💎 IPL - the business model that hit a sixer

After an exciting week where we celebrated 2 years of Dezerv, I watched the RCB vs DC IPL match yesterday.

During the match at one point I noticed the viewers as 1.1 crore! 1.1 crore viewers watching a single event on Jio TV. This left me amazed at the scale at which IPL has reached. Indian Premier League is one of India's most sought-after sports events; it's almost like the festive season.

The IPL has not only evolved into a highly celebrated sports event in India but has also become a substantial revenue generator for numerous stakeholders and has made a remarkable impact on the growth of the Indian economy.

How, you ask? Whether you go by the slogan, Ee Sala Cup Namde or O Dilli re, tu Roar Macha, you and I contribute to IPLs massive revenue-generating business. In this weeks issue, I will dive into IPL as a business model and more. Stay tuned till the end.

IPL - the business model that hit a sixer

The Indian Premier League is likely one of the few industries in India that rising interest rates, a global pandemic, or high inflation won't impact.

In December 2022, The Indian Premier League (IPL) officially joined the elite 'decacorn' club! (Decacorns are privately-held firms that exceed the valuation of $10 billion). With a valuation skyrocketing to INR 90,038 crores ($10.9 billion), IPL has witnessed a staggering 75% growth in dollar terms since 2020. This fantastic achievement makes the IPL a coveted decacorn - in just 15 years since its inception.

IPL's revenue breakdown

The primary sources of revenue include

• Media rights
• Sponsorships
• Ticket sales and
• Franchise fees

Let’s dig a bit deeper -

Media rights: In 2022, Reliance Jio TV bagged the global media rights for IPL for a massive INR 23,800 crore (INR 200 crores higher than what Disney Hotstar paid for exclusive rights earlier), covering the period of 2023-2027.

Sponsorships: IPL enjoys a strong line-up of sponsors, with Tata being the title sponsor, shelling out around INR 670 crores for two years. The previous title sponsor Vivo had also paid INR 454 crores to terminate its title sponsorship. That adds up to a whooping INR 1124 crore revenue for BCCI. Other major sponsors include Paytm, Coca-Cola, and Tata Motors, contributing significantly to the revenue.

Franchise fees: The eight franchises pay an annual fee to BCCI, totalling INR 17,911 crores for ten years. This includes the latest team additions, Ahmedabad and Lucknow, who paid a whopping INR 5,500 crores and INR 7090 crores, respectively.

Additionally, franchises generate revenue from team-specific sponsorships, tickets and merchandise sales.

Business model

IPL's business model relies on revenue sharing between BCCI, franchises, and players. Media Rights and Sponsorships comprise 70-80% of the IPL revenue and are known as the central pool.

The BCCI retains around 50% of the central revenue pool, while the remaining 45% is distributed among the franchises and the other 5% is allocated to the winning teams as prize money.

Why should boys have all the fun?

Every year since 2008, the men's IPL team has enjoyed the limelight as a source of business and entertainment. But this year, that has changed—the time has come for women to take centre stage.

With the recent sale of five teams in the inaugural Women's Premier League (WPL), BCCI raked in INR 4,669.99 crore. Established IPL team owners Mumbai Indians, Royal Challengers Bangalore, and Delhi Capitals also joined the WPL party with successful bids of INR 912.99 crores, INR 901 crores, and INR 810 crores, respectively.

So, what's the big deal? The Women's IPL has outshined the Men's IPL! In 2008, Men's IPL teams had a combined franchise value of INR 2,853.6 crores. With the WPL, the women's league has shattered records and is off to a fantastic start.

Economic impact of IPL: a home run for India

The Indian Premier League doesn't just entertain millions of cricket fans; it also brings in big bucks for the Indian economy. A KPMG survey report reveals that the 60-day tournament contributed a staggering INR 11.5 billion ($182 million) to the economy in 2021. Furthermore, a report submitted by the UN General Assembly for Peace and Development estimated the economic value of IPL to be $3.2 billion!

So, how does the IPL generate this value?

The answer lies in several factors. First and foremost, the league creates many employment opportunities for thousands of Indians. From high-paying sports-related professions like physiotherapy and coaching staff to stadium-related jobs like stewarding, the IPL has got it all covered. Alongside this, there's a boost in the tourism and hospitality sectors too.

In a nutshell, the IPL isn't just a thrilling sports event but also an economic powerhouse that fuels growth and creates opportunities across the nation.