IPL has become one of the fan favorites since its very first season. Recently it has completed its 13th edition even amid the corona pandemic. Here we will look at the business model of this cash-rich t20 tournament and the sources of incomes and expanses of the IPL franchise owners.
1. Media rights :
Media rights are the main revenue source for the franchise owners. The broadcasting channel that gets the media rights pays some amount to BCCI, and BCCI distributes some portion of that amount between the teams. It accounts for 60 - 70% of the revenues of the IPL franchise owners.
For example, from 2008 to 2017, Sony had the media rights for which it had paid 8200 crores at the rate of 820 crores per season. Similarly, the current media partner star has paid 16347 crores for a time period of 5 years, i.e, 2018 to 2022, and at the rate of 3270 crores per year.
2. Brand sponsorships :
Brand sponsorship is another source of income for the franchises. For example, Samsung is the current brand sponsor of Mumbai Indians.
3. Title sponsorship :
All of us know that this 2020 edition of IPL was known as 'Dream 11 IPL'. Actually, Dream 11 was the title sponsor of IPL this year, and for that, it paid 222 crores to the BCCI for this season only. Any way this amount is much more than what the previous sponsors have paid. BCCI distributes some portion of this among the teams.
4. Ticket sales :
The revenue generated from the stadium match ticket sales is another source of income for the home franchises. For example, RCB will generate revenue for any match ticket sold for an IPL match in the Chinnaswamy stadium.
5. Merchandise sales :
IPL franchises also earn money by selling their branded caps, jerseys, etc.
6. Player trading :
If a team trades a player with a lower price tag for another player with a higher price tag in the trading window, the team can get economic benefits.
7. Prize money :
The tournament title winners are awarded prize money of 20 crores while runners ups are with 12.5 crores. The team owners distribute some prize money with the players and keep the remaining money with them.
However, surprisingly, compared to other revenue sources, the revenue from prize money is very less for franchise owners.
Expenses of IPL teams :
If we talk about the teams' expenses, they have to share 20% of their revenue with BCCI, their largest expense. Besides, the players' salaries, flights and hotel booking, administration, and other operating costs are the other expenses of the teams.
The teams also spend a lot on an advertisement, including making the theme songs like 'Halla bol' for Rajasthan Royals, 'Duniya hila denge hum' for Mumbai Indians, etc.
The inclusion of some celebrities like SRK for KKR, Preity Zinta for KXIP also increases the franchise's brand value. Some owners like Mukesh Ambani also promote their own brand (Jio) through the IPL.
So to conclude, the revenues for the IPL franchise owners have increased in the past few years due to the increase in their brand value and sponsorship. However, some franchises like Decan Chargers had to end their journey due to the financial crisis. So it's the governing body, i.e., the BCCI, who gets the ultimate benefits from the IPL.
You must be logged in to post a comment.