Recently 11th
edition of IPL ended. Ever thought how does the IPL became the largest cricket
league in the world. Lets understand the market of IPL.
IPL (Indian Premier
League) is the largest cricket league worldwide. And its growth rate is
increasing constantly. But before this all started and IPL was found. There was a league called ICL that is Indian Cricket League (ICL) which
was found in the year 2007. And at its initial stage it got funding from Zee
Entertainment Enterprises. But the ICL was not recognised by Board of Control
for Cricket in India (BCCI) and it was neither recognised by International
Cricket Council (ICC) so BCCI was not happy with ICL as there committee members
started joining ICL. So to compete with ICL BCCI decided to increase its prize
money for its domestic tournaments. And that was just not enough from BCCI to oppose
ICL but BCCI also decided to put a life time ban on players joining ICL which was a
huge decision and also ICL failed to attract audience. That was due to less
marketing and player not joining the league due to the fear of life ban
from BCCI. And due to that ICL not stayed in the Indian market for long and soon
shut down.
Then came Lalit Modi
with his idea of IPL that was some what inspired by ICL. And he proposed his thoughts in front of BCCI and got approved in 2007. The first tournament was held in the year 2008. With eight teams participating and a double round robin league stage games and knockout for semi-finals to reach finals. Each team had to host home match and play away games with rest of the teams.
Due to the big cricketing names associating with IPL and the top performing players from almost every cricket playing nation involved in the IPL and great marketing strategies from BCCI gave a huge start to IPL towards becoming a worlds largest cricket league. And due to its popularity in the whole world the amount of money involved the business kept on increasing day by day. And now in 2018 from when it all started in 2007 it has reached an great extent in terms of money making and business through IPL.
The total brand value of IPL when it started in 2008 was aprox 2.8 billion US$, And now in 2018 it has an huge increase in the numbers with total 5.3 billion US$.
So lets see where does the all money associated with the IPL come from. Lets understand the business model of Indian Premier League(IPL)
BCCI's Earnings
Media Rights: Media Rights are the rights for broadcasting certain show on television,
So in 2008 the media rights for broadcasting the IPL live on the television was bought by Sony Entertainment Networks for next 10 years that is 2008 to 2017 for 82 Billion US$ which has to be paid to BCCI for live broadcasting. And now in 2018 the media rights are owed by Star India for next 5 years i.e 2018 to 2022 for 160 Billion US$, That means Star India has to pay 32 Billion US$ per year for next 5 years to BCCI for live broadcasting of IPL.
So why does broadcasters pay so much for the media rights? Because they also charge the money to promote the brands in between the over breaks. The charges of the ads broadcast for a second in between the over breaks are so high that we can't even imagine it might cost us millions of dollars.
Title Sponsor: Title sponsor is the main sponsor for the IPL which is advertised with the name of the IPL. The title sponsorship rights from the year 2008 to 2012 was brought by DLF for aprox 0.4 Billion US$ per year. So till 2012 IPL was called DLF IPL.
After that title sponsorship for year 2013 to 2015 was brought by Pepsi for aprox 0.7 Billion US$ per year.
And then came the big game changer Vivo which brought the title sponsorship rights for the year 2016 to 2022 for aprox 5.34 Billion US$ per year. So now it is called Vivo IPL.
So till 2022 BCCI will be getting 5.34 Billion US$ from Vivo per year. And from that amount the 40% will be given to the participating 8 teams regardless of its loosing and winning. So each team will be getting approximately 2 Billion US$ per year.
Team Revenue: BCCI also earns from the team revenue as teams have to pay 20% from their revenue to BCCI.
Now you might be thinking if teams make so much money without winning does winning even matters? Yes it does because winning grabs the attraction of the audience and winning team is in the lime light for long period of time. That means advertisement for long period of time. And with consistent performance every year, team will also attract big sponsors. As they will create big fan base and viewer base which will provide more marketing for the sponsors.
Team Earnings
Sponsorship: Now each team has got there own title sponsor whose name is there right in front of the teams jersey. And then other small sponsors on shoulders, back, etc. So the most amount of money earned by the team is by there sponsors. Either they get sponsors or they promote there own brand like for example JIO.
Local Earning: Teams also earns locally from there home stadiums. For example stadiums get local sponsors on the ground. Then they earn form selling tickets, food, merchandise , etc.
Rewards: Then teams also earn from the winning prize amount of IPL. But minimum 50% of the amount won has to be given to the players and rest will go to the owners. Owners can also take a decision on paying more than 50% it totally depend on the franchises. So for example in this years IPL the amount for the final winners was 0.2 billion US$, from which minimum 0.1 US$ has to be given to the players.
Runner ups also gets aprox 0.12 Billion US$.
Now lets talk about the expenses of the teams
BCCI Payment: Each team has to pay 20% of the team revenue to the BCCI.
Other Expenses: The huge amount of spending is done on the stay of the players, traveling cost, support staff cost and other miscellaneous expenses.
Spot Fixing is the other source of income associated with the IPL, which i don't think it is probably need to be explaned.
But expenses are not high as compared to the revenue generated through the IPL each and every team earn something from the IPL regardless of loosing and winning the matches. Any how if team looses and get a loss of some crores it does't matters to the owners much as IPL has got big viewer base and has become such a huge advertising and marketing opportunity for the brands and owners itself. So for example if Mumbai looses and Ambani has loss of few crore it will not matter him much as he has promoted his brand JIO on such a large platform which will benefit him in the long run in the business.
And now IPL is no more just a cricket game it has become an business and money earning opportunity for each and everyone associated with it. And every person connected with IPL is earning money in one way or the other and all are the winners.
But talking about losers then we the viewers are the biggest losers, Because after watching IPL for almost 5 hours we are not receiving a single penny instead we are wasting our precious time which we could have utilized in some creative work and working towards our own life goals.
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