The huge financial value of the Indian Premier League (IPL) got another boost when the Board of Control for Cricket in India (BCCI) sold two new franchises for a combined amount of Rs 12,715 crore (about US$1.7 billion). October 2021.
RPSG Ventures Limited, which has prior IPL experience, is back with the new Lucknow franchise. The group spent 7,090 million rupees (about $975 million) to acquire bragging rights for the shiny new toy in town.
CVC Capital Partners, on the other hand, through its subsidiary Irelia Company Pvt Ltd, bought the long-awaited Ahmedabad franchise for Rs 5,625 crore (approximately US$754 million).
CVC is a veteran in this field and has previously invested in various sports such as Soccer, Rugby and Formula One.
The sale of two new franchises has created quite a stir after the successful conclusion of the 14th edition of the IPL. However, much of the conversation about the whole situation focused on the hefty prices the franchisees were sold for.
Veteran cricket journalist K Srinivasa Rao explained in great detail the finer details of the IPL revenue system from a franchise’s point of view in his wonderful Twitter thread.
IPL price in 2008 compared to present
To put this in context, the BCCI sold the original eight franchises in 2008 for a collective amount of around Rs 2,900 crore (approximately US$387 million).
Since then, the league’s valuation has grown at a remarkable rate. This is mainly evidenced by the huge increase in the amount for which the league’s broadcasting rights were sold.
In 2008, it was sold for a total of Rs 8,200 crore (approximately US$1.1 billion) over a 10-year period. Fast forward a decade and Star then bought the broadcasting rights for Rs 16347 crore (approximately US$ 2.19 billion) for five years from 2018-2022.
This is almost double the amount for exactly half the period as compared to the original period.
It is unclear whether the stakeholders concerned took this exponential growth in the value of the league in 2008, but ten years later there would certainly be a major improvement in their fortunes.
In fact, the property rights were sold to DLF for 200 million rupees (about $26.7 million) for the first time in the first five years. $293.8 million)!
How is the main revenue pool shared in IPL?
During the early years through season 10, the main pool of revenue was shared between the franchise and the BCCI in the ratios of 80:20, 70:30, and 60:40, with the majority of the amount going east.
However, the same pool was earmarked to be shared in the ratio of 50:50 between the two boards and the franchises after the 10th season. So the board benefited greatly from the huge increase in the valuation of the league.
Therefore, in the ratio of 50:50, BCCI is in the process of distributing around ₹9570 crores (approximately US$1.23 billion) among the eight franchises (10 for the next year) over a period of five years.
This means that Rs 1218 crore (approximately US$162.6 million) went into each franchise’s quota (taking into account the eight teams) for five seasons, meaning that each of them would get around Rs 244 crore (approximately US$ 162.6 million). $32.52 million). Central Revenue per year.
Now, there is another aspect of local income for teams. That is, they can raise the most money mainly from commercial sponsorship and ticket sales. According to Mr. Rao, teams earn between Rs 40 million (approximately US$5.3 million) and 70 million (approximately US$9.47 million) per year from sponsoring T-shirts.
Naturally, the larger teams, in terms of performance and follow-through, are more fortunate with respect to the sponsors they lure. However, the above figure was probably taken keeping in mind the situation in which all the franchises operate. Obviously, some of them haven’t had the luck of finding the right jersey sponsor.
Attract the largest number of crowds or stadiums
Now, in ideal scenarios, each IPL team earns around Rs 2.5 crore (approximately US$333,000) – Rs 3.5 crore (approximately US$467,000) through gate money, ie ticket sales, per game. This can be estimated to be around Rs 20 crore (approximately US$2.67 million) of his earnings in an ideal IPL season when fans can flock to the stadiums (multiple times).
They spend a minimal portion (Rs 50 lakh or the US $ 66,000 per game) to the respective state federations to host each game. Now, these figures may be different for the sides that attract the largest number of crowds or stadiums where ticket prices are higher than the rest.
Overall, it appears that franchisees earn around Rs 300 crore (roughly US $ 40 million) annually under the current deal, or anywhere close to that figure. They spend Rs 90 crore (about US $ 12 million) of this during the auction, and Mr. Rao’s estimates suggest that Rs 35 crore (about US $ 4.7 million) to Rs 50 crore (about the US $ 6,67 million) each year.
In addition, the BCCI has made a good provision for franchisees to benefit from the national game by ordering them to pay 20 percent of their maximum income (gross receipts) to the board each year. The BCCI then redirects this money to the improvement of national cricket.
By exempting tax, franchisees earn an overall net profit of between Rs 145 crore (approximately US $ 19.3 million) and Rs 150 crore (approximately US $ 20 million) under current circumstances. With the addition of two new franchises next year, this number will be slightly reduced.
Huge price expected for IPL broadcast rights after 2022
But the entire system will likely take a hit when broadcast and title rights are sold again after 2022. We’ve seen a massive shakeup after the post-2017 upgrade on these fronts. The revenue model for the parties has changed, or rather, vastly improved.
The same will also happen after 2022. And it will continue to happen every time after a certain period of time from now on. If you think the current numbers around leagues and franchises are insane, the average audience over the next two decades will be shocked.
Inevitably, there will be an increase in the length of franchises, matches, and therefore tournaments. Anyway, the franchise fee must be paid in installments over a period of 10 years and also without interest.
IPL has not yet risen to the top. His popularity and influence will only widen and grow in the years to come. The BCCI can also work to bring the league to viewers, which has not been violated so far. There are endless possibilities and therefore the inflow of money will also continue to grow in a staggered manner.
Gradually, the new owners will enter a more profitable phase. With many aspects of the game still untapped, such as aggressive business examples. Add to this the fact that the valuation of broadcasting and title rights will only increase in the future.
IPL is a gold mine that has yet to be adequately explored. This is just the beginning.
The dates of the sale
Notwithstanding the maintenance rules having been clarified. The dates of the sale are still to track down appearance Notwithstanding, passing by the insider reports. The conventional declaration might come soon and the bartering might be scheduled to occur in the main seven-day stretch of January 2022.
Shocks in IPL sell off history
Like the manner in which the competition works out for the Indian fans, engaging them profoundly. Correspondingly, the barterings are similarly exciting for them. The live IPL 2022 mega auction will simply be one more expansion to the extensive. Rundown of exchange that has been occurring across the ages.
