Do you want to know How Indian Premium League (IPL) Franchises Make Money? If your answer is yes then this blog provides you all information regarding this.
The Indian Premier League (IPL) will hold its 15th edition in 2022, and we are naturally in the midst of a cricket frenzy, with players preparing for action, religious cricket fans ecstatic and anticipating their favorite matches, and franchise owners and other businessmen anticipating significant profits from the tournament’s proceeds. The Twenty20 Cricket league brings together the best cricketers from around the world to showcase their skills. Obtaining bids from private firms to purchase cricket franchises is a key aspect of the IPL’s commercial strategy.
Because franchises are so expensive, corporations are forced to invest in the IPL’s many other significant components, which include a number of other major components. At the Indian Premium League auctions, it is not uncommon for clubs to pay millions of rupees just to get the players they want. It’s tough to ignore the business element of the game completely because of the amount of money involved in the league. According to Brand Finance’s predictions, the IPL brand value was expected to be $4.7 billion in February 2022. In the last few months, the market valuation of the Indian Premier League has increased by 7%.
According to the BCCI, the 2015 Indian Premier League season contributed INR 1150 crores ($150 million) to India’s GDP. The IPL 2021 was watched by about 367 million people for a total of 188 billion minutes, a 14 percent increase over the previous year’s tournament’s total watch time. As a result, the IPL is as much about business as it is about cricket, beauty, and showbiz. The IPL franchisees generate revenue in six different ways.
1. Right to Media Representation
Over the last decade, Sony India has been the official media sponsor of the Indian Premier League (IPL), followed by Vivo, and finally, Dream 11. Prior to the cricketing extravaganza, Disney+Hotstar was designated the official broadcaster of the IPL 2022, which also announced the inclusion of 13 new sponsors including Swiggy, Pristyn Care, Ather, Parle Agro, Livspace, Niyo Zepo, Niyo, L’Oreal, Spinny, and Spotify.
IPL has a well-known income distribution scheme. Broadcasters and online streamers provide a large portion of the BCCI’s earnings. After deducting their respective fees and expenses, this sum is distributed among all IPL teams using the IPL team rankings.
IPL clubs can also earn money by selling media rights. They are, in fact, the IPL’s largest financial backers. Star India was said to have broken the bank when it bought the IPL broadcasting rights for INR 16,347 crores in 2017. According to sources, each IPL match earns the BCCI INR 60.18 crores, but the most recent bid in the BCCI media rights auction was INR 6032 crores or INR 59.10 crores per match played.
The media rights for the IPL were sold for a total of INR 16350 crores, equating to INR 54.50 crores each match throughout the duration of 300 matches. The broadcasters are able to charge such hefty fees as a result of advertising and audience earnings. Despite the fact that the 2017 agreement was between Star India and the BCCI, the BCCI is reportedly paying IPL clubs as much as INR 35 crores per season.
The team with the top rating at the end of the season gets a bigger share of the league’s media revenue. The IPL team generates 60 to 70% of its revenue from media rights, and the IPL team players gain money from media rights as well. The IPL franchises also profit from the broadcast of special programs like KKR’s Knight Club and others.
2. Sales of tickets and receipts at the entrance
The IPL franchises gain money via the sale of match tickets, which is a key source of revenue. Each club is guaranteed a minimum of seven home games, giving them a decent chance to recoup their investment. The IPL team’s ticket revenue accounts for approximately 10% of total revenue. The home team receives a set percentage of overall ticket sales, and all IPL teams profit from ticket sales during the tournament.
The revenue collected by gate tickets and passes is then completely owned and controlled by franchisees. Like any other major sporting event, the IPL teams rely significantly on fan support for the majority of their revenue. It is one of the most popular sports leagues in the world, with most games drawing sold-out crowds worldwide. This is a one-of-a-kind source of revenue because it is one of the few instances in which fans and franchises are directly involved in the financial transaction.
3. Promotional and merchandising
The proceeds from the sale of official IPL merchandise also add significantly to the franchises’ overall earnings. Official jersey replicas, sporting keepsakes, and sports equipment, among other items, are among the IPL merchandise. The Indian Premier League and its franchisees make a large amount of money through merchandise, and the IPL has begun to mimic major international sporting events.
In order to compete more successfully, more IPL franchises are expected to embrace a more active item advertising strategy. India’s game goods sector is expected to grow at a 100 percent annual rate. This market is estimated to be worth around $30 million. Each franchisee sells a variety of items, including t-shirts, caps, baseball bats, wristwatches, and other memorabilia.
Getting a stake sale is number four.
Simply by selling stakes at the right time, IPL franchisees have the opportunity to make substantial profits. Consider the Delhi Capitals, who were previously known as the Delhi Daredevils. Jindal South West paid INR 550 crore to GMR for a 50 percent stake in the IPL franchise. The company has claimed that it wants to increase its ownership of the franchise from 50% to 100%.
As a result, GMR virtually doubled its initial investment in the company in less than a decade. There have been speculations in recent weeks that the Rajasthan Royals’ owners want to follow in their footsteps and sell half of their ownership stake in the team. Although such large-scale deals are uncommon, selling IPL franchise ownership is definitely one of the most beneficial ways for them to make revenue.
A fifth choice is a sponsorship.
Everything in the stadium has a price tag attached to it, from the players’ bats to the bails on the stamps. Sponsorships are the most important source of revenue for the Indian Premium League. In the IPL, there are sponsors for everything, including the main sponsor, the jersey sponsor, and even the sleeve sponsor, all of whom contribute significantly to the overall revenue. The teams form relationships with businesses to advertise their products in exchange for a large sum of money.
Promotion takes place in two ways: first, through print media, and then through advertising. The athletes’ jerseys act as a marketing tool. An IPL costume will often include ten company logos, with six on the shirts, two on the pants, and a few more on the hat. Franchises also create promotional content to promote the brands’ products.
Businesses that are unable to be displayed on the jerseys are nevertheless promoted through the teams’ social media accounts and product packaging. CSK, for example, has partnered with at least 18 brands, with TVS Eurogrip serving as the event’s official sponsor.
Monetary awards (No. 6)
Without a question, prize money is one of the franchise’s most valuable sources of revenue. The winning team earns the largest portion of the prize money, which is split between the team’s owners and members. The winners were awarded INR 25 crores, with the runner-up receiving INR 12.5 crores. In the playoffs, the third-place finisher received INR 10.5 crores, and the fourth-place finisher received INR 8.5 crores.
7. A brand’s value
The team’s performance is largely dependent on the brand’s value. You will stand a higher chance of attracting sponsors and investors if you have high-profile players on your side, such as Virat Kohli and MS Dhoni, or even AB de Villiers. IPL franchises can boost the value of their brand by winning the IPL or even just making the Playoffs. As a result, bringing brands on board is a lot easier – and at a price, the owners are ready to pay. Mumbai Indians, Chennai Super Kings, and Kolkata Knight Riders have all won the IPL on many occasions.
The brand value of a team increases when it has well-known players.
As a result, when it comes to negotiating with marketers, teams like CSK and MI may not have the same negotiating leverage as DC and KXIP. While a team’s previous results influence Brand Value, it’s important to note that Brand Value is influenced by a range of factors. Stars like Shah Rukh Khan and Preity Zinta, as well as businesspeople like Keshav Bansal and Neeta Ambani, make important contributions to this industry.
Conclusion
The Indian Premier League (IPL) is a festival for cricket fans all around the world, in addition to being a money-making company. The IPL, which takes place across seven countries and seven continents, attracts cricket fans from all over the world. Because it has had a greater impact on cricket fans’ lives, the cricket league deserves all of the credit. A money-making league is founded, with money coming from various sources. Advertising, sponsorships, stadium tickets, merchandising, television, and other forms of media are all used to generate cash.
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