Sun TV's IPL team to make profit one year before planned

Group CEO says economics have considerably improved after Sun TV bagged Hyd franchise

The Sun Television Network (Sun TV) owned Indian Premier League (IPL) team Sunrisers is expected to start making profit from the second year itself. It may be noted, earlier the company said that the team will be turned profit from the third year. The new development comes after the overall economics for IPL has improved, after Pepsi bagged titled sponsorship for around Rs 398 crore.

While addressing analysts SL Narayanan, Group CFO of Sun  Group said that the economics have considerably improved after Sun TV bagged the Hyderabad franchise, simply because the title sponsor (for entire IPL not only for Sunrisers) has now moved from one to another. And what was Rs 36 crore per annum is now gone to Rs 80 crore per annum.

"So if anything, we thought we will breakeven by year two, (with) I think we will make a profit by year two," said Narayanan..

It may be noted, earlier the management said that at worst the company will see first year loss funding of around Rs 30 crore in fiscal 2014, which will drop to Rs 4-6 crore in the second year and in the third year the company expects profit to more to Rs 16 crore and then to Rs 24 crore and 45 crore on the fourth and fifth year.

The new development comes after Pepsi has bagged title sponsorship for the sixth season of the Indian Premier League will be called Pepsi IPL after the soft-drink manufacturing company bagged the title sponsorship of the cash-rich T20 tournament for Rs 396.8 crore. The T20 league got the new sponsor after the country's largest realty firm, DLF, IPL's title sponsor for five years, decided not to renew its contract.

The sponsorship amount which works out to around Rs 80 crore every year, will be distributed among the nine teams in IPL. It means each team in the IPL would get Rs 9 crore in the place of Rs 4 crore, when DLF was the title sponsor. The reality firm was paying around Rs 36 crore every year.

Earlier, media tycoon Kalanithi Maran-owned Sun Television Network (Sun TV) has said that its investment in buying Hyderabad IPL franchise will become a perceptual annuity with after tax of around Rs 60 crore from the sixth year. The company which acquired Hyderabad Franchise last year, after Board Of Control For Cricket In India (BCCI) terminated cash-strapped Deccan Chargers, which was owned by media house Deccan Chronicle Group.

Sun TV said that it is not likely to incur any losses in fiscal 2013 as the season starts towards end of fiscal 2013 and shall at worst bring in loss of around Rs 30 crore in fiscal 2014. The losses shall decline meaningfully in the very next year.

After the first five years, the company hopes that the franchise shall consistently bring in profits of around Rs 60 crore after tax, he said while not sharing the details of expected expenses. The company also stated that the IPL business has huge opportunities including the ones like IPL Jerseys which will increase the revenue.

He added during the current fiscal no major deployment company’s assets expects some working capital funding to be supported.