7 Ways the Indian Premium League (IPL) Franchises Make Money

PV Vyshnavi PV Vyshnavi
Mar 25, 2022 9 min read
7 Ways the Indian Premium League (IPL) Franchises Make Money

The 15th edition of the Indian Premium League (IPL) is here now in 2022, 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. When it comes to the Indian Premium League auctions, teams spend crore 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 $4.7 billion, as per the reports of the leading valuation consultancy Brand Finance, in February 2022. The Indian Premier League has noticed a 7% increase in its valuation recently.

According to BCCI, the 2015 IPL season contributed INR 1150 crores, which is close to $150 million to the GDP of the Indian Economy. The viewership of IPL 2021 reached the 367 million viewer mark and was watched for more than 188 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 6 prominent ways in which the IPL franchises make money.

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

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1. Media Rights

The official media sponsor of the IPL for the last decade was Sony India, vivo and then it was Dream 11. Disney+Hotstar is declared as the official broadcaster of IPL 2022, which has further onboarded 13 new sponsors including Swiggy, Pristyn Care, Ather Energy, Parle Agro, Livspace, Niyo, Zepo, Niyo, Spotify, L'Oreal, Spinny, ahead of the cricketing extravaganza. Β 

IPL is known for its revenue distribution model. The BCCI gets a substantial amount from broadcasters and online streamers. On the basis of IPL team ranking, this amount is distributed among all IPL teams after deducting their fees.

Media rights are another way of earning for IPL franchises. In fact, they are the IPL brand's biggest financial contributors. Star India reportedly broke the bank in 2017 to buy IPL broadcasting rights for a massive INR 16,347 crores. Each match of the IPL reportedly helps BCCI make INR 60.18 crores, while the latest bid in BCCI media rights auction stands at INR 6032 crores, which amounts to INR 59.10 crores per match.

The IPL teams of 2020.
The IPL teams of 2021

The IPL media rights sold for INR 16350 crores across 300 matches amounting to INR 54.50 crores per match. The broadcasters can afford such exorbitant prices because of the advertising and viewership revenues. Even though the 2017 deal was between Star India and BCCI, it is rumored that Board pays IPL franchises as much as INR 35 crores per season.

At the end of the league, the team with higher ranks gets the larger share of media revenue. Media rights account for 60 to 70% of the total earnings of the IPL team and through which IPL team members earn money. Besides that, the IPL franchises also make money from broadcasting special shows such as KKR’s Knight Club and more.

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%. Β The home team gets a fixed share of the total tickets sales and all IPL team owners earn money through the sale of tickets.

The franchises then have complete rights on the income from gate tickets and passes. Just like any other major sports event, the IPL teams also depend largely on their fans for revenue. It is one of the most watched leagues across the world 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 include official jersey replicas, sports souvenirs, and sports equipment among others things. Merchandising is a huge opportunity for IPL and the franchisees to monetize their brand and IPL has started replicating the global sporting events.

Chennai Super King Merchandise
Chennai Super King Merchandise

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 percent. This market is about 30 million dollars. Every franchisee sells its merchandise, this includes T-shirts, caps, bats, wristwatches, and other items.

4. Selling stake

The IPL franchises can make big gains by just selling stakes at just the right time. For example Delhi capitals formerly known as Delhi Daredevils case for instance. Jindal South West brought 50% stake of 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 rumors 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 of making money for IPL franchises.

5. Sponsorship

From players bat to the bails on the stamps everything within the stadium has a price tag. The sponsors are the real source of income in the Indian Premium League. All the teams of IPL have sponsors for everything, there is 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 of money.

The main title sponsors of IPL 2020
The main title sponsors of IPL 2020

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 for the promotion of the brands' products.

While the brands that cannot make on the jerseys are still promoted through the teams' social media handles as well as through package design. For example, CSK has tied up with at least 18 brands, with the TVS Eurogrip being the title sponsor.


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6. Prize Money

Prize money is obviously one of the main sources of income for the franchise. The winning team of the tournament get the largest share of the prize money, which would go to the team owners and the players. In the year 2019, the winners got INR 25 crores, the runner-up got INR 12.5 crores, the third place in the playoffs was INR 10.5 crores, while the fourth place in the playoffs got INR 8.5 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 AB de Villiers in your team, you have a better chance of attracting the 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, top the Brand value.

The brand value of a team increases if they have popular players
The brand value of a team increases if they have popular players

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 in that aspect along with business leaders like Keshav Bansal and Neeta Ambani.

Conclusion

Indian Premier League(IPL) is a money-making business and festival for cricket fans all over the world. 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 the life of cricket fans. 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 2022?

The brand value of IPL has last recorded a growth of 7% to reach $4.7 billion in 2021, as of February 2022.

Who is king of IPL?

Mahendra Singh Dhoni is known as King of the IPL Teams. He is also referred to as the Baap of the IPL Teams, and the King of the IPL Captains. It is due to his terrific performance, the huge followers and admirers he has, and 4 IPL titles that Dhoni has gifted Chennai Super Kings so far.

What is IPL merchandise?

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

What do IPL teams cost?

The cost of IPL teams are all in 3-digit crores.

What is the IPL revenue?

Though the exact figures of the IPL revenue couldn't be determined, it has been concluded that the IPL revenue contributes to 40% of the global revenue of cricket.

What is the IPL business model?

The IPL business model revolves around the acquisition of players and teams, advertising, merchandising, sponsorship, fantasy gaming, and more. The core of the IPL business model is the idea of 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 in terms of the average age of the players in the squad.

Which is no. 1 successful team in IPL?

MI is the most successful team in the league's history with 5 IPL titles to their name, while CSK is the second most successful IPL team, which has won the title on 4 occasions.

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