Business Times

Controversy over costs and revenue of IIFA

By Bandula Sirimanna and Duruthu Edirimuni Chandrasekera

In its over-enthusiasm to attract more Indian tourists and build the Sri Lankan image as a major tourist destination following the end of the conflict, Sri Lanka spent a total of Rs 1.1 billion Sri Lanka rupees to host last week’s International Indian Film Academy (IIFA) awards in Colombo, of which over Rs 850 million has been provided by the Treasury while the balance came from sponsors, according to figures compiled by the Business Times (BT).

It was unclear however as to whether IIFA organiser, Mumbai-based Wizcraft International Entertainment paid part of the bill or nothing at all. During earlier occasions, in the conduct of the IIFA awards in other countries, IIFA has spent around Rs 840 million per event. In Colombo last week, Wizcraft Director Sabbas Joseph told the Business Times that while the total project cost (holding the IIFA) was estimated at $19 million (Rs 2.1 billion), there was little (financial) benefit to IIFA.

According to Deputy Economic Development Minister Lakshman Yapa Abeywardena, the government spent Rs 850 million of which Rs 400 million was approved by the Treasury as an expense. The minister, at a press conference, also said another Rs 400 million was spent on renovating the Sugathadasa Indoor Stadium including fixing a new air conditioning system and cushioning around two thousand seats in the auditorium. But he didn’t reveal that this part of the expense came as a loan from a state bank.

Another figure that has not been mentioned but obtained by the Business Times was Rs.250 million which came from the main sponsors of the event – industrial conglomerate Videocon and Indian mobile phone company Micromax and several local sponsors. Thus the figures compiled by the newspaper show that the total cost of the event was made up of: Rs 450 million from the Treasury, a Rs 400 million loan to refurbish the stadium and Rs 250 million from sponsors making up the total of Rs 1.1 billion.
Additionally the Colombo Municipal Council (CMC) spent Rs. 75 million to prepare the city through repairing and renovating roads and roundabouts, a senior CMC official. The Ceylon Electricity Board and the Defence Ministry bore the cost of providing power to the Stadium and handling security arrangement for celebrities.

Both tourism authorities and IIFA organisers say the return to Sri Lanka in terms of publicity, increasing tourism revenue and possible Indian foreign investment is huge and far outweighs the ‘investment’ in the event. Mr Joseph said Sri Lanka received US$ 60 million in terms of advertising visibility in addition to the Rs.1.5 billion worth of publicity from international media through the IIFA Colombo show televised to 600 million viewers in India and across 120 countries on June 4.

Wizcraft’s Joseph did not give a breakdown of the cost to stage the event but said it was US$ 19 million. This cost included artistes’ travel, their performances at IIFA, their stay, etc. Asked what percentage of this cost was spent by the Sri Lankan government and Indian organisers, he said that this information will not be divulged. “We will not share that with you,” he told the Business Times.

“During the three days it was held, about 5,000 to 6,000 room nights were taken up in your hotels,” he said, adding that the film stars spent colossal amounts of money on shopping, casinos and partying. He also noted that Bollywood producers are trying to invest in multiplexes in Sri Lanka. “Because IIFA happened here, there are a host of Indian businessmen who are discussing many business projects such as BPOs, manufacturing units, etc.,” he added.

The Sri Lankan government has said the return on investment is estimated at Rs 4 billion in terms of proceeds from higher tourism arrivals from India, among other potential income. According to other figures compiled by the Business Times, IIFA organisers earned revenues of between Rs.192 million to Rs.240 million in the pre-IIFA award events in Colombo. These profits were made from selling the media rights, including telecast rights, Internet rights, among others -- and partly from sponsors and sale of tickets. IIFA’s overall earnings is expected to reach at least Rs. 540 million, BT figures show.

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