sharing model but — in order to ensure their common interests remain safe — they have decided to collude.

Real reason behind the spat;

PSL franchises incurred losses ranging from PKR 200 million to 700 million (USD 1.4 million to USD 5 million approx) each in the first two seasons of the league – losses that have led the teams to seek a financial restructuring of the league as well as tax exemptions from the Pakistan government, claimed ESPNcricinfo.

According to ESPNcricinfo they obtained a copy of a letter that was sent by the PCB to the finance minister of Punjab, which includes consolidated financial details of the five franchises from the 2016 and 2017 seasons.

This is the letter that the PCB had erroneously sent to all franchises, inadvertently revealing the financial details of each franchise to the others, a slip-up that the PCB chairman Ehsan Mani had to apologise for.

Related: PCB reveals PSL franchises’ financial accounts in error

According to the letter, Lahore Qalandars – the least successful franchise on the field, having finished last each season – have incurred the largest losses: PKR 312,744,021 in 2016 and PKR 420,914,836 in 2017.

Quetta Gladiators, the lowest-priced franchise when the league was launched, have incurred the smallest losses: PKR 46,530,560 in the opening season and PKR 63,518,476 in 2017. Quetta are among the more successful franchises, having finished runners-up twice in three seasons.

Karachi Kings, the most expensive franchise when the league was launched, incurred losses of PRK 117,028,811 in 2016 and PKR 60,846,776 in 2017.

Islamabad United, the current champions, twice winners and the league’s most successful franchise, lost PKR 184,148,300 and PKR 241,981,640 in 2016 and 2017 respectively.

The 2017 champions Peshawar Zalmi made a loss of PKR 237,233,858 in the opening season but reduced that ten-fold to PKR 20,152,767 in their winning season.

PSL Finances 2016-17. Photo: ESPNcricinfo

The figures may seem eye-opening but the fact that the league is mostly played in the UAE, where logistics and operational costs are much higher and sponsorship cannot be leveraged as it might have had it been played in Pakistan, are a big factor.

Additionally, the first set of broadcast and commercial rights deals (signed for the first three seasons) were relatively lower – the new broadcast deal, for example, is 358% higher than the first one – and that has affected the revenue each franchise receives from the central pool.

Related: Pakistan Cricket Board signs New PSL media rights deal

One of the main concerns of the franchises is that the franchise fee they pay to the PCB every year is in US dollars – the value of the Pakistani rupee against the dollar has plummeted, however, over the last six months, ESPNcricinfo claimed.

*It is not clear from the figures whether Islamabad United’s income includes winnings from the 2016 season.  Photo: ESPNcricinfo

The first owners of the Multan franchise, who pulled out after one season, cited the dollar fluctuation as one of the main reasons for their leaving. The Multan Sultans are believed to have made a loss of approximately PKR 400 million in the one season they played in 2018.

The other big concern is the taxes paid on the franchise fee. According to the figures in the letter, franchise fees made up anywhere from 30% to 91% of a franchise’s total costs in 2016 and 2017.

“The PCB is currently invoicing franchises by adding up Sales Tax [16%] amount which is recovered by PCB from the franchises…,” explains the letter, sent in early December by the PCB’s chief operating officer Subhan Ahmed.

For teams, the major sources of earning are the central pool revenues from media rights and central sponsorships, and gate money – which is shared out equally among the franchises. The sale of TV rights and title sponsorship this year – for USD 36 million and USD 14 million respectively – should, according to one PCB official, help at least two low-valued franchises start making profits.

The Multan franchise has since found a new owner, a consortium led by Ali Tareen agreeing to pay a franchise fee of USD 6.35 million – 144.5% more expensive than the Karachi franchise – when the PCB’s base price was set at USD 5.21 million. That indicates, if nothing else, that investors still see value in the brand.

The five original franchises have a 10-year ownership agreement with the PCB, while Multan have a seven-year agreement (the PSL model doesn’t allow perpetuity rights).

For teams, the major sources of earning are the central pool revenues from media rights and central sponsorships, and gate money – which is shared out equally among the franchises. The sale of TV rights and title sponsorship this year – for USD 36 million and USD 14 million respectively – should, according to one PCB official, help at least two low-valued franchises start making profits.

[The story includes input from ESPNcricinfo (Umar Farooq) , Cricket Pakistan and GreenTeam92.com]

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