PSL salary cap reduced to minimise franchise losses
In a bid to reduce losses incurred by PSL franchises, the PCB has reduced the salary cap to assemble a full squad from USD 1.38 million to USD 1.1 million.
PSL franchises have struggled to turn a profit ever since the start of the tournament in 2016. In January this year, the original five - Islamabad United, Karachi Kings, Lahore Qalandars, Peshawar Zalmi and Quetta Gladiators - reported losses of PKR 200 million to 700 million (USD 1.4 million to USD 5 million approx) after just the first two seasons.
The PCB met with representatives from all six teams on Monday and, in addition to bringing down the salary cap, it also exempted them from paying their bank guarantee, a combined value of USD 14.51 million, ahead of the 2020 season.
"We had fruitful discussions with our valued partners and we have found a way forward," said PCB's Chief Executive Wasim Khan. "In the days ahead, our preparations for the HBL PSL 2020 season will continue in full swing, we are committed to staging the entire edition in Pakistan and the franchises are on-board with us."
ESPNcricinfo understands that the change to the salary cap happened after an understanding that a majority of the players who play the PSL participate in other franchise-based T20 leagues for lower wages. In addition, the squad sizes were reduced from 21 to 18, meaning the higher salary cap could be brought down without negatively impacting individual players. Besides, ESPNcricinfo understands the upper limit for the capt had never fully been utilised, further lessening the impact of the change.
PCB had earlier classified the US$ 1.38 million purse into five categories: Platinum (USD 570,000), Diamond (USD 270,000), Gold (USD 180,000), Silver (USD 140,000), and Emerging (USD 25,000) with provision for an extra USD 175,000 for supplement players.
In comparison, and according to an internal PCB document, IPL franchises spend USD 1.38 million on players, CPL USD 0.764 million, Global T20 Canada USD 0.65 million, while the postponed Euro T20 Slam had a pocket of USD 0.65m approximately.
The financial structure has caused plenty of friction between the PCB and PSL franchises and hit its peak when the board was late in distributing the franchises' share of the revenue generated during the 2019 season. This led to all six owners refusing to submit their bank guarantee. Pushed to a corner, the PSL's general council met in Karachi along with PCB chairman Ehsan Mani to deliberate on the matter. Qalandars and Multan Sultans were represented by their owners themselves while the rest of the teams sent proxies.
The falling value of the Pakistani rupee against the US dollar has been another bone of contention. At the time of signing the franchise agreement in 2016, the exchange rate pegged the Pakistani Rupee at 105 to the dollar. That value has now slumped to 154.
In what could be seen as some consolation for the owners, the PCB has agreed to lock this conversion to PKR 138.50. Further, the PCB will engage with a consultant to evaluate the financial model and advise the PCB to find a middle ground.