IPL

IPL: ENORMOUS GROWTH OF REVENUES

In India cricket is not just a game, it is an emotion that instills passion in the hearts of millions of people and unites the nation as a whole. Indian cricket is of various types, ranging from Ranji trophy to twenty20. IPL is a professional twenty20 cricket league in India that happens during the month of March, April, or May. Have you ever wondered what are IPL revenues!! how it is generated? probably you may not be aware of these questions as of now but you will get to know after you read this blog


BEGINNING OF IPL

The face of domestic cricket changed drastically with the launch of the Indian premier league in 2008. It was the proposition of Lalit Modi the then vice president of BCCI. In 2007 Indian Cricket League was founded but it was not approved either by BCCI or ICC. BCCI even prohibited team players from joining ICL. Despite this, in September 2007 BCCI announced the launch of IPL. BCCI announced that the first match will be in April 2008.

Pic credits : The financial express

Lalit Modi formulated the sponsorships, prize money and even decided that the seven-man governing council will lead IPL and the top two teams will qualify for that year’s champions league twenty20. IPL soon gained popularity and momentum among Indians. The brand value of teams saw a consistent increase over the years. In 2019 as per duff and Phelps(Multinational financial consultancy firm) the brand value of IPL was US$6.7 million.


REVENUE SOURCES OF IPL

There always existed a doubt what is the revenue of IPL how much do they earn. There are plenty of sources from where IPL generates its revenue

1. Media and broadcasting rights

The main source of revenue is from media and broadcasting rights that are sold to channels. Even some of the teams own their 60percent revenue to the media. Indian premier league became a major television property within India. Firstly the broadcasting rights were shared by sony pictures network and world sports group. During the season sony max became the most-watched channel throughout the country. In 2017 it was announced that the global media rights were transferred to star India.

Pic credits : Scroll.in

Star broadcasts the live match of IPL through the online platform Hotstar. From 236 crores in 2008 IPLs media rights touched a remarkable rate of 4087 crores in 2019. the estimated revenue during the 2018 – 2022 season is 3065. The sudden hype in media rights definitely secured the financial system.


2. Brand sponsorship

The sponsorship has found an increase from 111 crores to 618 crores in 2019. Brand sponsorship also contributes to a significant amount of IPL revenues. BCCI collects the money from the sponsors and distributes it among the teams. . Like CSK(Chennai super kings ) getting sponsorship deals with India cements, gulf oil, Equitas Small Finance Bank, HIL, Nippon Paint, Parle Agro Frooti, and Atria Convergence Technologies.

Pic credits : Inside sport

The companies invest in the teams to get the promotion of their specified brands by their logos and the name on the jerseys. The highest Sponsered company got the most attention on the jersey.


3. Title sponsor

Title sponsorship means the name that comes before IPL like Vivo IPL, Dream 11 IPL, etc. The title sponsorship generates a significant amount of money for the team and the owners. For 4 years i..e from 2008 to 2012 the title sponsors were DLF who have secured the rights with the US $28 million for 5 seasons. After the DLF, PepsiCo brought the title of another 5 seasons however they terminated the contract in 2015, 2 years before the completion. The reason was the two-season cancellation of the Chennai and Rajasthan franchise from the IPL league.

Pic credits : Business insider India

Afterward, BCCI transferred the title sponsorship to VIVO(technology company) with a winning bid of US $310 million. On Aug 4, 2020 VIVO pulled out as the title sponsor due to disagreements with the BCCI over discounts on the sponsorship and due to the Galwan standoff, thereby increasing the opposition to Chinese brands among people. On 18 august Fantasy sports platform dream 11 acquired the title sponsorship of IPL with a bid of US $31million. Just like other sponsorships and media revenue the money generated from title sponsorship is divided between the teams.


4. Ticket and merchandise sale

For team owners, ticketing is not a small Revenue stream.

A team owner , source :Economic times

The teams could earn between a sum of 130 – 160 crores. Top teams like Chennai super king, Mumbai Indians, and Delhi capitals could earn between 20 -25 crores. The money earned from the ticket and merchandise sale is also distributed among the team.

There is also a fixed Franchise fee payable to the BCCI, it was an average of 40 crores per team. It is estimated as Rs 65 crore each for the 2018 – 2022 cycle.


5. Prize money

Indian premier league mandates that half of the prize money should be shared among the team players. In the 2019 season of IPL total prize money of US$7 million was there, the winning team getting the US $2.8 million, the first second, and third runner-ups were also awarded the money.

Pic credits : Maps of India

Concerning teams, the prize money is not an interesting part of the IPL revenues. However being a consistent winner can increase the value of the team thereby increasing the sponsorship money, brand value, and increasing the demand of the team.


CONCLUSION

The above-mentioned are the main sources of revenues for the IPL team, so people might be thinking that the teams would be earning a very huge sum of money but it must be noted that the expenses are also very high. The transportation expenses, the salaries of the staff, and the advertisement they are shooting in order to get promotion for their team. These expenses are quite unavoidable for the team.

REFERENCES

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Sandra Joseph
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Rohith TS

Nice content