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Besides the buzz around the matches, an IPL Franchise is is one of the most talked about things, given the popularity of the league.
I am sure while watching IPL we all wonder, How much an IPL franchise make money? the only reply we get in our mind is ALOT! and that’s true. Stick around till the very end to know the right information.
Cricket, a bat-and-ball sport, has been in popularity since it was first played as a childhood game by the southeast country of England in 1597. Fortunately, the most dominant kind of cricket in recent decades has come from India, where the Indian Premier League (IPL) commenced in 2008 and caused a paradigm shift in the history of cricket.
The IPL, which was started by the BCCI (Board of Control for Cricket in India), is a competitive Twenty20 cricket league that is much more successful than the other cricket matches. The competition takes place in India every year in March or April, with eight teams competing for the trophy and each represents a distinct Indian region. The IPL’s main motto is to allow private huge firms to purchase IPL franchises.
As IPL involves money and franchisees receive a huge profit, huge firms participate in big IPL auctions. The huge firms pay crores of rupees to get the best player in their IPL during the auction.
There is a high amount of money at stake, so it becomes important to take a view on the financial side. During the pandemic, BCCI decided to start its bid at a lower rate, and hence, for Rs 222 crore, Dream11 got secured the title of Official sponsors 2020.
How an IPL franchise makes money in six different ways:
Rights to the Media
For the past decade, Sony India, Vivo, Pepsi, and Dream 11 have been the IPL’s official media sponsors. Broadcasters and web streamers contribute significantly to the BCCI. This sum is divided among all IPL teams after deducting their fees and based on their IPL team rating.
Another source of revenue for IPL franchises is media rights. Media rights are the largest financial donors to the IPL brand. In 2017, Stars India Group spent a whopping 16,347 crores to purchase IPL broadcasting rights.
BCCI earns money from the media rights and that is more than what the players receive. An individual team also has their separate broadcasting rights .
The massive increase in media rights sales made every team successful. Firstly, previous costs were high but revenue was poor in contrast to the cost, and the rapid increase in the price of media rights gave their financial structure a boost to IPL franchises and benefit to the Indian Economy. Broadcasters can afford the high rates as the sponsors and other sales are high hence BCCI can gather a good amount of revenue.
Vivo has again ruled the IPL 14, 2021, and received the tag of Title sponsor. Whereas, Star Sports is the Official Broadcaster Partner. Disney+Hotstar is a Digital Streaming Partner. Star Sports have signed Safari, Dream11, Unacademy, CRED, Upstox as the official partners. Paytm is the official Third Umpire Partner. For the official Strategic timeout Partner, CEAT has been signed as a partner.
On the digital side, Disney+Hotstar has signed ten sponsors for the IPL 2021 season, including Dream11 as the co-presenting sponsorship and Upstox and Vimal Elaichi as co-powered by sponsors.
Everything in the stadium has a price to be paid whether it is a player’s bat, ball, or bails. In the Indian Premier League, sponsors are the primary source of revenue. The primary source of revenue for all IPL franchise teams is sponsorship. Both TV and digital platforms charge a fee for advertisement.
The Jersey that is worn by players is an effective way to publicize the brands. Each IPL franchise team has Ten brands sponsorship in their outfit. Whereas, around 6 after printed on t-shirts, 2 on trousers and remaining on the cap. As a result, a typical IPL franchise outfit has ten brand labels, six on the shirts, two on the trousers, and a few on the hat.
Also, franchisees conduct advertisement content to promote the brand’s products. Mukesh Ambani’s Reliance Industries owns the team through its 100 percent subsidiary Indian Sports, which is led by captain Rohit Sharma. Mumbai Indians is the most talented team as they have won 5 IPL titles.
Samsung and ColorsTV, Marriott Bonvoy, Jio, Astral Pipes, Kingfisher Calendars, USHA, Dairy Milk, Colgate, William Lawson’s Music CDs, Dream11, BKT, MakeMyTrip, Kotak, Myntra, boat, Mai Dubai, these are the sponsor partners of Mumbai Indians.
Ticket Passes and gate revenue
The revenue derived from the selling of match passes is another significant form of profit for the IPL franchises.
The IPL franchises own 100% of the revenue generated by gate tickets and passes. The IPL teams like every other major sporting event rely heavily on their fans for support. Because when fans come to the stadium to cheer their favourite team, they pay for tickets to enjoy the match, hence it increases the revenue of the IPL franchises.
The IPL franchise gains profit by selling the goodies of the team. Official jersey replicas, sporting souvenirs, and sports accessories are among the merchandise available.
The IPL and the franchises have a big potential to monetize the name by-merchandise. The IPL franchises also generate money from the sale of official T-shirts, hats, watches, and other merchandise, which are eventually purchased by the fans.
Any franchise is incomplete if it does not have any high-valued star players. Players are auctioned and the respective team owner bid higher for the star players like Virat Kohli, Rohit Sharma, MS Dhoni, or any international cricketer like AB de Villiers or Christopher Henry Morris.
Players like these can attract good companies for the sponsorship and investors are ready to invest in the team. Winning IPL or only getting through the Playoff, teams increase their market equity for IPL franchises. As a result, Team owners get the benefit to choose their brand at their rates. Teams like MI, CSK, and KKR are the top teams who have won the title more than one time.
Mumbai Indians team is valued at 761 crores which is the highest as compared to any other team in the league and it is the fifth straight year where they have led the board. But this year Mumbai Indians are 5.9% down from the prior year.
For More information regarding the IPL franchise, you can view our previous blog:
So this was regarding how IPL franchises make money. Now further we’ll watch how IPL is boosting the Indian Economy.
How IPL boost the Indian Economy 2021
GDP Increases by a Huge Amount
India is the world’s second-most populated democratic country. The numbers below are mind-boggling to boost the Indian economy by playing IPL to the home ground.
According to BCCI numbers, the IPL contributed approx 11.5 billion INR to India’s GDP in 2015.
In US Dollars, that amount is equivalent to $182 million. IPL is getting close to being compared to the NBA in the United States and the Premier League in the United Kingdom. This is all because of the die-hard supporters, fans, brand advertisement, and many other reasons.
Hence IPL is increasing the revenue of BCCI and therefore resulting in Tax payments. After 2007-2008, BCCI paid around 3,500 crores as a tax. Before IPL, Cricket was called a charitable game so BCCI never paid tax for the cricket game. As soon as IPL entered India in 2008, the Income Tax Department claimed IPL as a taxable operation and BCCI paid Rs 350 crore per year and continued to pay tax every year. However, as BCCI pays the tax, IPL boosts the GDP of the Indian Economy.
With more than 32 overseas players participating in the IPL, there will be a huge flock of supporters and fans to watch the match and during IPL we can see a huge crowd gathering to cheer their team in the stadium. India observes great tourism during the IPL season.
According to a survey by Cox & Kings, one of the oldest travel agencies observed that during IPL season there is an increment of the tourist to India by 30% than the regular days.
Further, we also see tourists not only in the hosted nations, but the supporters are ready to fly overseas to cheer their team.
Tourism is a multibillion-dollar business in India. According to a World Economic Forum survey, India is the 11th most desirable tourism place in the Asia Pacific region and the 62nd most enticing destination worldwide.
Since this IPL is played by the eight distinct regions of India and the people who are traveling freak will roam from one place to another so indirectly tourism sector will get the benefit.
But as the COVID-19 has been influenced, tourism promotion has been reduced and the matches are seen on online platforms like Disney+Hotstar. According to Hotstar’s IPL watch regions survey, they hit 55 percent of urban viewers.
The Indian Premier League (IPL) has often been portrayed as a catalyst for the Indian economy to increase its GDP in other ways. Companies, players, sports organizations, stakeholders, and aspiring athletes have all contributed to the increment of Job roles. Giving job opportunities boosts the Indian economy as the revenue increases, the ability to pay tax automatically increases.
The report also highlights the job opportunities during the month of IPL become strong as workers are in high demand. This includes medical staff for each team, club-specific cheerleaders, players, stadium personnel Cleaner staff, and guards, among other things. In a nutshell, it creates a large number of job openings when IPL is held.
Publicity in the Media
According to India’s Economic Times, it was claimed that in 2019, IPL smashed all the records of watching matches simultaneously. The Indian Premier League’s official broadcaster, Star India announced that the finale of 2019 drew the attention of 18.6 million viewers simultaneously.
The boost of tier-2 cities as a result of media attention was another interesting finding of the same report. IPL cricket matches attract a lot of public attention because they are broadcast across India. Tier-2 cities are spending more on infrastructure and growth as a result of the IPL’s media coverage, and they are seeing an increase in tourism-related events, which can produce more income for the region.
Media publicity can also be through online streaming IPL matches. Due to COVID-19, viewers are unable to offline watch the match in Stadium but with the sponsorship with Hotstar, people watch matches online on Hotstar.
There is no question that a sports event as large as the IPL boosts the Indian economy tremendously. The Indian Premier League has been going strong for the past 13 years, with each season adding more prominence and worldwide recognition.
Now we have to see how BCCI navigates the current pandemic and adapts to the modern type of advertising that can reach the viewers and in turn viewers that are attracted to it. Perhaps it is good for the people that the stadium will not occupy the seats and there will not be any shouting and cheering noise in the stadium.
This is done only to secure the people from the COVID-19 and less spread of the virus can make India strong. But cricket’s popularity and love for the IPL will continue to grow.
BCCI has also come up with a fan wall as they watch online. From the above blog, you will come to about how IPL franchises make money from different sources.
Also Read, about IPL 2021 highlights.