MUMBAI:Default on franchise fees from one of the six team owners in the inaugural edition of the X1 Racing League is the reason for the delay in payment of fees to senior professionals and the production company who worked on the event in end-2019, organisers of the league said Thursday.
Speaking to SportzPower, the CEO of the league, Abhinandan Balasubramanian, and co-promoter, Armaan Ebrahim, said that the defaulting team owner had promised to clear all dues in January 2020, and had given seven cheques which were to be encashed over a period of time.
However, none of the cheques cleared, and one cheque given to the production company, Sportzworkz, also bounced, Balasubramanian asserted.
Reacting to SportzPower's report on the league facing legal trouble, the organisers said that they are in talks with the team owner to clear all dues and there is every likelihood that the funds would start coming in from mid-August, and the league would be able to start clearing the dues owed by them.
Explaining the financial model, Balasubramanian said the league had raised money from multiple investors and sponsors which were utilised for central expenses such as marketing, operations, while the franchise fees paid by the team owners was responsible for team-related expenses.
Each team owner was to pay Rs 450 million over a 10-year period, but it was not Rs 45 million in the first year as the payments were structured in an incremental manner, Balasubramanian said. The default by one owner in an event with a tight budget upset the calculations leading to non-payment to the production company and other professionals, he said.
"We are not fly-by-night operators. We are right now working on our next edition. The intention is to clear all dues. And we would have started doing it beginning January itself, but we could not encash any of the cheques given to us by the team owner. They have had cash flow problems and we are in regular touch with them to get the money in. Most of the other payments to be made by this team during the event were also paid by the league since the team owner had expressed his inability to do it then itself," Balasubramanian added.