- The Board of Control for Cricket in India (BCCI) will walk home with ₹48,390 crore after the record-breaking bid closed on June 14.
- Now, after the last auction,
IPL the value is up 3x to ₹48,000 crore meaning franchises will get a bigger profit drop from BCCI. - From
Mumbai Indians to Chennai Super Kings, here’s howIPL Franchises make money from different sources.
The Indian Premier League is probably one of the few companies in India that remains unaffected by rising inflation, a global pandemic and rising interest rates. After the recently concluded media rights auction, money is going to rain for its franchises.
The Board of Control for Cricket in India (BCCI) will walk home with ₹48,390 crore after the record-breaking bid closed on June 14. With this, India’s biggest sporting event has witnessed a 3x increase from the previous cycle, with the National Football League ahead by a narrow margin at $17 million.
Disney-Star held the rights to television for 23,575 crore, while India’s richest man Mukesh Ambani’s Viacom18 took home two and a half bundles for ₹23,750 crore, including digital non-exclusive digital rights and a few international countries. New winner Times Internet shared the international mandate with Viacom18.
Aside from the media winners, the two biggest beneficiaries of the recently closed auction would be the IPL teams and their franchisees.
The Economy of IPL
BCCI collects huge revenue from broadcasters and Over-the-top (OTT) platforms by selling media rights. It withdraws its share and much of its revenue is then shared with the IPL teams.
Franchises get a guaranteed 40-50% revenue share (share of ₹48,000 crore for the next cycle) from IPL’s central contract revenue pool. The final winning team of the season will take home the bulk of the BCCI winnings.
Now, after the last auction, the IPL value has increased by 3x to ₹48,000 crore, meaning franchisees will get a bigger profit reduction from BCCI.
According to financial consultancy Elara Capital, the average revenue of all IPL teams is likely to double in the next five years.
For the next cycle of IPL 2023-2027, 10 teams will enter the battlefield, including two new teams Gujarat Titans and Lucknow SuperGiants.
The fee and revenue share for high demand teams like Mumbai Indians, Chennai Super Kings, Delhi Capitals is more than others as they have better earning potential – both in terms of sponsorship and gate receipts.
Elara Capital forecasts that after the recent auction, Mumbai Indians’ revenues will rise 109.1% from 3,836 million to ₹8,020 million and Chennai Super Kings will see their revenues increase by 124.9%.
On the other hand, Royal Challengers Bangalore and SunRisers Hyderabad will see the biggest increase at 133.8% and 138.4% respectively than their previous revenue collection.
Among the publicly traded companies behind major franchises, Sun TV Network, Reliance Industries and United Spirits will see growth in market capitalization as the value of their IPL teams improves.
According to a recent poll conducted by
Stocktwits51% are optimistic about media stocks after the
IPL franchises also earn from brand sponsorship, prize money, ticket revenue and merchandise sales.
Brand sponsorship
Aside from the media revenue discussed above, IPL franchises generate a significant portion of their revenue through brand sponsorship.
Franchises partner with brands to make the brand visible by endorsing their logos on their jerseys, headwear and team kits. The bigger the logo, the more the money brand has to pay.
Teams also earn from other tournament-related marketing activities organized by their sponsors. Sponsorship income reportedly rounds out
20-30% of revenue for an IPL team.
ticket sales
The global pandemic hit India’s biggest sports gala in 2020 and 2021. However, this year it was back with a bang.
Now that the stadiums are full of spectators again, a small part of the ticket sales will go to sponsors and the BCCI, the rest will go into the team’s wallet.
Ticket prices are determined based on the stadium’s capacity, the excitement surrounding the event, the standard of living in the city, and so on.
Ticket revenue is said to make up about 10% of revenue for IPL teams.
Prize money
BCCI offers a colossal prize money to the winning team. In 2018, IPL champion Chennai Super Kings took home a prize of 20 crore
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Merchandise sales
According to a ResearchAndMarkets report, India’s sports equipment and apparel market is estimated to be worth $28 billion in 2022 and $40.6 billion in 2027.
Each franchise sells merchandise, including T-shirts, caps, wristwatches, and so on, and gets a portion of the money raised from consumers.
