CORPORATE TAX ASSIGNMENT PHASE 2, INDO-GERMAN TRAINING CENTER (INDO-GERMAN CHAMBER OF COMMERCE)

CUNNINGHAM ROAD, BANGALORE

CASE STUDY ON THE STRUCTURE AND FUNCTIONING OF INDIAN PREMIER LEAGUE

DATE OF SUBMISSION: 11- MAY-2013

SUBMITTED BY: BINDU THUSHARA.N

AGENDA
INTRODUCTION TO INDIAN PREMIER LEAGUE CONCEPT BOARD OF CONTROL FOR CRICKET IN INDIA (BCCI) COMPOSITION OF THE BCCI ANALYSIS OF INCOME GENERATION & DISTRIBUTION IPL AND MAURITIUS CONNECTION TAX EXEMPTIONS TO THE BCCI TAX BENEFITS TO BCCI FORMATION OF IPL TEAMS- FRANCHISES AND RULES TAX EXEMPTIONS TO ICC TAXABILITY OF THE IPL INCOME TAX ASSESSMENT OF IPL IMPLICATIONS AS A RESULT OF IPL-2 SHIFTING TO SOUTH AFRICA 2013 INDIAN PREMIER LEAGUE FUNDING PATTERNS OF TEAMS

INTRODUCTION TO INDIAN PREMIER LEAGUE:

Cricket has always been like a religion for this country. It is seen as more than just a game. The players are considered as demigods and literally worshipped. The Twenty20 format of cricket created history. After the Twenty20 format of cricket was introduced to the world, cricket has just been overflowing out of everyone's ears . DLF Indian Premier League (IPL) is a T20 cricket league that was created and promoted by the BCCI, with the complete backing of the ICC. It all started when Lalit Modi, the Vice President of the Board of Cricket Control in India (BCCI) envisioned the Indian Premier League. IPL has been launched in response to the rebel Indian Cricket League (ICL) launched by Zee Group. IPL is not a separate legal entity. It forms part of BCCI and is managed and controlled by a separate Committee, known as IPL Governing Council, having 14 members. This Committee is appointed by the General Body of the BCCI for a period of 5 years. The Committee maintains a separate bank account which is operated by the Treasurer, BCCI. Every year, the Committee is required to submit a report of its activities and decisions along with the audited final accounts for the approval of the General Body of BCCI at its AGM. Indian Premier League (IPL) made its debut in April 2008. Based on the English Premier League (football) and the National Basketball League (NBA) of the United States, IPL is a professional Twenty20 cricket league. It has been backed by the ICC and has a total of eight teams, with each of them being made up of a minimum of 16 players. Currently, the sixth season of IPL is going on- IPL6 or IPL 2013.

CONCEPT OF INDIAN PREMIER LEAGUE:

The Premier League is generally considered to be the world's showcase for Twenty20 cricket, a shorter format of cricket consisting only 20 overs. Top Indian and international players take part in IPL, contributing to what is the world's "richest cricket tournament". Each cricket team meets the other team in the IPL league twice, once at home and once away (Host place and Guest place). For instance, if there are total 8 teams in IPL, each will play a total of 14 matches. The top four teams will qualify for the semi-finals stage. The winners from the semi-finals clash in the IPL finals and thus the whole tournament will have 56 matches in all.

BOARD OF CONTROL FOR CRICKET IN INDIA

The Board of Control for Cricket in India (BCCI) headquartered at Mumbai is the national governing body for cricket in India. The Board was formed in the year 1929 with the object of promotion and development of cricket in India and is a society registered under Tamil Nadu Societies Registration Act, 1975. BCCI is a full-fledged Member of International Cricket Council (ICC) which is the Governing Body for cricket in the world. As a member of the ICC, it has the authority to select players, umpires and officials to participate in international events and exercises control over them. Without its recognition, no competitive cricket involving BCCI contracted Indian players can be hosted within or outside the country.

COMPOSITION OF THE BCCI

The composition of the BCCI is given as under: (a) President (b) Five Vice-Presidents, one from each zone (c) An Honorary Secretary (d) An Honorary Joint Secretary (e) An Honorary Treasurer

ANALYSIS OF INCOME GENERATION AND DISTRIBUTION:

Every year BCCI gets the franchise fee payments ranging from US$37 million from Sahara Pune to $6.7m from Rajasthan Royals. There is also its share of central revenue, mainly from broadcast rights and from commercial sponsorships (this year from Pepsi, Yes Bank, Star, Vodafone and other partners). With the BCCI protected from risk, it is essentially the franchise owners who carry the heavy financial burdens in the IPL. They have committed expenses (franchise fees, player costs, the costs of running, managing and marketing the team and of staging home matches). All of this could touch Rs 150 crores (about $27m) every year for a franchise.

How does IPL make money? Auction of broadcasting rights Title sponsorship and corporate sponsorship Sale of tickets (20% of tickets allocated to IPL) Auction of franchisees rights Official umpires sponsorships

The franchises' lifeline is their share of the central revenue generated by the IPL from the collective sale of broadcast and sponsorship rights. Central sponsorship is distributed to teams through a complex formula a team's league standing has a bearing on what the franchise receives - and the average annual figure is approximately Rs 50 crores ($9m) per franchise. Given that there is a difference in revenue distribution of approximately Rs 1 crore (about $180,000) between each of the nine ranks in the league standings, the margin of earnings between the IPL winners and the bottom-placed team works out to about Rs 9 crore. A franchise team has to strenuously work the assets available to it. Selling branding space on team uniforms is a major revenue stream. Logo branding has obvious media value, given live television coverage; everything starts with the team shirt. Each franchise sells as many as ten properties on its team uniform. If marketed well, this could raise close to Rs 60 crores ($10m). The big money comes from the main team sponsor slot - the 206 square cm space across the front of the shirt, which can fetch about Rs 20 crores ($3m) per year. The six other logo spaces on a team jersey are expensive; the ones on the trousers and helmet fetch lower prices. Other licensing arrangements - which involve the use of the franchise's logo - come at more affordable prices (around 50 lakh or $92,000 a year). Ticket revenue from home matches form another chunk of revenue. Some teams, Mumbai, Chennai and Delhi among them, will target ticket sales in excess of Rs 40 crores ($725,000) this season. (This is after 20% of the ticket inventory has already been given, as part of the franchise contract, to the IPL.).

How is the IPL income distributed? Share of broadcasting money with franchisees Share of sponsorship money with franchisees Share of ticket money with franchisees Inauguration expenses Prize money: $5 million ($3 million for winner; $2 million divided among others)

What are the sources of income for an IPL Franchisee (ROI)? Share in revenue from broadcast rights (equal share for all franchisee after IPLs share) Share in sponsorship money (60% of the amount distributed equally) Share in revenue from sale of tickets Revenue from in-stadium advertising Sale of players to other franchisee Revenue from own sponsorship and corporate sponsorship How is the Franchisee income distributed? Franchisee fees 10% of total franchisee costs every year to IPL Players cost (Each franchise have paid around $4-6 million per year, $9 million this year) Match fees and Inauguration expenses Rent of stadium (expense of around Rs.2.5mn per match) Marketing and promotional cost (around $3-4mn per team) Fee for coaches, physiotherapists and other members. Administrative cost

IPL AND THE MAURITIUS CONNECTION:

Mauritius and tax haven suddenly seem to have become synonymous today with the IPL. There are some facts though that one needs to look at before associating every foreign funding coming from Mauritius as funny money and the IPL being the sole recipient of Mauritian funds. First of all, 100% FDI is allowed in sporting activity including in cricket. There are no restrictions on it. In fact it is on the negative list which does not attract any approval from the Government of India. However, the rules as of now state that if foreign funding is brought in and if it is not reported to the RBI within 30 days, and within 180 days of that transaction being completed, if shares are not issued then it becomes a FEMA violation. So the ED is currently only looking into whether these rules have been adhered to. Secondly, India has received close to 50% of its total FDI over the past 10 years (2000-2009) from Mauritius. Depending on the exchange rate used, it varies between $40 to $50 billion. Now that is a surprising statistic where a tiny African island is way ahead of countries like the USA, UK and Japan in generating FDI flows (which by the way is a much preferred funding option than FII money which is generally considered hot money by most Central Banks.) The reason for this is very simple and basic. Tax arbitrage! With a double taxation treaty in place with Mauritius and the corporate tax rates as low as 3% (take a look at the Mauritian Tax Treatment of offshore operations and GBC1 companies getting unilateral foreign tax credit), it becomes THE choice of routing investor funds to India. What this Tax arbitrage opportunity has led to is allegations of Round-tripping. It is nothing but routing of domestic investments through Mauritius to take advantage of the Double Taxation treaty to pay lower taxes on profits. It also has led to opposition benches alleging routing of political funds stashed in Swiss accounts back into the country (effectively money laundering). The point of the matter is that India as a country has seen a majority of its FDI inflows coming through Mauritius over decades, arguably most of it being above board and perfectly legal. So assuming that all IPL foreign investments have come from shady businessmen bringing money is extrapolating far more than what can be justifiable.

TAX EXEMPTIONS TO THE BCCI

In the past, tax exemptions were granted to BCCI on the ground that promoting cricket was a charitable activity. However BCCI amended its objects in 2006 to enable it to award sponsorship to sportspersons in games other than cricket and for contribution to other sports institutions such as National Sports Development Fund (NSDF) etc. Exemption to BCCI was being provided under Section 11 of the Income Tax Act since promotion of sports was being treated as a charitable activity under Section 2 (15) of the Income Tax Act. BCCI was registered under Section 12A with the Director of Income Tax (Exemption) Mumbai. Before granting exemption, objects of anybody/trust seeking exemption are enquired into by the DIT (E) and only on satisfaction that such objects are bona fide and charitable, the exemption is granted. It was also implied in the approval that the registration granted was only for the objects which had been submitted to the Director of Income Tax. It has been stated in the Background Note furnished to the Committee by the Ministry of Finance (Department of Revenue) that BCCI was granted exemption of income tax in respect of the following assessment years :A.Y. 2004-05 Rs. 56.00 Crore A.Y. 2005-06 Rs. 33.64 Crore A.Y. 2006-07 Rs. 125.64 Crore This exemption has been granted by virtue of CBDT Circular of 1984, wherein it was clarified that promotion of sports is covered by the definition of a charitable activity. However, the registration granted to BCCI for being involved in charitable activity has been withdrawn from assessment year 2007-08 with consequent dis-entitlement of exemption originally granted to BCCI. The breakup of the taxable income of BCCI during the last three years is given as under:A.Y.2007-08 Returned Income: Nil Assessed Income Rs.274, 86, 30,505/A.Y.2008-09 Returned Income: Nil (After claiming exemption of Rs. 377, 33, 97,273/-, u/s 11 of the Income Tax Act) A.Y.2009-10

Returned Income: Rs. (-) 57, 71, 81,762 (After claiming Exemption of Rs.216, 64, 24,924/- , u/s 11 of the Income Tax Act) On being asked by the Committee as to when the process for withdrawing the exemption was initiated and what the genesis for initiating these proceedings was, the Ministry of Finance (Department of Revenue) in their written replies submitted as follows: The genesis or the trigger for initiating the proceeding of withdrawal of exemption was a proposal dated 12.11.2009 from Addl. DIT (E), Range -1, Mumbai to the Director of Income Tax (Exemptions), Mumbai. This proposal, for withdrawal of registration u/s 12A, was based on the information, received during the assessment proceedings for A.Y. 2007-08, that there were changes in the objects of BCCI. On 28.12.2009 the Department came to the conclusion that the registration granted to BCCI u/s 12A of the Income tax Act, 1961 did not survive from the date on which the objects were changed i.e. 01.06.2006. The Committee further desired to know as to when the BCCI intimated the changes in its objects to the Ministry and why did Department not initiate the action immediately thereafter. In this regard, in their written information furnished to the Committee, the Ministry of Finance (Department of Revenue) replied as under: BCCI did not intimate the changes in its objects in 2006 or 2007. These changes were detected during the course of assessment proceedings for the A.Y. 2007-2008 which were finalised in December 2009. It was only after issue of a show cause notice dated 30.11.2009 for withdrawal of registration granted u/s 12A to the BCCI, that the Honorary Secretary of BCCI submitted letters dated 2.12.2009 and 14.12.2009 stating that there were amendments in the objects of BCCI and inadvertently these amendments were not informed to the office of DIT (E), Mumbai. Intimating about the chronology of the withdrawal proceedings, the Ministry further submitted as follows: Chronology of the withdrawal of proceedings by D irector of Exemptions (Mumbai) 12.11.2009: A proposal for withdrawal of registration u/s 12A of the I.T Act is received from Addl. DIT (E), Range -1, and Mumbai 30.11.2009: A show cause for withdrawal of registration u/s 12A of the Act is issued.

2.12.2009: A letter is received from Sri. N. Srinivasan, Honorary Secretary, intimating the amendment in Memorandum of Association made on 1/06/2006 3.12.2009: A second show cause for withdrawal of registration u/s 12A of the Income Tax Act due to amendment in objects is sent to BCCI 15.12.2009 & 16.12.09: Written submissions dated 14/12/2009, signed by Sri. N. Srinivasan, Hon. Secretary is filed before the DIT (Exemptions). 28/12/2009: The registration granted to the BCCI u/s.12A of the Income Tax Act is withdrawn w.e.f. 1.6.2006.

Having observed that registration U/s 12 to BCCI has been withdrawn in 2009 with retrospective effect, the Committee desired to know about the justification for the same. In response, the Ministry of Finance (Department of Revenue) in their written information replied as under: The communication to the BCCI, that the registration granted u/s 12A of the Act did not survive from the date on which the objects were changed i.e. 01.06.2006, was based on the basic principle of law that registration u/s. 12A of the Act is granted on the basis of the objects mentioned in the deed submitted at the time of registration. In a case where the assesse changes its objects after registration, such changes are required to be intimated to the Director of Income Tax, (the authority granting registration) so that the changed object can be examined. However, where the objects of the trust or institution, which were the basis of grant of registration, are altered and not intimated to the registering authority, the registration would not survive since the very foundation of the registration had been removed by a voluntary act of the assesse. This is based on the decision of Honourable Allahabad High Court in the case of Allahabad Agricultural Institute and Another v. Union of India and Others, 291 ITR 116. During the evidence of the representatives of BCCI/IPL held on 12.01.2011, the Committee sought to know as to why were the amendments to BCCIs objects not filed with the Income Tax Department. In response, the BCCI in their written submission stated as follows:

BCCI amended its objects in 2006 to contribute to other sports. Contribution to other sports is also charitable as per the CBDT circular of 1984. It was never the intention of the BCCI to conceal the amendment from the Department. As a matter of fact, every year during the course of assessment, the latest copies of the constitution of BCCI containing the amendments have been filed with the Assessing officer. The Department was in possession of amended constitution at all times. The Department has withdrawn the exemption for the reason that the amendments were not filed. The BCCI has been legally advised that the exemption cannot be withdrawn for nonfiling of amendment of objects. The BCCI is in appeal against the withdrawal of exemption before the Income Tax Tribunal. On being asked as to whether the exemption granted to BCCI during the A.Y. 2007-08 has been withdrawn, the Ministry of Finance (Department of Revenue) in their written information stated as under: While finalizing the assessment for A.Y. 2007-08, due cognizance of withdrawal of registration u/s 12A was taken, which resulted in denial of exemption u/s 11 and raising of demand of Rs. 118 crore which otherwise would have been exempt u/s 11 of the Income Tax Act. It was also held that BCCI is no longer promoting cricket as a `charitable activity. It was held that major income a rises not from the game of cricket but from the business of cricket. In this assessment, the claim of exemption was denied and demand of Rs.118.00 crore was raised. Out of such demand, Rs. 92.00 crore had already been recovered during the FY 2009-10. In response to a query as to whether BCCI was really involved in charitable activities during the year 2008-09 and 2009-10 and whether exemption is being allowed to it for these years, the Ministry of Finance (Department of Revenue) in their replies stated that for A.Y. 2007-08 it has already been held by the Department that BCCI is not eligible for any exemption of Income as it is carrying on a commercial activity. However, BCCI has claimed exemption from tax for the A.Y.2008-09 and 2009-10. The case of A.Y. 2008-09 has been selected for scrutiny assessment. The scrutiny assessment for A.Y. 08-09 is in progress, and the activities of BCCI during this year will be examined in these proceedings. Asked during evidence as to whether the CBDT analysed the tax exemptions to BCCI/IPL on the basis of some complaint or it was suo-motu, the Chairman, CBDT in his deposition stated that No, they have filed their Memorandum. During evidence, the Committee expressed the view that the Ministry of Finance (Department of Revenue) did not analyze the aims and objects of the BCCI annually. They only analyze their balance-sheets annually. Replying to this, the representative of the Ministry of Finance (Department of Revenue) deposed before the Committee that

What happened in this case is that during the assessment stage, the change in the objects was detected and then a notice was issued.

FORMATION OF IPL TEAMS- RULES FOR PLAYER SELECTION & FRANCHISES:

Team formation:

There needs to be a minimum of 16 players in each of the eight teams. Each team will have one physiotherapist and a coach. At least two players in each team will be from BCCI under-22 pool. A minimum of eight local players will be there in each team. The number of foreign players in a team cannot exceed 10 (8 in the first season). Amongst the playing 11 members of a team, no more than four can be foreign players. Sachin Tendulkar, Rahul Dravid, Sourav Ganguly, Yuvraj Singh and Virender Sehwag are the players with icon status.

Player selection into Teams:

Through annual auction Buying domestic players Signing uncapped players Buying Replacements (for players not available) Trading

Telecasting Rights: The television rights for the IPL Twenty20 Cricket are with Sony Entertainment Television Network and World Sport Group (Singapore). They secured the highest bid for broadcast rights at $1.026 million, for 10 years. Other Rules:

At least seven bowlers will be there for completing the 20 overs of a match. Of the seven bowlers in the game, six will bowl 3 overs each and seventh one will bowl the remaining 2 overs. For a match to be declared complete, full 40 overs should have been bowled and batted on. The batting team can call all of their extra players to bat, till the end of 20th over. However, only the first 11 players have the right to bowl and/or field.

The batting team can continue to bat till the end of the last over, even if it has reached the winning target.

FUNCTIONAL TEAMS-2013:
NAME CITY OWNER N. Srinivasan (India Cements) GMR Group PRICE US$91 million US$84 million CAPTAIN MS Dhoni HEAD COACH Stephen Fleming

Chennai Chennai Super Kings Delhi Daredevils Kings XI Punjab New Delhi

Mahela Eric Jayawardene Simons Adam Gilchrist Darren Lehmann

Mohali (Chandigarh) Preity Zinta, US$76 Ness Wadia (Bombay million Dyeing), Mohit Burman (Dabur) Karan Paul (Apeejay Surendera Group),The Oberoi Group Kolkata

Kolkata Knight Riders

Shahrukh Khan (Red US$75.09 Gautam Chillies million Gambhir Entertainment) Juhi Chawla, Jay Mehta(Mehta Group) Mukesh Ambani (Reliance Group) Subrata Roy (Sahara India Pariwar)

Trevor Bayliss

Mumbai Indians Pune Warriors India Rajasthan Royals

Mumbai

US$111.9 Ricky Ponting John million Wright US$370 million Angelo Mathews Allan Donald

Pune

Jaipur

Lachlan US$67 Murdoch (Emerging million Media) Shilpa Shetty, Raj Kundra(UK Tradecorp Ltd) Vijay Mallya (UB Group) Sun TV Network

Rahul Dravid Paddy Upton

Royal Bangalore Challengers Bangalore Sunrisers Hyderabad Hyderabad

US$111.6 Virat Kohli million US$159 million Kumar Sangakkara

Ray Jennings Tom Moody

DEFUNCT TEAMS:

NAME

CITY

OWNER

PRICE

CAPTAIN

HEAD COACH Geoff Lawson

Kochi Tuskers Kerala

Kochi

Kochi Cricket Private Ltd

US$333 million

Mahela Jayawardene

Deccan Chargers

Hyderabad

Deccan Chronicle Holdings Limited

US$107 million

Kumar Sangakkara

Darren Lehmann

Indian Premier League

Countries

India

Administrator

BCCI

Format

Twenty20

First tournament

2008

Next tournament

2014

Tournament format

Double round-robin andplayoffs

Number of teams

Current champion

Kolkata Knight Riders (1st Title)

Most successful

Chennai Super Kings (3 Titles)

Qualification

Champions League Twenty20

Most runs

Suresh Raina (2254, Chennai Super Kings )

Most wickets

Lasith Malinga (89, Mumbai Indians )

TAX EXEMPTIONS TO ICC

News Reports suggested that tax exemption of about Rs. 45 crore was granted to the International Cricket Council (ICC) for the World Cup Cricket Tournament held in 2011. Specifying the reasons for granting tax exemptions to ICC, the Ministry of Finance (Department of Revenue) in their written replies stated as under: The Cricket World Cup, 2011, in respect of which ICC has made an application now, has a participation of 14 countries. The ICC has stated that the event is approved by the International Cricket Council which is the governing body for cricket around the world. As the ICC Cricket World Cup fulfils the conditions laid down in section 10(39), income arising to ICC from this event was prima facie eligible for exemption. However an examination of the agreements entered into by the IDI (the commercial arm and subsidiary of ICC) with various companies in respect of the transfer of sponsorship and telecasting rights, shows that in most of the cases the payments are to be made to IDI on a net of tax basis. In other words, those companies to which the sponsorship or telecasting rights are transferred will bear the tax liability on behalf of IDI, if any such tax liability arises on the payments made to IDI by them. Seen from this perspective, if Cricket World Cup, 2011 was to be notified under section 10(39 ), the benefit of tax exemption will flow not to ICC/IDI but to the companies to which such sponsorship or telecasting rights have been transferred by IDI. Since there is no provision in the Section 10(39) to restrict the exemption, the approval of the Cabinet was sought to grant exemption from income-tax under

Section 10(39) of the Income-tax Act, 1961 in respect of the income which was arising in India from the ICC World Cup, 2011 to the subsidiaries of the ICC only where the contractual obligation to bear the income-tax liability is on these entities. The Cabinet has considered the matter in its meeting on 31.3.2011 and approved the exemption of Income to be granted only on the income on which the tax burden is required to be borne by the subsidiaries of the ICC and not contracted to be paid by a third party. The total tax effect of the proposed exemption after such restriction would be approximately Rs. 45 crore as against a tax effect of Rs. 443 crore that would have been forgone if the exemption was granted on the total projected revenue to these subsidiaries of Rs. 1476 crore.

TAXABILITY OF THE IPL INCOME

On being asked about the details of action taken by the Income tax Department as regards source of investments and taxability of income from IPL, the Ministry of Finance (Department of Revenue) stated that: Investigation is currently in progress on various issues involved in IPL in respect of individual teams, BCCI-IPL and other entities associated with IPL. The source of foreign investments in individual teams is being investigated and references through Foreign Tax Division, CBDT have been sent to various countries for obtaining information on these investments. The income and expenditure shown by the BCCIIPL, the IPL teams and the related entities are being examined by the Investigation Directorate of Income Tax Department and also by the assessing officers during scrutiny assessments. Investigation is under progress. On being asked as to when the Income tax Department came to know of the irregularities regarding bidding, investments and taxability of income from IPL, the Ministry of Finance (Department of Revenue) stated as under: The matter relating to TDS has been under examination since IPL -1 in April 2008. Enquiries were made by Investigation Directorates in September 2009 from BCCI about the various agreements in respect of media rights, especially fresh agreement that was signed by BCCI with WSG, Mauritius. The first survey action in respect of IPL was conducted on 15.04.2010 and subsequently, survey actions were also conducted on the various IPL teams in order to investigate the source of investment and taxability of income.

TAX ASSESSMENT OF IPL

On being asked as to whether IPL is a part of BCCI and how is IPL being treated for the purpose of Income tax assessment, the Ministry of Finance (Department of Revenue) in their written replies stated that since IPL is a part of BCCI and has no separate existence, there would be no separate assessment for IPL. On being asked during evidence as to whether IPL is a separate legal entity for the taxation purpose, the representatives of the Ministry of Finance (Department of Revenue) stated that: IPL is not a separate entity. Whatever income IPL is to pay to the BCCI will be shown by the BCCI as its receipt, and the BCCI shows it in its balance sheet. On being asked as to why 21 months time was given for tax assessment, the representative of the Ministry deposed before the Committee that : 21 months is the statutory time given for making an assessment. Once the returns are filed, the Department may call for details, they may have certain queries and in the process, the Department cannot go beyond 21 months . In this regard, Secretary Revenue in his deposition before the Committee further added that: When we say that assessment will take 21 months, we do not really mean that we will take 21 months. What we mean is that we cannot take any action under the law until that period is allowed to be lapsed. We are not really meaning that we will take that much time. I would only like to assure you that we will do everything that is possible to bring the investigation to a conclusion.

IMPLICATIONS AS A RESULT OF SHIFTING TO SOUTH AFRICA

Shifting the IPL-2, 2009 match from India to South Africa resulted in the following: The resulting arrival of prospective sporting audience to India from various countries became nil. The hotels which had geared up for the tourist in flex lost this whole business. The business that would have accrued to the catering industry from this massive tourist population was totally lost.

 The massive transport arrangement that would have benefited the transport sector failed to materialize. All the entertainment locations that these tourists would have visited all over India as an extension of their visit to India also came to nought. Each of the above events, had they materialized would have resulted in massive realization of entertainment tax, service tax, sales tax etc. Unfortunately all this tax earning vanished into thin air due to the shifting to South Africa.

2013 INDIAN PREMIER LEAGUE

The 2013 season of the Indian Premier League, abbreviated as IPL 6 or IPL 2013, is the sixth season of the Indian Premier League. The tournament features nine teams and is held from 3 April to 26 May 2013. The opening ceremony was held at the Salt Lake Stadium in Kolkata on 2 April 2013. This is the first season with PepsiCo as the title sponsor. The Kolkata Knight Riders are the defending champions, having won the 2012 season.

Sponsorship
PepsiCo replaced DLF Ltd as the title sponsor starting with the 2013 season. DLF did not renew their contract after their initial five-year contract, for 250 crore, ended with the previous season. PepsiCo's contract is 396.8 crore for five years, ending with the 2017 season. In response to questions about the higher sponsorship costs compared to DLF's, a representative of PepsiCo said, "Our estimate is that we will get five to six times the value of the money we paid." However, Brand Finance had assessed the IPL's brand value to have fallen from $4.1 billion in 2010 to $2.9 billion in 2012, attributed to the decline in television ratings over the two years.

Termination of Deccan Chargers

Deccan Chargers, champions of the 2009 Indian Premier League, became the second team to be terminated from the IPL after Kochi Tuskers Kerala. The owners failed to save the team after several attempts were made with the Bombay High Court and Supreme Court of India. Immediately after the Chargers' termination, the BCCI invited bidders for a replacement team also based in Hyderabad. It was announced on 25 October 2012 that Sun TV Network won the bid at 85.05 crore per year. The new team was named the Sunrisers Hyderabad.

Personnel changes
In October 2012, the teams were allowed to release any number of their players from their contracts to reduce their player costs. The released players would have the option of entering the auction. The players' auction was held on 3 February 2013, where 37 players were sold.

Overseas participation
Availability of Bangladeshi players was put in doubt when the Bangladesh Cricket Board considered not issuing the players with the No Objection Certificates they needed to participate in the tournament. Their deliberation was due to the tournament's dates clashing with the Bangladesh cricket team in Zimbabwe in 2013. Regardless, both affected players, Shakib Al Hasan and Tamim Iqbal, missed the start of the tournament due to injury. Despite the progress on the restoration of cricketing relations between India and Pakistan after the Pakistan national cricket team toured India in December 2012 and January 2013, no Pakistani players were included in the auction. Several South Africans missed the start of the tournament to play in the knockout stage of the Ram Slam T20 Challenge. Shortly before the start of the season, the IPL governing council ruled that Sri Lankan cricketers and match officials will not participate in any matches held in Chennai. This was a result of the growing political tensions concerning the ethnic conflict between the Sinhalese and Sri Lankan Tamils. The anti-Sinhalaese sentiments from the people of Tamil Nadu raised security concerns for Sri Lankan involvement. The decision was

made after Jayalalithaa, the chief minister of Tamil Nadu, wrote to the Prime Minister of India requesting the ban. Other than the Chennai Super Kings, the franchises were not in support of the decision as they believed it offered Chennai an added advantage in their home matches. Chennai's Sri Lankan players hold secondary positions in their team while some Sri Lankans in other teams play key roles and their absence in those matches would affect their team strategies. Another concern was with how the decision did not follow the precedence of moving the matches to a different venue. However, the playoff matches originally scheduled to be held in Chennai were later relocated to Delhi.

FUNDING PATTERN OF THE IPL AND THE FRANCHISEES:

Entire Expenses of running the IPL tournament are met by BCCI. The Franchisees are responsible to meet the expenses of the players in the team, 12 travel, marketing and all costs associated with staging costs for the matches. The income derived from Media Right and sponsorships are shared with the Franchisees as envisaged in the franchise agreement. The Franchisees have to pay the BCCI an annual franchisee fee which BCCI distributes to the Associations as subvention. Apart from this, the income generated towards sale of tickets and local advertisement goes to the franchisees to meet the costs. It is the responsibility of the franchisee to pay for their players whether Indian or foreign as per the agreement with the players. Beverages and snacks major PepsiCo India is planning a slew of marketing initiatives, including making fans meet celebrities, during the IPL 2013. Fan initiatives during Pepsi IPL 2013 include in-stadium 'Pepsi VIP Box', which will provide a unique viewing experience to cricket fans who may get to share the space with their favourite celebrities and more, PepsiCo said in a statement. PepsiCo, which had won the title sponsorship of the IPL for Rs 396.8 crore for the next five seasons starting 2013, will also be conducting other consumer engagement initiatives, including fans playing Pepsi Tweet20 tournament on Twitter. "...For us this (IPL) is a perfect platform as it provides wider reach and engagement opportunities with our core target audience in the peak beverage season," PepsiCo India, VPbeverage marketing, Deepika Warrier said. She added that from interactive contests and engagement in-stadia, on-air and online to product and branding innovation, everything is designed to provide the ultimate sporting experience.

"We are confident of making this edition of the Pepsi IPL the most thrilling and engaging event this year and in the years to come," Warrier added. The company also plans to come out with a '500 ml Fan Can', priced at Rs 35 during the IPL season. The IPL season for 2013 ends on May 26.

CONCLUSION:
I sincerely thank our Professor Mr Dinesh Agarwal, for giving me a chance to work on this case study. This case study helped me to understand the functional structure, tax implications & exemptions and the business flow of Indian Premier League. Though Indian Premier League is to entertain people, it has flow of cash hence can be related to a huge business. As every business is associated with protocols and tax policies, IPL is also governed under structured policies.

BIBLIOGRAPHY/ REFERENCES:
1. 38TH REPORT: STANDING COMMITTEE ON FINANCE (2010-11) FIFTEENTH LOK SABHA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) TAX ASSESSMENT/EXEMPTIONS AND RELATED MATTERS CONCERNING IPL/BCCI . 2. NDTV: Sports 3. dreamcricket.com: IPL and the Mauritius connection 4. IBN LIVE-SECTIONS: Winning is not the only thing for IPL franchises 5. Indian Premier League A Dummies Guide (http://www.labnol.org/tag/ipl/) 6. Wikipedia- Indian Premier League 7. Cricket World 4 U