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Massive Money Talks: Understanding How IPL Franchises Earn Money

T20 Cricket IPL 2024

Where Cricket Meets Commerce

Posted
Apr 18, 2024
Category
Economy

Cricket in India is more than just a sport; it’s a passion, a way of life. And at the heart of this cricketing frenzy lies the Indian Premier League (IPL), a glitzy and glamorous festival that has revolutionized the game. But beyond the boundaries and sixes, the IPL is a financial powerhouse that moves and shakes the Indian economy in ways that are nothing short of remarkable. In 2024, the IPL team franchise earnings are expected to be at an all-time high, making it a true economic powerhouse.

 

The Money Statistics

To comprehend the enormity of the IPL's financial muscle, one need only glance at the eye-watering sums involved. Since its inception in 2008, the IPL has witnessed exponential growth in its commercial value, with broadcasting rights, sponsorships, and merchandise sales contributing to its meteoric rise. The 2023 season, for instance, saw broadcasting rights alone fetching a staggering $2.55 billion, underscoring the league's unrivalled popularity among cricket enthusiasts worldwide.

 

how ipl franchise earn money

 

Money Matters: A Breakdown

 

1. Media Rights: Media rights is the biggest means of how IPL franchise earn money. The Indian Premier League (IPL) media rights for the period from 2023 to 2027 were sold for a staggering INR 48,390 crores (which includes both digital and TV rights) 12. Here’s the breakdown:

 

  • TV Rights: Disney Star retained the Indian sub-continent TV rights by paying an impressive Rs 23,575 crore (equivalent to Rs 57.5 crore per game) 13.
  • Digital Rights: Viacom18 secured the digital rights with a winning bid of Rs 23,578 crore

This monumental deal underscores the IPL’s immense popularity and its impact on the sports broadcasting landscape. Fans across the globe can now enjoy the cricketing extravaganza through various platforms, including JioCinema, which will stream the IPL 2024 in 4K UHD and offer coverage in 11 languages 1. Whether you’re in India, the UK, the US, Australia, or elsewhere, the IPL’s financial juggernaut continues to roll, enriching the game and captivating audiences worldwide.

 

how ipl franchise earn money

 

2. Sponsorship : Everything in the stadium, from the bails on the stamps to the players batting, has a cost. The actual revenue of Indian Premium League comes from its sponsors. Each and every IPL team franchise has sponsors for every aspect of their play, including the jersey, sleeve, and key sponsors, all of which significantly increase the teams' overall revenue. For a hefty fee, the teams collaborate with businesses to promote brands.

 

Two methods of promotion are used: print media and advertisements. The player's jerseys serve as an effective marketing tool. For this reason, an IPL costume often features ten brand logos: two on the trousers, two on the shirts and two more on the hat. Additionally, the franchisees produce advertising content to advertise the brands' merchandise.

 

Even if the IPL sponsors 2024 don't make any direct profit from the jerseys, they are nevertheless advertised through the teams' social media accounts and merchandise designs. For instance, CSK has partnerships with at least eighteen brands, with Etihad Airways serving as the official sponsor.

Dream11, a fantasy sports platform, is the co-presenting sponsor for IPL 2024. The associate ipl sponsors 2024 include Tata Motors, PayZapp by HDFC Bank, SBI, Cred, AMFI, Upstox, Charged by Thumbs Up, Britannia, Pepsi, Parle goods, Google Pixel, Haier, Jindal Steel, Vodafone, Dalmia Cements, Kamla Pasand, and Rapido.

 

how ipl franchise earn money

 

3. Merchandising : An important portion of the money that IPL teams make comes from the sales of official gear. Among other things, the IPL merchandise comprises authentic jersey reproductions, sporting equipment, and sports mementos. IPL and the franchisees have a great potential to monetize their brand through merchandise, and IPL has begun to replicate international athletic events.

 

With more IPL team franchises now pursuing heightened merchandise promotion, it is anticipated that this pattern will shift. India's market for gaming accessories is expanding at a 100 percent annual rate. This market has a value of roughly $30 million. Each franchisee sells their own brand of goods, which includes wristwatches, baseball caps, T-shirts, and other accessories.

 

 

4. Gate Revenue : Another significant source of income for the IPL franchises is the money made from the selling of match tickets. A minimum of seven home games are guaranteed to each franchise, providing them with an equal chance to make money. Though ticket sales contribute a smaller percentage (around 10-15%), packed stadiums with dynamic pricing still generate substantial income, especially for the home teams. All IPL club owners make money from ticket sales, with the home team receiving a set percentage of the total revenue.

 

The revenue from gate tickets and passes is then entirely owned by the franchises. The IPL team franchise rely heavily on their fan base for money, just like any other major sporting event. With full houses for most of the games, it is one of the most watched leagues in the world. This is one of the rare revenue streams where franchises and fans participate directly in the transaction.

 

how ipl franchise earn money

 

5. Brand Value : Brand value is really beneficial to the team. You stand a better chance of drawing in sponsors and investors if your squad features elite players like MS Dhoni, Rohit Sharma, and Virat Kohli. Participating in the Playoffs or winning the IPL helps IPL franchises increase the value of their brands. As a result, it is easier to bring brands on board at the pricing that the owners desire. This is how IPL franchise earn money through brand value. One must make note that the teams with the highest brand values are MI, CSK, and KKR, all of whom have won the IPL multiple times.

 

Therefore, DC and KXIP might not have the same negotiating leverage with brands as teams like CSK and MI. It's crucial to understand that a team's historical results do not alone determine a team's brand value. Business titans like Keshav Bansal and Neeta Ambani, as well as Bollywood actors like Shah Rukh Khan and Preity Zinta, greatly contribute to that element as well.

 

6. Prize Money : The IPL prize money system has been the same over time, enhancing the legitimacy and equity of the competition. Undoubtedly, prize money is the major sources of how IPL franchise earn money.  The winners take home a hefty prize of Rs 20 crore, while the runners-up take home Rs 13 crore. Teams who place third and fourth receive substantial rewards, taking home Rs. 7 crore and Rs. 6.5 crore, respectively. The players and team owners split the prize money, with the victorious team receiving the largest share.

 

how IPL franchise earn money

 

The winners of the Orange Cap and Purple Cap, in recognition of their outstanding batting performances, receive a substantial monetary prize of Rs 15 lakh apiece as bonus prizes.

Apart from honouring Orange and Purple Caps, the Indian Premier League also acknowledges several other outstanding performances. Significant prize money is given to the Emerging Player of the Tournament, Most Valuable Player, Power Player of the Season, Game Changer of the Season, and Super Striker of the Season, which encourages players to perform well on the field.

 

Impact on the Economy

Beyond the boundaries of the cricket field and understanding how IPL franchises earn money, its important to put light at the tournament’s impact on economy. IPL season reverberates earnings across various sectors, playing a pivotal role in stimulating economic activity and fostering growth. From tourism to advertising, hospitality to consumer goods, the IPL catalyzes spending and investment on a scale unparalleled by any other sporting event in India. Cities hosting IPL matches witness a surge in footfall, leading to increased revenue for hotels, restaurants, and local businesses.

 

Moreover, the league serves as a catalyst for job creation, offering employment opportunities ranging from event management and hospitality to marketing and media. The IPL's ability to generate employment and stimulate economic growth underscores its significance as more than just a sporting spectacle—it's a powerhouse driving economic prosperity.

 

how IPL franchise earn money

 

Top-Earning Players

At the heart of the IPL's financial narrative are the players who command whopping salaries, thanks to their prowess on the field and star power off it. Topping the list of highest-earning players is none other than Virat Kohli, whose association with the Royal Challengers Bangalore sees him pocketing a hefty paycheck, supplemented by lucrative endorsement deals. Other players like Rohit Sharma, MS Dhoni, and AB de Villiers are not far behind in leveraging their cricketing prowess to secure lucrative contracts with their respective IPL team franchise.

 

Beyond the marquee names, the IPL also provides a platform for emerging talent to showcase their skills and earn significant rewards. Youngsters like Shubman Gill, Prithvi Shaw, and Rishabh Pant have all enjoyed substantial paydays, underscoring the league's commitment to nurturing talent and rewarding performance.

 

The Future of IPL Earnings

With the ever-increasing popularity of cricket and the T20 format, IPL team franchise earnings are expected to continue their upward trajectory. This growth will likely lead to even higher player salaries, further economic benefits, and a solidified position for the IPL as a global sporting powerhouse.

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