After this bid, I don’t have money to take you guys out for lunch,” Uday Shankar, CEO, Star India, joked with his colleagues on Monday, just after winning global media rights of the Indian Premier League for the next five years. Star India won media rights for Rs 16,347.5 crore — stumping a dozen other technology, media and telecom giants — with its global composite bid. Later, in an internal communication to his staff, Shankar says, “It is in the DNA of this great company to take very few, but very big, risks and then go about executing them relentlessly in a very disciplined manner.”And while it is a very big risk — Rs 54.5 crore per match — a back-of-the-envelope calculation based on long discussions with experts from media, distribution and the sports industry shows that Star India may earn Rs 18,000-20,000 crore in the next five years from IPL . Many in the industry say the task is challenging, but it’s not impossible to make money, even at this price.“While it will make losses in the first two years, on a five-year horizon, it may recover the cost and make money too,” adds a sports marketing executive.Those backing the optimistic case say IPL is the single largest and most impactful media property in India, one that has been attracting very high viewership across demographics, every single day for 50 days for the last 10 years.To put things into perspective, there are three revenue streams — television advertising, distribution (payout from cable and DTH operators to the broadcaster) and digital (advertising and subscription). As Star India has won the global rights, it will also be able to syndicate its rights in territories where it does not have a presence.Incumbent television rights holder, Sony Pictures Networks India (SPN), clocked advertising revenue of Rs 1,300 crore from IPL10 (2017), compared to Rs 400 crore in the first year (2008).Advertising revenue has seen year-on-year growth, except in 2013, when the total number of matches were reduced. In the digital space, revenues have more than doubled every year in the past three years, with Hotstar clocking Rs 150 crore from digital advertising in IPL10.“Advertisers have been paying a premium for IPL and they will have to continue to pay. Even at a 20% increase over the current figure, it will get Rs 8,000-10,000 crore from advertising alone (over five years),” says Sandeep Goyal, founder, Mogae Group.A typical IPL match has ad inventory of 2,300 seconds. In IPL10, SPN raised spot rates by 15% to Rs 6.25 lakh per 10 seconds, which did not deter advertisers. Among sponsors, co-presenting sponsors paid Rs 5.2 lakh for 10 seconds, while associate sponsors’ payout was at Rs 5.75 lakh.Nandini Dias, chief executive at media agency Lodestar UM India, feels that because of the sort of bid it has made, Star will have to increase ad rates by over 200% — or Rs 15-17 lakh per 10 seconds — to recover cost. “But considering current market conditions and the GDP, it is to be seen if the market is ready to accept such inflation,” Dias says.However, Star India believes advertisers are ready to pay a premium for impact properties. When asked if advertisers will be willing to pay Rs 15 lakh per 10 seconds, Shankar tells ET, “If they want to advertise, they will... The market has clearly stepped up.” He adds that the market is getting polarised as “premium assets are getting very high inflation, while the discounted end of the market is getting even more discounted.”Peter Hutton, chief executive, Eurosports, says, “I think it completely makes sense for Star to buy all rights, both broadcast and digital. I believe the gap between broadcast content and digital content will narrow over the next 5 years; it’ll just be about getting a stream to a screen.” The pan-European sports network is owned by Discovery Communications.“It was a very smart bid,” adds Mogae’s Goyal. “There is no rocket science to it. Star will easily be able to make Rs 20,000 crore in five years.”According to Indranil Das Blah, founding partner at sports marketing agency Kwan Entertainment & Marketing Solutions, the task ahead is challenging, but not impossible. “Star should be happy with the win. There is a big demand for IPL and it has grown continuously, year-on-year. It also gives Star complete ownership of cricket in India.”While advertising revenue is a challenge, Star India may have to be aggressive with distribution platforms like cable and direct-to-home companies. Some distribution experts say SPN will see a major haircut in its distribution revenues because of loss of IPL, which will be Star’s gain. Experts believe that Star India, with its much stronger bouquet and other cricketing rights, will be in a position to exploit these rights.As per industry estimates, SPN earns around Rs 2,000 crore as distribution revenues, of which a major chunk is because of IPL, though the company has never disclosed its sports-related distribution revenues. Also, Ten Sports, which SPN acquired from Zee Entertainment Enterprises (ZEE), used to earn Rs 400 crore from distribution. “The challenge before Sony will be to retain Rs 2,400 crore in the absence of any driver property, unless it wins BCCI media rights next year. If not, almost Rs 800-1,000 crore will be shaved off Sony’s distribution revenues and most of it will go directly to Star,” says a senior executive of a multi system operator (MSO), who did not wish to be named.Goyal adds, “Because of its monopoly, it can extract more from ground distribution. I am seeing an (additional) Rs 1,000 crore-a-year opportunity for Star, which will bring in an additional Rs 5,000 crore.”Multiple cable and DTH executives ET spoke with agree Star will be looking at a sharp increase in subscription money, but how much they will get is a big question. “They have just won rights and I expect them to renegotiate deals before IPL next year. Problem is, they are already getting a huge share from our collection for their bouquet,” cautions another executive from a large MSO.Last month, Jawahar Goel, CMD of India’s leading DTH company Dish TV, wrote to the Competition Commission of India, Telecom Regulatory Authority of India (Trai), Board of Control for Cricket in India (BCCI) and the information & broadcasting ministry, voicing concerns over Star’s growing control over cricket. Many in the industry feel Goel’s fears are very valid today.A former top boss of another MSO adds that Star stands to gain from a Trai tariff order on the rights of subscribers to pick channels, once it’s implemented.“People will be able to select channels a la carte and most people want cricket more than music, movies and kids channels. With ICC, BCCI and now IPL, do you think they won’t subscribe for Star Sports? Star will definitely gain in those two months of IPL.”Star’s Shankar has already told ET in an interview that he is open to commercial arrangements with telecom operators on the digital front if it helps him monetise IPL. The fact that Facebook, Airtel and Reliance Jio bid over Rs 3,000 crore each for digital rights hints that they might be willing to partner Star as well.Even from Hotstar’s point of view, IPL will drive customer acquisition, not just in India but globally. Star India could have multiple combinations such as providing a delayed feed as a freemium, adsupported model and a live feed under pay model. In developed markets, it may go for pay-per-view, where an IPL package may cost $50-100 per subscriber. “While TV advertising and distribution revenue will be based on how much the ecosystem evolves, the biggest opportunity lies in digital for Star India. It’s a new play,” says a senior sports marketing executive.The global opportunity is evident from the level of competition in markets such as North America, South Africa and the Middle East. Media experts believe Star may syndicate rights in some, or all, of these markets to earn handsome returns. “I would expect Star already to have deals in place with fellow Murdoch-owned Sky for the UK and Fox for Australia, so there is very little risk in their international number,” says a global sports marketing expert.Goyal adds, “The rest of the world (ROW) is a big opportunity, both for TV and digital. There is a big Indian diaspora across markets like the US, UK, Middle East, Africa, Canada, Australia and New Zealand. Cricket connects these Indians to their homeland. I believe Rs 500 crore per year from these markets is not a big deal.”Star India will surely face a lot of resistance from advertisers, distributors and, in some cases, even consumers. Its task is certainly cut out, but not impossible.