Is IPL franchise profitable?

Before deep diving into IPL, we need to understand the business model of such leagues. Most of such leagues namely NFL, EPL, LaLiga and more generate revenue from broadcasting, sponsorship, goodies, stadium tickets, trading players and prize money. The expense goes into buying players, advertising, marketing and paying staff. That’s a simple revenue model of such leagues. Let’s take a deeper look into IPL.

IPL teams are owned by businessmen. It is the most cash rich league in the cricket world. It’s obvious that so many businessmen won’t be there just for a social cause or a social status. There got to be some income for the owners.

IPL makes a huge chunk of revenues from TV broadcast and digital rights. Star India won the right back in 2017 for 5 years at the cost of 55 crore per match i.e. 16,347.50 crore. Around 50% of the broadcast revenue is shared equally among the franchises. Thereafter comes the title sponsorship, which was bagged by Dream11 this time, due to the exit of Vivo. The prices are bound to get higher as the viewership increases. The opening match had a viewership of more than 200 million. Even the last year’s final didn’t gain so much of viewership.

Did you ever thought, why the teams are allowed to retains players?

The teams had a huge fan following especially, KKR, CSK, MI and RCB. Such teams are able to get huge boost from the local sponsorship because of the fan following. While watching any of the IPL match, you will be able to clearly see the local sponsor over the players t-shirt.

Moreover the teams are able to sell the merchandise, which gives a huge boost to the revenue. Because of the pandemic, they aren’t able to generate any revenue from the stadium tickets.

From expense perspective, each team has a limited budget to buy a set of players. Additionally they need to pay 10% to foreign board for each player. For instance, Pat Cummins is worth of $2 million, so the team franchise and BCCI, each needs to pay $200,000 to Cricket Australia. Additionally, they need to pay the coach and the support team. Some chunks of amount goes into marketing too. They too need to spend for the logistic costs, for food and for lodging.

IPL franchise will remain profitable this year even without the tickets revenue. The broadcasting rights and the sponsorship makes them profitable.

Tomorrow, we plan to look into how Star network generates revenue to pay such a huge amount to BCCI to broadcast IPL.

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