How Do IPL Franchises Make Money?
Indians Premium League (IPL) 2022 is rocking the homes in every corner. This is the moment when the T20 Cricket league allows the best of the best players in the world to come together and showcase their talent.
With all the enthusiasm at its peak, the devout fans of the game are electrified. Moreover, franchise owners and other businessmen are also expecting great returns on their investments.
And why not? The franchises are sold at enormous prices, so the owners would naturally be eager to attract huge sums of money into their accounts.
On the top, the IPL management has secured some of the best personalities in the country as the owners of their franchises.
One might wonder what keeps these celebrities hooked on investing crores every year. To put it simply, how do IPL Franchises make such tremendous money?
In this article, we have compiled several ways by which IPL franchises earn money.
Let’s dive in.
The Business model of IPL
A vigorous business model like IPL does not entirely depend on the selling of tickets. They ensure that several other outlets are available which can help to generate money.
IPL franchise has advanced as a treasured profitable property. It provides various businesses the chance to extensively advertise their brands.
7 Ways by Which IPL Franchises Make Money
We’ve compiled 7 top ways by which IPL franchises are able to lure a great amount of money towards them. Check them out!
You may have noticed a brand name mentioned before the word IPL in different seasons. These brands are the official title sponsors for IPL.
Everything in the IPL stadium has a price tag. The teams in the IPL have sponsors – there is the main sponsor, a jersey sponsor, and a sleeve sponsor.
The teams sign contract with these organizations to promote them in return for a lucrative amount of money.
Vivo had paid over 2100 crore rupees for its relationship with IPL for 5 seasons in 2018. The BCCI holds 50% of this amount and allocates the residual amount among the teams.
These rights are the most significant source of earnings for any IPL franchise. For most teams, it can even go up to 60% of their income.
Star India supposedly broke the bank in 2017 to purchase IPL broadcasting rights for Rs. 16,347 crores.
It is the responsibility of the BCCI to sell Media rights or broadcasting rights to Channels. BCCI distributes revenue produced from media rights between teams after taking their own share.
The official media sponsor of the IPL for the last decade was Sony India, Vivo and then Dream 11.
In 2022, Disney+Hotstar is declared the official broadcaster of IPL 2022. It has further lodged 13 new sponsors such as Parle Agro, Swiggy, Zepo, Spinny, Pristyn Care, Livspace, Niyo, Spotify, L’Oreal, Niyo, Ather Energy.
The revenue generated from the sales of IPL merchandise is a major contributor to income for IPL teams. Its merchandise includes sports souvenirs, official jersey replicas, sports equipment and so on.
Merchandising is a great option for IPL franchisees to monetise their brand.
Prize money, no doubt, is one of the key sources of revenue for the IPL franchises. The winning team gets to take the largest piece of cake, which then obviously goes to team owners and players.
For instance, in VIVO IPL 2021, CSK won the IPL title, and they received 20 crores. KKR got Rs. 12.5 crores for being the runner-up.
Similarly, in the year 2019, the winners got Rs. 25 crores, the runner-up got Rs. 12.5 crores, the third place in the playoffs was Rs. 10.5 crores, while the fourth place in the playoffs got Rs. 8.5 crores.
The brand value of IPL teams is vital for IPL franchises to draw a lot of money. The team which gets a lot of star players pulls great brand value.
In a Forbes 2022 report, Mumbai Indians (MI) was ranked as the most valuable IPL team with a brand value of $1.3 billion (9900 crores).
Chennai Super Kings (CSK) is the second most valuable team in terms of brand value. In fact, they became the first IPL franchise to cross the $ 1 billion valuation. It is seen that the team which performs better earns more brand value than others.
Bollywood stars like Preity Zinta and Shah Rukh Khan also contribute a lot to the brand value of a team. The same is true for business personalities such as Neeta Ambani and Keshav Bansal.
Just like any other major sports event, the IPL teams also depend mainly on their fans for income.
Revenue generated from ticket sales is also a major route for IPL franchises to make money. This is one of the few means of revenue where franchises and fans are directly involved in the financial transaction.
On an estimate, ticket sales usually contribute 15% of the total revenue for IPL franchises. Each franchise is permitted to a minimum of 7 home matches, which allows them a generate money.
The home team is given a fixed share of the total ticket sales and all IPL team owners earn money through the ticket sales.
The franchises also possess full rights to the income from gate tickets and pass.
Sale of stake
Many IPL franchises make great returns by just selling their stakes at the right time.
An example of this is the case of the Delhi Capitals, formerly known as Delhi Daredevils. Jindal South West bought a 50% stake in the IPL franchise for a heavy price of Rs 550 crore from GMR. The group has stated its longing to boost its shares in the franchise from 50 to 100%.
Similarly, there were some rumours that the owners of Rajasthan Royals wanted to sell 50% of their stakes in the franchise.
While such major breakthrough deals don’t occur every day, the sale of stakes is no doubt one of the key routes of earning large sums of money for IPL franchises.
Indian Premier League(IPL) is a lucrative revenue-generating business model for brands across the world. Die-hard cricket fans travel across countries to watch IPL and cherish their favourite cricket moments.
As a result, a lot of thought process goes into the kind of investment we see. The team owners are wise enough to know the drawbacks behind each investment and, hence, become wiser concerning their money every year.
Therefore, even after being in the showbiz for more than a decade, IPL continues to shine and keeps getting bigger and better.