Seconds after StarTV popped its $2.55 billion record investment for a five year-long, worldwide television and digital rights for the Indian Premier League (IPL) and deflated its rivals, a cricket maverick in faraway London did some quick calculations.

And then, a message surfaced in the handset of a sports editor in the Indian capital, reading: “The world’s most expensive delivery at Rs 25 lakhs.” The cost of a delivery of an IPL match was calculated on the basis of the cost of the match, pegged at Rs 55 crore.

Speculations have started as to how would StarTV work out its equations to cover its whopping $2.55 billion record investment. The answer, claim highly placed StarTV insiders, lies in the ground rights, digital rights and overseas rights. 

The Star investment happened after considerable time was spent by the top honchos of the Murdoch-owned channel analysing how Sony Television earned some Rs 2100-odd crore from the advertising and ground rights. And also taking into account the sales of feed to countries with a sizeable Indian population.

The rest was a pure gamble by Star, enriching the Board of Control for Cricket in India (BCCI) by a mind boggling bid of Rs 16,347.5 crore that left the rest far behind by Rs. 528 crore. On paper, Star will spend spend around Rs 3,270 cr on the IPL every year for five years. Some of the rivals had an inkling of what Star would bid to crash the ceiling, and they lobbied hard with the Ministry of Sports, one channel even citing issues of “nationalism in protecting cricket from being taken over by foreign channels”. But they found no takers. 

Now, calculations are back on the interactive whiteboards, and it’s all about recovering the investment. Sports cognoscenti claim the potential to push monetisation would be highest at the distribution level, Star is hoping to pick up Rs 1500 crore per season. And then, advertising revenues and digital rights would help the channel pick up another Rs 1500-1700 crore. The rest, actually, is in the hands of Gods.

In 2009, Sony had bought the television rights for $1.63 billion for nine years from the World Sports Group, which had bagged the rights for $918 million from the BCCI for a ten-year period. That cycle came to an end in 2017.

This time, Sony blundered by not bidding for digital. Star bundled it with TV and went for the jugular. Digital is now fetching decent revenues, highly popular among the young and the medium of the future. Star, the previous holders of digital rights in India with a Rs 303 crore three-year digital rights deal (2015-17), knew clubbing it together will add to the reach of IPL. That was solid, smart marketing.

There are indications from the Star stable that the channel is not very gung-ho about the India cricket rights for which they paid Rs 3851 crores for a 2012-18 deal, which also included internet and mobile rights. India has not played some great matches at home, except for two series with Sri Lanka. And the viewership and demand for the series has not been great. Cricket insiders claim Australia’s visit was just about the high point, the South Africa and England series are away from home. 

And then, there is something else to ponder about IPL, which – on the face of it – appears to be more lucrative, thanks to its perfect timing every summer when schools and colleges are closed for their annual vacations. IPL, in many ways, is like a Rock of Gibraltar as compared to the unpredictability of Indian cricket rights. No one knows what’s going to happen — one year you may have Australia and England touring, the next year Sri Lanka and Bangladesh. And even though Test matches get results more often, it’s only for the puritans. T20 sells, Tests don’t. But ICC lays more emphasis on Tests and ODIs. There are a few bilateral T20 games and ICC events only once every two years. 

And the big deal breaker, Pakistan, is no longer a part of the equation, as the ruling NDA at the Centre will not bring them here, nor will the Prime Minister’s Office allow the Blue Billion Express to travel across the border.

So IPL is the new mantra for moolah, it is cricket’s new Money Ball as aptly described by cricket fanatic and ad guru Sandeep Goyal. By his own definition, Money ball was an American movie that challenged old-school selection methods for baseball. In India, IPL is changing the game plan, never mind if its creator is holed up at his home in London.

So lets get back to the million dollar question: How will Star make money? There are indications that for the first few years, Star may not break even but eventually, the channel will be able to square up the cash spent and earn decent revenues, which could even rise to Rs 1800 crore per year. After all, IPL appeals to all demographics and Star will be able to hike advertising rates substantially, offering advertisers the possibility of spreading their ad budgets across multiple sporting properties.

Cricket’s biggest deal in history also threw up some interesting data. For the record, Star was not even the highest bidder in the two marquee categories – Indian television and digital. The highest bid for the Indian television category was Sony’s which had pledged Rs 11,050 crore, compared to Star’s Rs 6,196.95 crore. Also interesting is the fact that Facebook’s bid of Rs 3900 crore for digital rights in India was 170 per cent higher than Star’s Rs 1443 crore, lowest in the category. Strangely, Star and Sony, heavyweights in the television segment, were not even contenders in the digital category where the face-off was between Airtel, Facebook and Reliance Jio, all making bids over Rs 3000 crore.

Remember, digital did not even exist a decade ago. 

Star remains confident it will rake in the moolah. Some of the biggest names it is eyeing are Reliance Industries, operating in the scale of Rs 2,65,000 crore, Maruti at Rs 77,000 crore, Airtel at Rs 62,000 crore, ITC at Rs 55,000 crore and Hindustan Unilever, operating on a scale of  Rs. 35,000 crore upwards.

Some of the biggest push to the Star kitty will definitely – come from these giants, never mind routine warnings from market pundits screaming how television advertising rates are in the doldrums for years. Star knows advertisers are willing to pay for cricket and it will surely extract the best value.

Why not? Star, the new owner, has more muscle to display. They are in a monopoly which will impact the distribution to multiple-system operators and direct-to-home and get extra cash from cricket fans. But cricket will – eventually – work in India. Goyal has an interesting take on the whole issue. He said, “The cricketing rights may look expensive but we have seen this happen in telecom and we can see this happen in broadcasting too: the higher you go, the farther you see.”

I agree.