BENGALURU: Busy plotting strategy before responding to the Committee of Administrators’ (CoA) calls for implementing changes, the Board of Control for Cricket in India (BCCI) is yet to pay serious attention to implications that the introduction of the Goods and Services Tax will have on economics of cricket in the country.
For starters, ticket prices for IPL matches will increase, since these matches are charged an entertainment tax. A lot of things in and around the league will also come under GST, so the overheads in this marriage of entertainment and sport will go up. The liability on sponsors who have committed specific amounts will also increase.
Funds that the state units claim as reimbursement come under GST, so the invoices they produce will have to be in accordance with new rules, which effectively means they will get less than what they have been.
Top sources in the BCCI confirmed that the board office has received a communication from the government in this regard. Tied up with reform matters pending in the court, they are yet to finalise a date, but when time permits, a meeting is expected to discuss the finer points and chalk out new strategies, if required.
“From what we gather and estimate, there will be a 28 per cent tax on IPL tickets. So ones that cost Rs 1,000 will cost around Rs 1,300. More importantly, the cost of conducting the IPL will increase because the rise in taxes will be felt at several stages, for the different types of services hired for different things,” a top BCCI source told Express.
If the BCCI has to do fresh calculations to ensure the optimum from the money-spinning competition, sponsors will have a graver issue to address. According to contracts, if the sponsorship amount is x, recipients have to get that amount after deduction. So for sponsors committed to Rs 100, the amount they sanction has to be Rs 118 (in case of 18% tax), for the BCCI or state bodies to actually get Rs 100.
“The GST is an additional burden on sponsors. Till now, the tax was 12%. So for us to get Rs 100, they were giving Rs 112. This figure becoming Rs 118 means the sponsors will incur an additional expenditure of 6%. Whether this impacts everything else and changes the position of the sponsors, we have to wait and see,” said BCCI sources experienced in handling these matters.
atreyo@newindianexpress.com