LAHORE: The Pakistan Cricket Board (PCB) has been left red-faced after its confidential letter to the Punjab state government which contained consolidated financial statements of all Pakistan Super League (PSL) franchises for the 2016 and 2017 season, was accidentally sent to all of them and leaked to the media, ESPNcricinfo reports.
As per the letter, all the teams have complained about the taxes that they are required to pay for their franchise fees. The fees constitute 30-91% of the total costs a franchise incurs. With the tournament not played in Pakistan but the United Arab Emirates (UAE), the PCB has requested the Punjab government to grant tax exemption to the board, sponsors and the franchises until the board can completely succeed in hosting the entire tournament in the country. This is expected to be for a period of five years.
“The PCB is currently invoicing franchises by adding up Sales Tax [16%] amount which is recovered by PCB from the franchises,” PCB chief operating officer (COO) Subhan Ahmed explained in the letter.
“In addition to the above, the Federal Government’s withholding tax currently chargeable at 10% of the franchise fee is also levied by the PCB and deposited with the Federal Board of Revenue. The amount of franchisee fee plus taxes adds to the financial hardships of the franchisee who in addition to these, also incur costs of players’ match fees, logistics etc in the UAE and Pakistan. Thus it adds to their financial burden since they are incurring heavy losses.
“PSL is still in its nascent years and unless measures/steps are taken to protect the brand there is a risk that the franchisees will start pulling out of the PSL. We have already have one such instance when Multan Sultans team’s contract had to be terminated on account of failure to meet their financial obligations.”
It is believed that the Multan Sultans, which got disbanded late last year, could not keep up with the weakening Pakistani rupee (PKR) vis-à-vis the US Dollar. The defunct franchise suffered losses worth PKR 400 million ($2.88 million) in the only season it participated in 2018.
All the PSL franchises pay their fee to the PCB in dollars, aggravating the issue further.
With the exception of the new Multan franchise, the rest of the lot namely Peshawar Zalmi, Lahore Qalandars, Islamabad United, Quetta Gladiators and Karachi Kings have played in all the three seasons of the competition so far.
Amongst these five, Peshawar is the only franchise which managed to reduce its losses in 2017 to PKR 20.15 million ($145,000) from PKR 237.23 million ($1.7 million) in 2016.
Lahore is said to the worst performing both on and off the field, with its losses creeping to PKR 421 million ($3 million) in 2017. On the other hand, Quetta Gladiators could be considered the most consistent in both the aspects, with the least losses in the first two years, i.e. PKR 46.5 million ($335,000) in 2016 and PKR 63.5 million ($457,000) in 2017.
Two-time champions Islamabad United and Karachi Kings recorded losses of PKR 242 million ($1.74 million) and 61 million ($440,000) in 2017 respectively.
However, the league’s brand value continues to be attractive to stakeholders as it is set to receive $36 million, which is a whopping rise of 358% in terms of broadcast rights revenue for the next 3 years. The PCB had also sold the title sponsorship rights recently to HBL worth $14 million.
The tournament will once again have six franchises as the PCB confirmed the new Multan team owners, a consortium of investors led by Pakistani businessman Ali Tareen who have agreed to pay $6.35 million as franchise fees, making it the most expensive in the history of the competition.
