One of the biggest sports leagues in the world, the Indian Premier League is a cash rich league that has made fortunes through the game’s popularity. To make you understand the monetary gains, here’s a special story, Understanding the financial landscape of IPL.
IPL – How did it all began for the cash rich league?
The day was 13th September 2007. In international cricket, West Indies were knocked out of the inaugural World Twenty20 by Bangladesh and India’s first ever T20 World Cup match was washed out.
While everybody was busy following the World T20 and thinking about the future of T20 cricket, none had the idea that back in India, it was the dawn of a new phase- a phase that would change the landscape of Twenty20 cricket forever. This was the day when the idea of the Indian Premier League(IPL) was launched by the BCCI.
The league’s format was very much similar to that of the English Premier League and NBA i.e. all the teams would play each other in a two-legged league stage.
The inaugural edition of the Indian Premier League was played in 2008 and ever since, the competition has been held every year. The IPL has been a grand success and is one of the most awaited cricketing events every year.
This league has helped so many youngsters produce their breakthrough performances which eventually result in their international careers.
In 2010, the IPL was the first sporting event in the world which was broadcast live on YouTube. In terms of average attendance, it was 6th among all sports leagues in the world in 2014. Currently, it is the most viewed cricketing league in the world.
IPL has gone through plenty of ups and downs since its inception. Yet, it is the richest cricketing league in the world. Whenever anything is written or said about the IPL, it is always referred to as the “Cash-Rich League”.
Financials benefits of the Cash Rich League towards Economy
- According to BCCI, the IPL contributed $182 million to India’s GDP in 2015. The economic output of the tournament that year was $418 million.
- In a research conducted by KPMG, when 20 odd IPL matches were held in the United Arab Emirates in 2014, the IPL contributed 275 million Dirhams (roughly $75 million) to the UAE economy.
- In 2009 when the entirety of the tournament was held in South Africa, a total of 22000 rooms were booked, some 10000 domestic flight bookings were made and the expenditures on food, beverage, transport and merchandise sales were in millions.
With the event being so popular, one might wonder about the financial landscape of the competition. Here’s a description.
Sponsorship for the Cash Rich League
The first and foremost form of income in any league is the sponsors of the league and of the various teams.
VIVO is currently the sponsor of the entire tournament. They acquired the sponsorship rights of the tournament at a price of 2199 crore ($323 million). The deal was more expensive compared with Barclays Premier League title sponsorship from 2013-2016.
BCCI distributes 60% of the net income from the main sponsors among the eight franchises.
All 8 franchises of the tournament have plenty of sponsors. For instance, Royal Challengers Bangalore sponsors include Zeven, DuraGuard Cement, Eros Now and HP. All the sponsors pay the teams heavily and the sponsors get plenty of publicity.
A lot of money is garnered by the stadium tickets. All the franchises earn a lot from their respective home games. Most of the matches have a full house.
Apart from the tickets, the stadiums also sell team jerseys and different kinds of merchandise. You add food and beverages to that, and a huge overall sum is accumulated. A major portion of the entire sum is paid to the home team.
Broadcasting Rights of the Cash Rich league
Star Sports acquired the broadcasting rights of the tournament for a price of $2.55 billion. A major chunk of that money is paid to each team based on the TRP ratings by BCCI. Star Sports earns through commercials. For every 10 seconds of a commercial, they earn in lakhs.
IPL attracts millions of viewers throughout the tournament. The player retention event before this year’s competition was viewed by more 8 million people.
Brand Value of IPL
IPL earns billions in brand valuation. After the 2017 edition, the brand value went up to $5.37 billion. The IPL’s brand value saw facebook being willing to spend $600 million on the digital rights of the competition from 2018-2022 which was sold to Hotstar a few years back.
Additionally, the owners of the IPL teams like Shah Rukh Khan and Preity Zinta and players like Virat Kohli and MS Dhoni just add more glamour to the competition. That is bound to affect the brand value in a very positive way.
How are the players paid?
- The players are bought by the franchises in the player auction. The bidding of a player starts from his base price. Once a player is bought by a franchise, he has to sign a contract for them.
- A player is paid based on his availability for a season. The player’s salary is affected if he is unavailable for the season or a part of it.
- Additionally, a player also gets paid additionally if he gets any of the match awards.
- The Man of the Match, the stylish player of the match, the perfect catch of the match, the super striker of the match and the nayi soch award all have monetary prizes of 1 lakh. The Man of the Match in the playoffs and final gets paid 5 lakh.
- The players who are the recipients of the Purple Cap, Orange Cap, Catch of the season award, Stylish player of the season award, Nayi Soch of the Season award, Emerging Player of the season award and Player of the Season Award are paid 10 lakh each.
- The runner-up of the tournament receives a cheque of 12.5 crore while the winning team receives 20 crore.
Financial future of the Cash Rich League called the IPL
The IPL is currently one of the richest sporting leagues in the world. Provided things go like this for the next 5 years or so, the IPL will be Business of india sports on the same financial level as the Premier Leagues or the NBA due to its brand value.