Impact of IPL on Indian Economy

Shruti Jalan Shruti Jalan
Apr 22, 2021 9 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 religion for millions in India. But guess what, there's a bigger religion with the biggest fan following in the world - money, moolah currency!

Apparently BCCI (richest cricket body of 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 entertainment business & corporates. Today this sporting event moves & shakes the economy.

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 & my economy
An uncomfortable fact
Lets team up this season - on and off the field
FAQ

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.

Little flashback first: Indian Premier League aka IPL cricket championship began in 2008. It has a '20 over' format, hence called Twenty20 (T20) tournament. Currently it's in its 14th season, constituting eight teams, each team 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's overdone anyhow, so instead lay out some dynamic economic data.

● Β  IPL brand value: 4.4bn USD

● Β  Highest source of income: Media rights

● Β  Team with highest brand value: Mumbai Indians (MI)

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 men invent to skip how many productive work hours to watch a match? Can't say? Fine, at least how many memes, jokes & posts are created during IPL? Duh! Are you even serious?

Alright, 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 Β real economic figures. From 100s of crores poured in annual auction of players or million & billion dollar deals signed amongst BCCI, sponsors, global media houses, advertisers etc.

Not to mention 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 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 anyway, so check out 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 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 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. Which 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, TV & media rights of IPL has been sold for a massive 2.3 billion dollars approximately (INR 16k+ crores) to Star network.

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

● Title sponsorship Β¦ Awarded to Chinese phone maker vivo for INR 439.8 crore as year on year fees for period 2021-2023 Β¦ The 1st sponsor DLF paid INR 40 crore & the preceding sponsorship deal was worth INR 100 crores (Vivo again). That's some quantum leap in the income of BCCI, signalling impressive increase in viewership of the tournament every season

● Β Media rights Β¦ Sold for INR 16,347.5 crore to star India for global broadcasting rights i.e. TV & digital for 5 yrs (2018-2022) Β¦ It is said to be 1.5 times the previous deal. Well this leap of faith is backed by guaranteed advertising revenues these media giants get. By the way IPL 2021 ad revenue estimate is said to be INR 3,500 crores

● Β Ticket sales Β¦ Nil for 2020 as well as 2021 as both seasons held behind closed doors due to COVID19 Β¦ Nonetheless, on-air sponsors are multiplying every year & thus the money that comes with them. Over 10 sponsors, big & small, strike multi crore deals with each franchise. So nothing to worry really because rising digital viewership is set to more than offset that loss

● Β Sports / cricket tourism Β¦ 100% loss again Β¦ This is one sector that has suffered immensely & globally since the onset of Corona. So one can't really factor it in here


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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. Government of the day realised it & brought IPL's income under tax net.

Income means taxes and taxes mean revenue for the govt. Did you know BCCI was considered a charitable organisation under 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 till 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 sep 2019. But with 400 million viewers & 400 billion viewing mins 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 & my economy

Good question but a little premature. Happy to explain b'cos 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. And with repeated displays, you tend to remember the brand name for long. That's how they increase their customer base. Boom! The brand sales might hit the roof & you think 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 field and other conspicuous places? They get the desired visibility & attention for their brand.

It is not just these purchases & just the sponsor companies that benefit from the IPL excitement. Other businesses & sectors gain from the festive mood & cheer too. Because economic activity has a ripple effect. For instance if you are a YouTuber, create content around cricket/IPL & cash it on. If you are a SM marketer, influencer create that perfect meme which goes viral faster than any known virus to mankind.


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That reminds us of the promise to present 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 inspite of an 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 & fun.

Lets dig a little deeper. Sometimes religion pushes its followers into fanaticism & 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 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.

FAQ

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 β‚Ή475 billion (US$6.7 billion), according to Duff & Phelps. 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?

According to the BCCI treasurer Arun Dhumal, the board has earned Rs 4,000 crore as revenue from hosting the 13th edition of the Indian Premier League. In addition, the TV viewership made a 25 per cent rise when compared to IPL 2019.

Conclusion

To end on a lighter not - just as 'Stay home stay safe' was & is the mantra of Corona age.

'You could cheer for Dhoni or AB de Villiers, so long as you stay fit until next year!' may be your mantra for IPL 2021. Lets have a field day!

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