What is the Profit for IPL Franchise?

The 53-day long tournament scored more revenue and viewership in 2020, and 2021 is expected to ‘score’ even better. We calculate some rough numbers..


India is all geared up for the most awaited cricket tournaments — India Premier league (IPL) 2021— which will begin on April 9 in Chennai. Besides Covid restrictions, several factors affected the business of IPL in 2020. First, the IPL was moved out of India to UAE which added to the franchises’ expenses, second, BCCI and Vivo had suspended their partnership which affected the ‘central revenue pool’ of the BCCI and franchises. However, despite unusual arrangements, the 53-day long tournament scored more revenue and viewership, and 2021 is expected to ‘score’ even better. Let’s have a look at some rough figures and calculations, as to how much each  franchise takes back home on an average each year.

Main Revenue Sources of IPL Teams

The ‘central IPL revenue pool’

This is a fixed source of income for both BCCI and franchises, which is shared in a 60:40 ratio. This consists of two revenue sources – Broadcasting rights and sponsorships.

Sponsors

The logos on the jersey of players, training kits are a part of sponsorship income. The team’s tie-up with companies to promote their brands in return for good money. Usually, promotion is done in two forms, through print media and advertorials. This sponsorship is different from the one which is shared between BCCI and teams. This is the local sponsorship which each individual team gets on their own.

Gate Revenue/ Tickets Sales

Franchise is allowed to a minimum of 8 matches and they have the complete right on the income from the gate passes and tickets.

Merchandising

This includes the sale of jersey replicas, sports souvenirs and sports equipment among others.

Prize Money

The winner of the IPL title receives a big chunk of the prize money, while the rest of the amount is equally divided among other teams.

‘‘

IPL teams are expecting a 40% jump in revenue with digital sponsorship deals. Many brands (Myntra for Chennai Super Kings) are looking at creating digital content by partnering with franchises.

Money Report Card 2020 IPL

Average Profit For Each IPL Team

Total number of franchise – Eight

Broadcasting partner: Star Channel – Rs 3,269 Cr
Title sponsor: Dream 11 – Rs 222 Cr
Official Partners: Tata Motors, Unacademy, CRED – Rs 120 Cr
Strategic Time Out Partner: CEAT – Rs 30 Cr
Umpire Sponsor: Paytm – Rs 28 Cr
Other sponsorships – Rs 300 crore

Total BCCI Central Revenue Pool = Rs 4,000 Cr

Each franchise’s share (40%) from central revenue pool = Rs 1600 Cr /8 teams =Rs 200 Cr

Now, lets calculate the total revenue earned by each franchise:

CREDIT

BCCI central pool share – Rs 200 Cr (as calculated above)
Gate revenue – Rs 20-30 Cr
Licensing – Rs 5 Cr
Jersey, associate and kit sponsorship – Rs 40-50 Cr
Total = Rs 200-285 Cr

DEBIT

Stadium operations cost – Rs 8 Cr
Stadium rent – Rs 2.4 Cr
Team support staff hiring costs – Rs 3 Cr
Team purse – Rs 85 Cr
Travel costs – Rs 4 Cr
Franchise staff – Rs 1.5 Cr
Marketing – Rs 6 Cr
Administration cost – Rs 1 Cr
Accommodation expenses – Rs 1.5 Cr
Miscellaneous – Rs 1 Cr

Franchise fees to the BCCI – Rs 54 Cr

Total = Rs 100-167 Cr

Average profit = Rs 100-120 Cr each (minus the prize money which starts from Rs 20 cr)

This is the approximate average profit that each franchise earns every IPL. Depending on the local sponsorship of each team, this figure would change. 

What Will IPL 2021 Look like?

The year 2020 saw a 25% increase in viewership from last year and is set to increase further in 2021. This could also mean an increase in jersey sponsorship, which fell last year. Vivo is back as the title sponsor of the IPL for 2021 at ₹440 crore, which means a bigger central revenue pool.

IPL teams are expecting a 40% jump in revenue with digital sponsorship deals. Many brands (Myntra for Chennai Super Kings) are looking at creating digital content by partnering with franchises. These digital deals could help IPL teams score better in terms of sponsorship revenues. Such deals entail use of team name, logo or pictures of players to create digital campaigns. Though the teams fear losing Rs 25 to 35 Cr each in the view of ‘no physical audience’ diktat, the other revenue streams are likely to compensate all. We will have to wait and watch the ‘game’ for that.

Naina Sood
Naina Sood
Naina is assistant editor at Dutch Uncles, she writes on policies, business-life-cycle, funding and start-ups. An alumna of University of Nottingham, her stint includes Businessworld and Hindustan Times.

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