Bengaluru FC writes to Ambanis amidst increasing financial losses

Bengaluru FC owner Parth Jindal has written a letter to Indian Super League (ISL) founder and Football Sports Development Limited (FSDL) Chairwoman Nita Ambani in an effort to seek guidance regarding the long-term progression of the league. The Indian Express reports that Jindal has mentioned in his letter that the club is incurring losses in excess of Rs 25 crore every season apart from raising concerns regarding the ‘fragile financial condition’ of the league as a whole.

The expenses have increased even further this season with additional costs of maintaining the bio-secure bubble as well as constant testing of the players. On the other hand, the lack of ticketing revenue and reduced sponsorship money due to the ongoing pandemic has meant that almost all the teams are faced with drained financial resources. The Reliance Foundation has also suspended its youth subsidy of up to Rs 2 crore that it grants to the qualifying teams, adding to the owners’ woes. “Not having ticket revenue, losing out on sponsorships as well as the additional costs due to maintaining the COVID bubble have resulted in losses increasing dramatically,” Jindal wrote in his letter.

Ahead of the start of the 2020-21 season, the teams had requested FSDL to reduce the franchise fee in view of the financial situation post lockdown. It has to be mentioned in this context that the major income for the teams is usually from a share of the central revenue pool. However, that is usually evened out due to the aforementioned franchise fee and other major expenses like player wages and logistical costs. Therefore, without a large corporate backing them, it is becoming increasingly difficult for some of the teams to balance their books.

This is compounded by the fact that there is no broadcast revenue for the teams to bank now. What is probably the biggest source of income for clubs around the world does not apply to ISL sides as the main broadcasters, Star Network, are also co-owners of the league. That situation may have to be looked at in three years’ time when the 10-year ownership cycle ends. Moreover, Jindal feels that not enough is being done to stop teams from finding loopholes in the prevalent ‘salary cap’ system which aims to keep a check on the teams’ spending power. “The already fragile financial health of the ISL has been worsened by the suspension of the youth subsidy usually granted by Reliance Foundation to qualifying teams and inadequate sanctions being imposed on teams flouting player salary cap rules using one loophole or another,” he wrote in the letter to Mrs. Ambani.