How IPL Business Model Works

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IPL is a professional league of Twenty20 cricket competition. It was founded in the year 2008 by the Board of Cricket Control India (BCCI).

There are 8 teams in this league:

  1. Chennai Super Kings
  2. Delhi Capitals
  3. Mumbai Indians
  4. Kolkata Knight Riders
  5. Sunrise Hyderabad
  6. King XI Punjab
  7. Rajasthan Royals
  8. Royal Challengers Bangalore

The games are played in a Double Round Robin League format – where each team plays the others twice. Then there are playoffs – knockout games towards the later part of the competition among winning teams.

The tournament is huge and its collective brand value stands at a mammoth $400 billions! (2020 stats)

The individual team’s brand values are as follows –

Chennai Super Kings – $72 million
Munbai Indians – $72 million
Kolkata Knight Riders – $69 million
Royal Challengers Bangalore – $51 million
Rajasthan Royals – $45 million
Delhi Daredevils – $40 million
Kings XI Punjab – $32 million
Sunrise Hyderabad – $25 million

How IPL management generates money

Sponsors

The main IPL event has many high profile sponsors willing to cash out big money to sponsor the event. The official BCCI IPL sponsors include names like Dream11, Unacademy, Rupay, CRED, Upstox and Tata Safari. These groups will pay Rs 210 crore to the BCCI as the official IPL sponsor fee.

Tickets

Tickets are another major source of income for the IPL. Each team gets 14 games, 7 at home and 7 away. These games generate ticket sales in huge numbers as cricket is a popular game in India. A major chunk of these ticket sales are however passed on to the teams playing.

Media Rights

The BCCI sells the media rights of the event to highest bidder. In the first audition Sony TV acquired the rights and made a handsome Rs. 8230 crore profits in 10 years. The current incumber Disney owned Star India is also projected to make a profit.

The media rights include, broadcasting rights in TV and Digital media.

For the current year 2022, the media rights of the IPL will bring in about Rs. 40,000 to Rs. 50,000 crore, which is huge and there are some doubts in some quarters about the profitability of such investment.

Franchisee Cost

BCCI sells franchisee for IPL. Since inception it has sold rights to 10 franchisee at Rs. 6000 (approx) crore and this year (2022), they will add two more franchisee at around Rs.12,000 crore.

These franchisee are owned by single or multiple people and they pay BCCI in crores to own the franchisee rights.

Cost of IPL franchisee till date –

Inaugural Year – 2008
Mumbai Indians – 447.6 crore
Royal Challengers Bangalore – 446 crore
Deccan Chargers – 428 crore
Chennai Super Kings – 364 crore
Delhi Daredevils – 336 crore
Kings XI Punjab – 304 crore
Kolkata Knight Riders – 300 crore
Rajashthan Royals – 268 crore

Then in 2011, BCCI added 2 more franchisees –
Kochi Tuskers – 1533 crore
Pune Warriors – 1702 crore

And in the year 2022, another 2 franchisees were added –
Gujarat Titans – 5652 crore
Lucknow Super Giants – 7090 crore

How IPI franchisees make money

The main source of revenue for IPL teams comes from the media rights. Some 50 – 60 % of the total revenue of teams come this way. The BCCI sells the media rights to the IPL games to interested parties for a duration. First it was the Sony TV company, next Start TV. Currently they are planning to sell the rights at a humungous Rs. 40,000 crore – Rs. 50,000 crore.

This revenue from the media rights gets shared among BCCI and the participating teams.

The title sponsorship also brings in revenue for the teams. Currently TATA group is the title sponsor and they pay Rs. 335 crore every season for two years to BCCI. This amount gets shared 50 – 50 between BCCI and the teams.

Ground ticket sales are another way teams make money. Cricket is hugely popular in India and the venues of the games attract sizeable attendants. Some 80% of the tickets sales goes directly to the participating teams and the rest to BCCI.

Brand sponsorship is another way IPL teams make money. Franchisees, which partner with brands, sign contracts to show their logos on team kits. This generates about 20 – 30 % of their revenue.

IPL teams can also sell merchandise and generate revenue. They sell T-Shirts, Kits, Caps and Wristwatches during the event and make some tidy income in the process.

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