Impact of IPL on Indian Economy

Shruti Jalan Shruti Jalan Anik Banerjee Anik Banerjee
Mar 23, 2022 10 min read
Impact of IPL on Indian Economy

There are over a billion cricket fans in the world and 90% are Indians. Whoa!

With that kind of following, one can't complain that cricket is called a religion by millions in India. But guess what, there's a bigger religion with the biggest fan following in the world - money, moolah or currency!

Apparently, BCCI (the richest cricket body in the world) fancied this in time, founded the commercial format of the game in the form of Indian Premier League (IPL) in 2007 and IPL became cricket's most glitzy, glamorous festival. Add to that, its association with the entertainment business and corporates is something that added more fuel to the cricketing carnival. Today, this sporting event moves and shakes the economy beyond words.

IPL - Finest avatar of cricket?
The real game
Lets get back to serious business
BCCI, franchises or players - the bigger beneficiary?
What does the government get?
Okay, but how does IPL affect your and my economy
An uncomfortable fact
Lets team up this season - on and off the field

IPL - Finest avatar of cricket?

We are a religious nation but also a secular one. So, while some of you will devote yourselves to your favorite deity (player/team), the not-so-religious ones can keep up their excitement by following IPL's money trail, or in other words, the direct/indirect impact IPL has on our economy. It is no less interesting than the matches themselves. Follow through the end to know-how.

A little flashback first - The Indian Premier League aka IPL cricket championship began in 2008. It has a '20-over' format, hence called Twenty20 (T20) tournament. Currently, it has already passed the 14th season in 2021, which concluded with Chennai Super Kings, who took the 14th IPL winner award, as the 4th title home. The IPL tournament constitutes eight teams, where each team is set to play two games with each of the other competing teams, totaling 60 matches over a month and a half.

Basically, this professional sports league has been conceptualised on the lines of the famous UK/American leagues such as the English Premier League, NBA, MLB, NFL et al. The frenzy behind is no less.

Now let's talk numbers because what is cricket without it. Hang on, we are not going to discuss cricket scores or static stats like run rates, most centuries, or ducks that are overdone anyhow, but instead lay out some dynamic economic data.

● Β  IPL brand value: $4.7 billion, which has noted a 7% rise, as per the February 2022 reports.

● Β  The highest source of income: Media rights, which make up for 60% of its revenues.

● Β  Team with the highest brand value: Mumbai Indians (MI), the value of which has increased by 13% to become $79.5 million.

The real game

Can you guess how many Pani-puris or Pizzas are sold during a match? No idea? Okay, what kind of creative lies do men invent to skip how many productive work hours to watch a match? Can't say? Fine, at least how many memes, jokes and posts are created during IPL? Duh! Are you even serious?

Alright, the cricket craze hasn't stumped us that bad. We were only checking your entertainment quotient. After all, it's the fun persona of cricket branded as IPL, that we will talk about.

Yeah, so let's show you some real economic figures. From 100s of crores poured in annual auction of players or million and billion dollar deals signed amongst BCCI, sponsors, global media houses, advertisers, etc., not to mention the heavy business activities that take place during and around an IPL championship. Money just flows across various sectors for this Kumbh of cricket. This results in a solid boost in the finances of not only the players, the BCCI, the mammoth size corporations, but also of the government as well as the nation.

(Well, we won't disappoint you in any way, so check out the best few memes/ jokes/ tweets on IPL towards the end)


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Lets get back to serious business

We like the American yardstick a bit too much. So, here's a comparison of the salaries of our players with top US league players.

Average annual player salary in the sports industry
Average annual player salary in the sports industry

Wow! IPL is second on the list, right under NBA (National Basketball Association). However, we already knew that our cricket/IPL players are awarded pretty handsomely.

Although cricket falls too low in popularity among other global sports like football, basketball, baseball, hockey, etc, but hey, as promised we are only talking about the economics of the game and there we don't fall too behind.

BCCI, franchises or players - the bigger beneficiary?

BCCI earned INR 4,000 crores from IPL 2020, according to its treasurer. This means every cricket fan contributed 40 rupees. Actually! So, be proud, because you're not just a passive viewer but an active participant in the economy. Need further proof? Well, the TV and media rights of IPL has been sold for a massive 2.3 billion dollars approximately (INR 16k+ crores) to Star Network.

Here are a few more fantastic figures vis-a-vis IPLs that you can use to tickle your imagination or just revel in delight while you enjoy a match.

● Title sponsorship - Tata Group has replaced the Chinese phone maker Vivo as title sponsors for the 2022 and 2023 seasons of the cricketing phenomenon. Vivo was reportedly booked earlier as title sponsors for the period of 2021-2023, which is why Tata will remain the main sponsor with Vivo next in line, with 2 remaining years of contract with them still.

● Β Media rights - While we have seen BCCI selling the media rights to Star Sports for INR 16,347.5 crore for the global broadcasting rights i.e. TV & digital for 5 yrs (2018-2022), the cricketing body is now mulling over the expansion of broadcasters where the others will also share the rights in 2022. The deal value for the media rights in the previous installment of IPL is 1.5X from that of the year before. Well, this leap of faith is backed by guaranteed advertising revenues these media giants get. By the way, IPL 2021 ad revenue was calculated at INR 2,950 crores, only in TV advertising.

● Β Ticket sales - Nil for 2020 as well as 2021 as both seasons were held behind closed doors due to COVID19. Nonetheless, on-air sponsors have multiplied every year and thus the money came pouring from them. Over 10 sponsors, big and small, strike multi-crore deals with each franchise. The rising digital viewership is certainly set to more than offset that loss. However, the IPL 2022 matches are estimated to have a seating capacity of 25%, and the ticket sales have already started going live from 12 pm on March 23, 2022. Β 

● Β Sports/cricket tourism - 100% loss again! This is one sector that has suffered immensely and globally since the onset of the coronavirus pandemic. So, one can't really factor it in here. However, with growing relaxation of the pandemic-induced rules, we might see some tourism in 2022.


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What does the government get?

No one said that religion was just about finding God? It is also about deity worship, rituals, festivals, and much more. Take a hint from it and admit that cricket too isn't just about fitness and health anymore. It is also about entertainment, business & fun. The government of the day realised it and brought IPL's income under the tax net.

Income means taxes and taxes mean revenue for the govt. Did you know BCCI was considered a charitable organisation under the IT act, thus, paid zero taxes? Govt took away that privilege in 2012 from BCCI & declared IPL as a commercial activity hence taxable. Although BCCI hasn't accepted it to date.

Whilst fist-fighting with the Govt on this issue in the background, BCCI has paid little over INR 460 cr to settle tax dues (of an earlier assessment year) in September 2019. However, with 400 million viewers and 400 billion viewing minutes recorded last season, perhaps it'll have to pay up the balance dues which is close to INR 1300 cr. After all, taxes are a necessary evil.

Okay, but how does IPL affect your and my economy

Good question but a little premature. Happy to explain because that'll affect my bank balance or say the economy positively. See! That's how the economy in essence works. There are no free lunches. Likewise, when those big brands like Royal Stag, Flipkart, Vivo, Jio appear on your screen in the middle of an exciting match, you may not like it much but the brands have knowingly or unknowingly made an impression on your mind. With repeated such displays, you tend to remember the brand name for a long. That's how they increase their customer base. Boom! The brand sales might hit the roof and you may think that you just bought one beer to cheer.

What about the sponsors whose names show on your fav player's (deity) jersey/cap/bat or placed on the field and other conspicuous places? They get the desired visibility and attention for their brand.

It is not just these purchases and just the sponsor companies that benefit from the IPL excitement. Other businesses and sectors also gain from the festive mood revolving around the religious sport of India, cricket, and cheer too. This is because economic activities always have a ripple effect. For instance, if you are a YouTuber, create content around cricket/IPL & cash it on. If you are an SM marketer, an influencer creates that perfect meme that goes viral faster than any known virus to mankind.


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That reminds us of the promise to present the best/funniest memes, jokes on IPL. Here -

Because RCB (Royal Challengers Bangalore) hasn't won a single tournament in 13 yrs. Cruel world!

Yeah, I know my teams! This one is for hardcore cricket fans.

Maxwell was picked up by RCB for a magnificent INR 14.25 cr in spite of average performance in 2020. Cool eh?

Chris Morris went under the hammer for INR 16.25 cr which is the highest IPL buy so far. Cricket is all about breaking records, right!


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An uncomfortable fact

Religion isn't just about finding God; it is about deity worship, rituals, festivals and so much more. Take a hint from it and admit that cricket too isn't just about fitness and health. It is also about entertainment, business, and fun.

Let's dig a little deeper. Sometimes religion pushes its followers into fanaticism and fascism. Cricket too has its dark side. Nah, not talking about betting rackets here. Check out this tweet.

This is just to leave you with an afterthought.

Lets team up this season - on and off the field

Cricket is inherently a sport. And a sport is packed with emotions. So without the energy of a live audience cheering for the teams...emotions run dry. We can't be emotionally stuck in the pre-COVID era either or reject changing realities of our times. So how do we keep up the enthusiasm? By consuming some great content, like this one? Let us know what you think! Because we passionately & constantly work to score more & more points from our readers.

Conclusion

To end on a lighter note - 'Stay home, stay safe' was and is the mantra of the pandemic age, and if you choose otherwise, then take adequate precautions while going out and remaining outdoors. 'You could cheer for Dhoni or AB de Villiers, so long as you stay fit until next year!' may be your mantra for IPL 2022, which is starting on March 26, 2022. So, let's have a field day!

FAQs

Is IPL good for Indian economy?

The IPL teams earn revenue through their sponsors and the sale of merchandise of their kits and garbs. To sum it all up, IPL has an impact on the Indian economy as it produces numerous employment opportunities.

How much does IPL contribute to Indian economy?

The brand value of the IPL in 2019 was $6.7 billion, as per the Duff & Phelps report. According to BCCI, the 2015 IPL season contributed β‚Ή11.5 billion (US$160 million) to the GDP of the Indian economy.

How much is IPL worth?

The brand value of the IPL, as per the reports dated February 2022, is $4.7 billion, which witnessed a 7% increase lately.

When is the IPL 2022 starting?

IPL 2022 is starting from March 26, 2022, as per the reports.

When will IPL 2022 end?

IPL 2022 will be ending on May 29, 2022, as per the reports.

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