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The eyewatering dollar value of the Indian Premier League (IPL)

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Last Updated on 3 years by Charbel Coorey

The eyewatering dollar value of the Indian Premier League (IPL) | What is the IPL worth? Looking at the huge value of the IPL

The humungous financial value of the Indian Premier League (IPL) received another booster dose as the Board of Control of Cricket in India (BCCI) sold two new franchises for a combined sum of a whopping Rs 12,715 crore (approx. US$1.7 billion) in October 2021.

RPSG Ventures Ltd, who do have previous experience in the IPL, has made a comeback with the brand new Lucknow franchise. The group shelled out a massive Rs 7090 crore (approx. US$975 million) to bag the bragging rights of the shiny new toy in town.

On the other hand, CVC Capital Partners bought the long-awaited Ahmedabad franchise for a sum of Rs 5625 crore (approx. US$754 million) through their subsidiary company Irelia Company Pvt Ltd.

CVC is a veteran in this sector and has invested previously in a number of sports like football, rugby as well as Formula One.

On the back of the successful completion of the 14th edition of the IPL, the sale of the two new franchises made a lot of noise. However, more of the talk around the whole situation was about that immense values at which the franchises were sold.

Veteran cricket journalist K Shriniwas Rao explained the finer details of the IPL’s revenue system from the franchise’s perspective very elaborately in his brilliant Twitter thread.

IPL value back in 2008 compared to the present

The eyewatering dollar values of the Indian Premier League (IPL) | What is the IPL worth? Looking at the huge values of the IPL
The value of the IPL has come a long way after some brilliant early days.

Just to put it in context, the BCCI had sold the original eight franchises back in 2008 for a collective sum of approximately Rs 2900 crore (approx. US$387 million).

Since then, the valuation of the league has increased at a remarkable rate. In terms of the most profitable leagues in the world across all sports, the IPL is high up on the list, with the National Basketball League (NBA) in its sights. That is apparent primarily from the massive enhancement in the amount at which the broadcasting rights of the league were sold.

Back in 2008, it was sold for a total sum of Rs 8200 crore (approx. US$1.1 billion) for a period of 10 years. Fast forward a decade and Star then bought the broadcast rights for five years from 2018-2022 for Rs 16347 crore (approx. US$2.19 billion).

That’s almost double the amount for exactly half the tenure than the original one.

Whether the concerned stakeholders had taken this exponential increase in the league’s value in 2008 is unclear, but there was set to be a stark improvement in their fortunes ten years later.

In fact, the title rights that were firstly sold to DLF for Rs 200 crore (approx. US$26.7 million) for the first five years were in 2017 sold to Vivo for 2018-22 for a grand sum of Rs 2200 crore (approx. US$293.8 million)!

How the central revenue pool is shared in the IPL

The eyewatering dollar values of the Indian Premier League (IPL) | What is the IPL worth? Looking at the huge values of the IPL
The BCCI has gained massively from the increased value of the IPL.

For the initial years up until the 10th season, the central revenue pool was shared in an 80:20, 70:30, and 60:40 ratio between the franchises and BCCI, with the majority chunk of the amount going towards the former.

However, the same pool was set to be shared in an exact 50:50 ratio between the two boards and the franchises after the 10th campaign onward. So the board ended up gaining massively from the vast increase in valuation of the league.

So at the 50:50 ratio, the BCCI is in process of distributing an approximate figure of Rs 9570 crore (approx. US$1.23 billion) amongst eight franchises (10 for the next year) across a period of five years.

This means that Rs 1218 crore (approx. US$162.6 million) was pitted into each franchise’s quota (considering eight teams) for five seasons, meaning that each of them ended up getting somewhere around Rs 244 crore (approx. US$32.52 million) from the central revenue per year.

Now, there’s another aspect of local revenues for the teams. That is, the amount of money that they are able to raise from commercial sponsorships and ticket sales primarily. As per Mr Rao, teams end up raking in somewhere between Rs 40 crore (approx. US$5.3 million)  to Rs 70 crore (approx. US$9.47 million) from jersey sponsorships annually.

Naturally, the bigger teams, in terms of performances and following, are more fortunate with respect to the sponsors they lure. However, the above figure was perhaps taken keeping in consideration the situation that all franchises operate in. Understandably, some of them do not find great luck with respect to finding the correct jersey sponsors. 

Now, in ideal scenarios, each team makes somewhere about Rs 2.5 crore (approx. US$333,000) – Rs 3.5 crore (approx. US$467,000) from gate money, that is through ticket sales, in every game. That could be estimated to about Rs 20 crore (approx. US$2.67 million) of their earnings in an ideal IPL season when fans are allowed to flock the stadiums (pre-COVID times).

They shell out a minimal part of it (Rs 50 lakh or US$66,000 per game) to the respective state associations for hosting each game. Now, these figures may vary for sides that pull greater number of crowds or stadiums where the ticket prices are higher than that of the rest.

Overall, it appears that the franchises make about Rs 300 crore (approx. US$40 million) or somewhere near that figure annually per year under the current system. They spend Rs 90 crore (approx. US$12 million) of it during auctions, and Mr Rao’s estimates suggest that additional Rs 35 crore (approx. US$4.7 million) to Rs 50 crore (US$6.67 million) is shelled out for operational purposes each year.

Moreover, the BCCI has made a good provision for the domestic game to benefit from it by directing the franchises to pay 20 per cent of their topline revenue (gross revenue) to the board every year. The BCCI then redirects this money towards the improvement of domestic cricket.

Discounting the taxes, the franchises overall seem to be making a net profit of somewhere between Rs 145 crore (approx. US$19.3 million) to Rs 150 crore (approx. US$20 million) each year under the current circumstances. These numbers will reduce down by a bit with the addition of two new franchises next year.

Huge value expected for IPL broadcasting rights after 2022

But the entire systems will shakeup perhaps when the broadcasting and title rights are sold yet again after 2022. We have already seen the massive shakeup that happened after a revamp on these fronts post 2017. The revenue models for the sides changed, or rather improved, immensely.

The same is set to take place post 2022 as well. And it will keep happening after certain duration each time from here onwards. If you think that the current numbers surrounding the league and the franchises are crazy, the average audience is in for a shock in the coming two decades.

There will inevitably be an increase in the number of franchises, matches and thus the length of the tournament. The franchise fee is anyways to be paid in installments over a period of 10 years and that too at an interest-free manner.

The IPL hasn’t hit an upward threshold yet. Its popularity and influence is only set to broaden and grow in the coming years. The BCCI might even work to take the league to audiences that it hasn’t breached so far. There are endless possibilities and hence the influx of money in the same will continue to increase in a phased manner as well.

Gradually, the new owners will enter a more profitable phase, with several facets of the game such as aggressive merchandising for instance still being untapped. Add to that the fact that the valuation of broadcast and title rights will only rise in the future.

The IPL is a goldmine yet to be explored properly. This is only the beginning.

Written by Tarkesh Jha. Follow Tarkesh on Twitter

Tarkesh Jha
Tarkesh Jha
Tarkesh Jha is a media professional and cricket writer who has managed social media content, public relations (PR) and marketing related content for cricketer Ajinkya Rahane and cricket presenter and stand-up comedian Vikram Sathaye. Also, Tarkesh has been featured in some leading publications such as Sportskeeda, Khel Now, firstpost.com, and cnbctv18.com

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