8 Ways the Indian Premier League (IPL) Franchises Make Money

The 15th edition of the Indian Premier League (IPL) is here now in 2024, and naturally, we are in the midst of the cricket frenzy with players set in action, the religious fans of the game all thrilled and waiting for their favourite matches, and the franchise owners and other businessmen anticipating great returns out of it. The Twenty20 Cricket League allows the best cricket players around the world and gives them a chance to showcase their talent. The key business plan of the IPL is to invite private companies to buy cricket franchises.

The franchises are sold at huge prices, so the corporates are largely attracted to invest in various other major components of IPL. Regarding the Indian Premier League auctions, teams spend crores of rupees just to get the desired players. With the kind of money involved in the league, it is hard to ignore the financial aspects of the game. In terms of the valuation, the IPL brand value was calculated to be $10.7 billion as of 2022.

According to BCCI, the 2021 IPL season contributed INR 1150 crores, which is close to $182 million to the GDP of the Indian Economy. The viewership of IPL 2023 reached the 449 million viewer mark and was watched by more than 427.1 billion minutes, which is 14% higher than the total watch time of IPL 2019. Therefore, IPL is as much about business as it is about cricket, glitz and showbiz. Here are the right prominent ways to answer how do IPL teams make money.

1. Media Rights
2. Ticket Sales/Gate Revenue
3. Merchandising
4. Selling stake
5. Sponsorship
6. Prize Money
7. Brand value
8. Unlisted Shares

1. Media Rights

The official media sponsor of the IPL for the last decade was Sony India, and then Dream 11. The current title sponsor of IPL is TATA Group. Disney+Hotstar is declared as the official broadcaster of IPL 2022, which has further onboarded new sponsors, Zomato, Pristyn Care, Ather Energy, Parle Agro, Livspace, Niyo, Spotify, L'Oreal, Spinny, ahead of the cricketing extravaganza.

IPL is known for its revenue distribution model. The BCCI gets a substantial amount from broadcasters and online streamers. Based on IPL franchises to earn money, and IPL team ranking, this amount is distributed among all IPL teams after deducting their fees.

Media rights are another way for IPL franchises to earn money. In fact, they are the IPL brand's biggest financial contributors. Star India reportedly broke the bank in 2023 to buy IPL broadcasting rights for a massive INR 23,575 crores. Each match of the IPL reportedly helps BCCI make INR 60.18 crores, while the latest bid in the BCCI media rights auction stands at INR 23,758 crores, which amounts to INR 59.10 crores per match.

The broadcasters can afford such exorbitant prices because of the advertising and viewership revenues. At the end of the league, the higher-ranking team gets the larger share of media revenue. Media rights account for 60 to 70% of the total earnings of the IPL team, through which IPL team members earn money. Besides that, the IPL franchises also make money by broadcasting special shows such as KKR’s Knight Club.

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2. Ticket Sales/Gate Revenue

The revenue generated from the sale of tickets for matches forms another major source of income for the IPL franchises. Each franchise is entitled to a minimum of 7 home matches, which gives them a fair opportunity to generate money. The ticket revenue share in the IPL team revenue is around 10%. The home team gets a fixed share of the total ticket sales, and all IPL team owners earn money by selling tickets.

The franchises then have complete rights to the income from gate tickets and passes. Like any other major sports event, the IPL teams depend largely on their fans for revenue. It is one of the most watched leagues worldwide, with full houses on most occasions. This is one of the few mediums of income where fans and franchises are directly involved in the financial transaction.

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3. Merchandising

The revenue received from sales of official IPL merchandise also forms a significant part of income for IPL teams. The IPL merchandise includes official jersey replicas, sports souvenirs, and sports equipment, among other things. Merchandising is a huge opportunity for IPL and the franchisees to monetize their brand, and IPL has started replicating the global sporting events.

This trend is expected to change, with more IPL franchises now moving towards elevated merchandise promotion. The game merchandise market in India is growing at an annual rate of 100 per cent. This market is about 30 million dollars. Every franchisee sells its merchandise; this includes T-shirts, caps, bats, wristwatches, and other items.

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4. Selling Stake

The IPL franchises can make big gains by selling stakes at the right time. For example, Delhi Capitals, formerly the Delhi Daredevils case. Jindal Steel Works brought a 50% stake in the IPL franchise for a hefty price of INR 550 crore from GMR. The group has expressed its desire to increase its share in the franchise from 50 to 100%.

So, within a decade, GMR almost doubled their investment in the franchise. Recently, there were intense rumours that the owners of Rajasthan Royals wanted to go by the same route and sell 50% of their stakes in the franchise. Although such big deals don’t happen deals every day, selling stakes is surely one of the major routes to making money for IPL franchises.

5. Sponsorship

Everything within the stadium has a price tag, from players batting to the bails on the stamps. The sponsors are the real source of income in the Indian Premium League. All the teams of IPL have sponsors for everything: the main sponsor, a jersey sponsor, and even a sleeve sponsor, which hugely contributes to the overall income. The teams tie up with organizations to promote brands in return for an exorbitant amount.

The promotion is done in two forms: through print media and through advertorials. The player’s jerseys are a valuable marketing tool. This is why an IPL outfit has an average of 10 brand logos: 6 on the jerseys, 2 on the pants, and another couple on the cap. Moreover, the franchises also create ad content to promote the brands' products.

While the brands that cannot make on the jerseys are still promoted through the teams' social media handles and package design, for example, CSK has tied up with at least 18 brands, with Etihad Airways being the title sponsor.

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6. Prize Money

Prize money is obviously one of the franchise's main income sources. The tournament's winning team gets the largest share of the prize money, which goes to the team owners and the players. In 2023, the winners got INR 20 crores, the runner-up got INR 13 crores, the third place in the playoffs was INR 7 crores, while the fourth place in the playoffs got INR 6.5 crores.

7. Brand value

Brand value adds a lot to the team. If you have star players like Virat Kohli and MS Dhoni or even Rohit Sharma in your team, you have a better chance of attracting brands and investors. Winning IPL or even making it to the Playoffs helps IPL franchises to boost their brand values. This, in turn, helps in easily getting brands on board – at prices that the owners demand. Note that MI, CSK, and KKR, all of whom have won IPL more than once, are at the top of the brand value.

So, the clout that teams like CSK and MI enjoy during negotiations with brands may not necessarily be experienced by DC and KXIP. However, it is important to know that Brand Value is not only affected by a team’s past performances. Bollywood stars like Shah Rukh Khan and Preity Zinta also add a lot to that aspect, along with business leaders like Keshav Bansal and Neeta Ambani.

8. Unlisted Shares

It is worth noting that while it is a new phenomenon for Indian sports franchises, numerous European football franchises have been offering their pre-IPO stocks in cricket fans' lives for a while now. In India, Chennai Super Kings is among the select few sports franchises whose unlisted shares can be traded. These franchises have been able to generate a considerable amount of capital through their pre-IPO stocks, which has proven to be a valuable source of funding for them.

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Conclusion

Indian Premier League(IPL) is a money-making business and festival for cricket fans worldwide. Cricket fans around the world travel across seven countries and seven continents to watch IPL in India. All credit goes to the cricket league as it has created a bigger impact on cricket fans' lives. It's a money-making league where the money is generated from all sources. The money is generated from advertisements, sponsors, stadium tickets, merchandise, TV, and media.

FAQs

What is the brand value of IPL 2023?

The brand value of IPL 2023 is $10.7 Billion.

How do IPL teams make money?

IPL teams make money primarily through sponsorships, broadcasting rights, ticket sales, merchandise, and team merchandise. They also generate revenue from franchise fees paid by team owners and endorsements.

What is IPL merchandise?

The IPL merchandise includes IPL and team t-shirts, key rings, jerseys, polo t-shirts, mobile covers, chargers, caps, joggers, coasters, wristbands and more.

What is the IPL revenue?

IPL 2023 earned Rs. 10,120 crores through advertisement.

What is the IPL business model?

The IPL business model revolves around acquiring players and teams, advertising, merchandising, sponsorship, fantasy gaming, and more. The IPL business model's core is inviting private firms and businesses to own franchises.

Which is the oldest IPL team?

MS Dhoni-led Chennai Super Kings (CSK) had the oldest players in their team, while Rajasthan Royals (RR) had the youngest team playing in the IPL 2021 according to the average age of the players in the squad.

Which is the No.1 successful team in IPL?

MI and CSK are the most successful teams in the league's history, with 5 IPL titles.