IPL Viewership

According to Broadcast Audience Research Council of India (BARC), IPL 2020 edition broke previous records and became the biggest ever IPL edition in terms of viewership. It is the first sports tournament to surpass 400 billion viewing minutes. IPL 2020 was delayed due to the COVID-19 pandemic and was finally played in September 2020 (post the lockdown) in the United Arab Emirates (UAE). Despite the absence of spectators at the field but with a virtual presence of the audience, the game turned out to be a huge success. Currently, Star India holds the media rights to telecast the event globally. And, IPL franchises generate 70 per cent of revenue by these media rights.

Till 2019, IPL was one of the biggest sporting leagues in the world in terms of brand and annual viewership. Though the overall viewership across television and other digital platforms increased immensely in 2020. But brand valuation decreased. According to a Duff & Phelps report, for the first time in seven years, the brand value of IPL dropped by 3.6 per cent (in rupee terms). However, that does not make the event and its contribution to the nation’s economic growth any less.

Title Sponsorship

Over the years, the Title Sponsorship has changed hands from DLF, Pepsi to VIVO. In 2020, VIVO in mutual agreement with BCCI had to pause the Sponsorship due to ongoing India China Border tensions. Hence, the 2020 Title Sponsorship was given to Dream 11.

IPL Winners

Mumbai Indians is the only team that has won the IPL title five times since the inception of the tournament. And it is owned by Reliance Industries, India’s biggest conglomerate. With IPL 2021, you will see another edge of the chair performance in a month’s time as IPL 2021 begins on April 9, 2021.

What’s in it for me?

IPL has added the experience of cricketing carnival for its audience. It is one of the most-watched events. Thus, any association of start-ups with IPL will enhance digital footprints, bring more visibility to their product/service and will create awareness of the brand among the consumers. It will create more business opportunities, new associations and build further credibility for the brand.

Pandemic has hurt the Merchandise Sales 

According to a study by Mondaq, the pandemic has slowed the pace of licensing and merchandising business to 3.4 percent as compared to 4.1 percent in 2020, due to less presence of spectators in the stadiums.  In Kolkata, the home of the club Kolkata Knight Riders the merchandise sellers from Maidan have experienced 2020 to be a grim year for merchandise sales since the IPL 2020 was held overseas. 

Fighting the Counterfeit products 

Merchandising is one of the greatest missing links in IPL’s success that hurts the revenues. The low revenue generation from merchandising business has gathered concerns from the organisers to boost it. IPL organisers have decided to fight the menace of counterfeit merchandise by appointing a central agency that will have the license to sell merchandise for the teams, thus keeping a check on the counterfeit products. However, IPL teams have the liberty to partner with any other company.  

Indian Premier League (IPL): Changed the fate of BCCI

In 2007, the inception of the Indian Premier League (IPL) turned out to be the fate-changer. It changed the fate of the cricketing fraternity and the board. The combination of Cricket and Bollywood Celebrities was an instant hit. It gathered a huge fan following and IPL became one of the main sources of income for BCCI.  

IPL changed the power equations in world cricket too.

As per BCCI Annual report 2016-2017, the valuation appraisal firm Duff & Phelps estimated the IPL brand to be worth $5.3 billion (Rs. 37,100 Crore) in 2017. And as per Duff & Phelps IPL Brand Valuation Report 2019, the overall value of the Indian Premier League (IPL) ecosystem in 2019 has increased to around US $ 6.8 billion (Rs. 47,500 crores) from US $ 6.3 billion (Rs. 41,800 crores) in 2018.

What does this mean for India?

Indian audience and Indian cricket players, their passion has made Cricket the favourite and one of the most-watched sports in this day and age. India generates more than 70 per cent of the global revenue by being one of the largest populations to watch the sport. The rights to private channels to telecast the matches and IPL inception was a game-changer that led to the great transition of BCCI. In the mid-2000s the growth of Indian cricket was exponential.

As per the balance sheet in the year 2018-2019, the BCCI’s valuation has reached Rs 14,489.80 which made it richer than International Cricket Council (ICC). Therefore, BCCI has become richer and now the world’s richest board.

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.

How are things going for Reliance and Mumbai Indians?

In the year 2020, the whole world was adversely affected by COVID-19. In IPL, the revenue generated with tickets was the lowest due to the coronavirus. Mumbai Indians still managed to close 36 sponsorships deals even in such an adverse situation. The revenue earned by the IMG-Reliance was record-breaking. They enriched their portfolios significantly in the sponsorship business despite being in the business for mere four years. Some of the official sponsors of Mumbai Indians for IPL 2020 were Balkrishna Industries Ltd (BKT), Usha International, Kingfisher, Colgate, William Lawsons, Dream11, MakeMyTrip, Boat, Mai Dubai, Performax, Reliance Foundation, DNA Networks, Radio City 91.1 FM and Fever 104 FM.

With millions of viewers watching IPL on television and other millions enjoying it on the OTT platform, the sponsorship business of IPL has grown many folds. IMG-Reliance holds one of the most popular and performance-driven teams in the IPL. This enables them to cash on revenues from all the spheres. Being the leading franchise of the IPL in 2020, its brand value is over 70 million dollars. In 2021, these numbers are only expected to get higher as with the coronavirus norms being eased and more people are likely to come to the stadiums as compared to the last year. Also, the television and OTT views of Mumbai Indians are soaring as high as their flooded stadiums. An estimate of around an increase to 77 million dollars in brand value alone is a possibility in 2021 along with more sponsorships and more ticketing revenue.

IPL auction in 2021 

The IPL auction held on February 18, 2021, franchisees had a list of 292 players to choose from. A total of 1114 players had registered for IPL 2021 auction from where 292 were shortlisted. The IPL teams of 2021 can either 18 members or a 25 member team. In a 25 member team size, 8 players have to be from overseas and 17 players should be Indian. 

Minimum budget for the IPL Auction 2021 

Each IPL franchisee has been allotted a maximum budget of 85 crores to buy a player and no franchise will be allowed to buy a player beyond the purchase capacity. Also, the minimum amount that a franchisee can spend to buy a player is upto 75 % of the overall purse. In case a franchise completes its squad by purchasing 18 players within 70% of the money, the remaining 5% of the balance will directly go to the Board of Cricket Control of India.

The Right to Match Power 

The IPL auction of 2021 was a mini-auction, due to which the Right to Match (RTM) card will not be available to franchises’ bids to re-sign the players they have released before the auction. To get the released players back, franchisees need to bid again. 

In Right to Match card, the franchises can retain their released players back even if a franchisee buys him, it is generally available during the mega auction. 

IPL in 2022

With things returning to normalcy, this year’s IPL 2021 will begin in April. BCCI will be roping in additional two teams in IPL 2022, where instead of eight teams there will be an addition of two more new teams. With the addition of two new teams, BCCI has decided to fix the base price of each franchisee to be at a minimum of Rs 1500 Crore. Based on the base price the bidding war will take place, and will follow the same suit where the player is bought by the one who bids the highest.

Factors Contributing to Revenue Stream of Indian Premier League

As per a report from Duff and Phelps, IPL’s valuation in 2019 became $6.8 billion from $3.2 billion in 2014. Below are some of the factors that contribute to the revenue stream of Indian Premier League: 

Jersey, Helmets, and barricades near the boundaries 

Brand endorsing their logos printed on a players’ helmet, logo, including the boundary barricades receives large scale visibility that contributes approximately 20% – 30% of an IPL team’s revenues. The minimum price for endorsing a logo at the backside of the helmet begins from Rs 1 crore, Rs 4-5 crores for a logo at the back of the jersey, and Rs 7 crores for the front of the jersey. The more prominent and bold the brands want their name to be displayed on the chest or behind the jersey, more the team generates revenue. Brands such as Gionee, Oppo, Vivo, Karbonn, Lava, Micromax, Vodafone, Idea, Amazon, Flipkart, Paytm, Freecharge, KFC, Swiggy, etc. have been some of the IPL’s prominent sponsors over the last few years.

Broadcasting rights 

Broadcasting rights forms the lion’s share of 60% – 70% of the revenue earned by the IPL teams. The BCCI ( Board of Cricket Control of India) collects massive revenue from the event sponsors, broadcasters, and online streamers. It retains 50 percent of the revenue and distributes the rest among the teams. The teams receive the amount in the proportion or weighted average of the match rankings. The team that ranks higher at the end of all receives the maximum share of the media revenue. Sony Entertainment and Star Sports have been the official broadcasters for IPL. 

 Ticket Sales 

The revenue through ticket sales forms 10 percent of the IPL teams. If the team happens to play in their home ground or city then the sales of tickets would form a part of their revenue. The ticket prices are decided by the team owners in which a small portion of the ticket sales goes to the sponsors and the BCCI and the rest amount goes to the team’s wallet. The ticket prices are also dependent on the seating capacity of the stadium, the wallet capacity of the individuals in the city, and the enthusiasm around the match. 

Prize Money 

The winners of the seven-week extravaganza cricket event receive lucrative prize money in IPL. The champions receive a larger share of the pie while the runners up and other teams get a small share. In IPL 2020, the winners got 10 crores, the runners up received 6.25 crores and teams ranking third and fourth at the playoffs received 4.375 crores each. For the winning team, the prize money is distributed amongst owners and players. The official terms and conditions say that at least 50% of the prize money must be distributed among players, but how much would be offered over and above is decided by the team owner. 

Business of Merchandising 

Unlike football leagues where fans worship the teams that translates into incomes, the merchandising in IPL is nascent since fans in cricket largely favour the players than the team. The fan’s loyalty base shifts if their favourite players are picked up by some other team in the next season. IPL is yet to earn the revenues from merchandise that includes selling T-shirts, caps, wrist watches, souvenirs, etc.  In such tough times of the pandemic, IPL 2020 has been a cushion to various small and medium fitness and lifestyle brands by offering them the contract of sports jerseys, kits, masks , caps etc. . 

Stall rentals

The food and beverage stalls that serve the spectators during matches are allowed to do business on a contract basis to a third party which again subcontracts it. The franchise collects a fixed amount from a stall per match basis. 

Player Exchange during auction

Before every IPL auction, a player transfer window is created where teams can exchange players. Teams can exchange a less expensive player who performs decently in the matches with an exceptional player with some money as compensation.

For the startups here:

India considers cricket as nothing less of a religion. The love for this game is hard to go. For startups to invest in marketing in such high voltage sports events, it will be a shot in the arm to receive large-scale visibility. There is no denying that it will be an expensive affair to invest in such events, but the attention received will be incomparable to the traditional approach.