The IPL business model is exclusive fusion of cricket, entertainment, and marketing strategies. The league employs a franchise model with ten teams, each representing a distinct Indian city, engaging in competition. Privately owned franchises operate under a revenue-sharing structure. The league garners income from diverse channels, including broadcasting rights, sponsorships, merchandise sales, player auctions, and endorsements.
The Indian Premier League stands as an unyielding fortress amid the tempests of soaring inflation, the global pandemic's relentless grip, and the surge of interest rates. Following the crescendo of the recently-concluded media rights auction, prepare for a veritable downpour of wealth cascading upon its franchises.
Come Lets discuss how IPL capitalizes on the Magic formula of Entertainment and Cricket to allure attention of millions and pulse out money from them.
Media Rights
The Board of Control for Cricket in India (BCCI) will walk home with ₹48,390 crore after the record-breaking bidding concluded on June 14. With this, India’s biggest sporting event has witnessed an increase of 3x when compared to the previous cycle, with the National Football League ahead by a small margin at $17 million. Disney Hotstar retained the rights for television for ₹23,575 crore, while India’s richest man Mukesh Ambani's Viacom18 bagged two and half bundles for ₹23,750 crore including digital rights.
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.
Player Trading
Every year, at the IPL auction, a transfer window is provided for a set amount of time. Teams are allowed to exchange players with other franchises during this trade window. This means that talented players are traded for good ones with some money as compensation.
The team owners bid for the players they want to include in their team. The price of the players depends on their performance and popularity. The team owners can make a profit by selling the players they bought at a higher price than they paid.
Shikhar Dhawan, for example, was one of the most high-profile players to exchange teams ahead of the IPL Auction 2019. The left-handed hitter joined the Delhi Capitals after leaving the Sunrisers Hyderabad franchise. In exchange, DC sent Vijay Shankar, Shahbaz Nadeem, and Abhishek Sharma to SRH. The exchange benefited DC because Dhawan was a standout performer for them over three seasons, whereas the three players moved away by the Capitals did not play regularly for SRH.
Advertising Revenue
Advertisers paid the broadcaster as much as ₹14 lakh for a ten-second ad slot during a match. As per Moneycontrol, the total revenue generated from television and digital (streaming) ad sales in IPL 2021 was almost ₹3,500 crore. The Hindu BusinessLine estimates that with the new media rights deal, ad rates for a 30-second television slot could reach ₹1 crore.
Viewership brings ratings and that in turn brings more ads. Star India had said in 2021 that IPL was on track to cross the 400 million viewership mark for the fourth year in a row that season. The tournament had set a viewership record in 2020 with 31.57 million average impressions per match. However, viewership in IPL 2022, as per Broadcast Audience Research Council (BARC)’s estimates, saw a 30 per cent dip in the first three weeks of the season. Experts attributed this to the easing of COVID-19 restrictions and more viewers stepping out of their homes.
Brand sponsorship
IPL franchises generate a sizeable part of their revenue through brand sponsorships.
The teams sign agreements with various brands, including apparel companies, beverage manufacturers, and mobile phone brands like DLF, Vivo, Tata,Pepsi and Dream11.
Teams also earn from other tournament-related marketing activities organised by their sponsors. Sponsorship revenue reportedly forms around 20 - 30 % of revenue for an IPL team.
Ticket sales
The global pandemic affected India’s biggest sporting gala in 2020 and 2021. However, it was back with a bang this year.
Now that the stadiums are full of spectators again, a small portion of ticket sales will be offered to sponsors and the BCCI, the rest goes into the team’s wallet.
The ticket prices are determined based on the seating capacity of the stadium, the excitement around the event, the standard of living in the city, and so on.
Ticket revenue reportedly forms around 10 % of revenue for IPL teams.
Prize money
BCCI offers a colossal amount of prize money to the winning team. In 2023, IPL champion Chennai Super Kings took home ₹20 crore in prize money, whereas Gujarat Titans, the runner - up received ₹13 crore in a total price pool of 43.5 crore.
Merchandise Sales
As per a ResearchAndMarkets report, India's sports equipment and apparel market is estimated to be $28 billion in 2022 and reach $40.6 billion by 2027.
Each franchise sells merchandise that includes T-shirts, Caps, Wrist watches and so on and gets a share of money collected from consumers.
Player Endorsements
The players in the IPL are some of the most popular players in India. They are highly sought after by brands for endorsements. The franchises can make a commission by arranging endorsements for their players. The more popular the player, the higher the endorsement fee, and this translates into more money for the franchises.
Naming Rights
The IPL franchises can also sell the naming rights of their team to a sponsor. This has been a significant source of revenue for many IPL teams.
For example, the Delhi Daredevils changed their name to Delhi Capitals after signing a deal with JSW Group. Kings XI Punjab changed their name to Punjab Kings. This change occurred after the team signed a deal with a digital entertainment company.
By selling naming rights, franchises can earn substantial amounts of money, which can go towards salary and facility expenses for players.
Stall Rental
The stalls that feed fans during games are given on a contract basis to a third party, who then sub-contracts them. This is usually a fixed term for fixed money that each team collects on per stall per match basis.
As the IPL continues to evolve, it stands as a testament to the symbiotic relationship between sports, entertainment, and business.
It's model for success in the ever-expanding landscape of sports entertainment is simply exceptional.
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