Inside IPL: Cricket and Business

Cricket’s fanbase across the world is estimated to be around 1 billion people, and guess what? People of the Indian subcontinent account for almost 90% of that population. So, that’s the amount of love for cricket amongst the people in India! And this is something that the Board Control for Cricket in India (BCCI) has capitalised upon over the years. In 2008, the first edition of the Indian Premier League (IPL) was played, and today it is one of the most celebrated cricket tournaments in India and all other cricketing nations. This domestic T20 cricket league is governed and organised every year by the BCCI, which, thanks to IPL, is currently the richest cricket board in the world.

This widely acclaimed tournament is the ultimate celebration of cricket, especially in India. This league is not just about cricket, it is so much more than that. Besides players, franchises, & fans, it is also about sponsorships, brand value, advertisements, awards & prizes, broadcasting, ticket sales, etc. IPL is a very successful business model on its own.

The Business model

IPL’s business model is simply based on capitalising on the love for cricket amongst the Indian population. A sound business plan, like that of IPL, does not rely on just ticket sales. They make certain that they have a variety of sources of income through which they can sustain themselves.

  1. Franchises: 

The IPL tournament franchise has grown to be a valuable commercial property. It allows businesses to promote and publicise their products and services extensively. At the heart of IPL’s business model lies the idea of inviting private entities to own franchises. When the franchise rights are sold at staggering prices, the invested firms saw the value of investing in IPL. By selling off the franchise rights IPL was able to generate money.

Currently, there are 8 franchises in the IPL, which are owned and managed by private owners. In 2008, the 1st year of IPL, bids were invited for owning franchises in the tournament. For eg.- India’s leading businessman Mukesh Ambani of Reliance Industries made the highest bid amount of $111.9 million for ‘Mumbai Indians’, Vijaya Mallya of United Breweries group stood second with $111.6 million for ‘Royal Challengers Bangalore’, Shah Rukh Khan’s Red chillies Entertainment also won bid for ‘Kolkata Knight Riders’ at $75 million. Similarly, 8 franchise rights were sold, and a pool of Rs. 5000 crore was collected by the BCCI in such bids alone.

The franchises also have their sources of income- sale of merchandise, jersey sponsorships, membership subscriptions etc. Since the fans look up to their favourite players, there’s a brand value attached to each of the franchises, which may or may not change with the performance of the teams in the event.

Currently, the valuations of franchises have taken a hit for the 1st time in 6 years due to the ongoing Covid-19 crisis.
  1. Sponsorships:

IPL is flooded with advertisements of sponsors: Title sponsorship, powerplay sponsorship, timeout sponsorship, umpire sponsorship, etc. There are sponsorships even for the celebration of small events like- a catch out, hitting of a six, player playing at a great strike rate, fastest ball delivery, game-changing performance player and what not! these are highlighted continuously by the commentators during the match, and respective awards in the name of the sponsor are distributed to the players in the end. Prominent sponsors of this year’s IPL are Vivo, Tata motors, Dream 11, Phone pe, Paytm, Justdial, Upstox, Unacademy, Byju’s, Vimal Elaichi, and many more.

  1. Media Rights: 

BCCI earns a large part of its revenue through the sale of the media rights for broadcasting IPL, due to its high viewership among Indians. Media rights of this event are very valuable because of the further TV sponsorships and advertisements it attracts. Currently, Star sports holds the media rights of IPL under a contract from 2018 till 2022 for a whopping Rs.16,348 crores! This year, Star sports roped in 18 sponsors and more than 100 advertisers for TV telecasts!

The viewership of this mega event is growing year after year:-

The craze for IPL is unstoppable, and it only seems to grow in the future. It is a very successful model, both economically and socially. It gives opportunities to young cricketers for expressing themselves. IPL also generates a lot of direct and indirect jobs, is a brilliant revenue source for all the parties monetarily involved; and is a delight to watch for the audiences and fans.

By Bhavesh Rohra

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