Many people have questioned how IPL franchises pay millions of dollars for star players and yet make money.
This week’s Indian Premier League (IPL) has started, and with it, the cricket excitement and the pulsating action on the ground. The Twenty20 Cricket League gives the top cricketers in the globe an opportunity to show off their skills. It is the primary goal of the Indian Premier League (IPL) for commercial firms to acquire cricket franchises.
How does IPL generate revenue and distribute it among teams ?
As part of the IPL, the Board of Control for Cricket in India (BCCI) is in charge of controlling and administering the competition, with every franchise paying a 10% fee to the BCCI. Each year the BCCI keeps a portion of this money and uses it to cover the administration costs associated with organizing the IPL season. It is the IPL revenue and cost system that works on a ten year basis, and we explain in detail how it actually works. In order to get a true sense of the cost of each franchise, let us take a look at how much each franchise costs.
There has been an exponential increase in the cost of purchasing an IPL franchise since 2008. The most expensive franchise sold in the first season was Mumbai Indians worth 839 crores, but it will cost almost 8 times more money for a franchise to be purchased in 2022. Lucknow and Ahmedabad cost 7090 crores and 5600 crores respectively.
IPL’s revenue streams and distribution channels are as follows:
If one looks at the IPL from the viewpoint of a business standpoint, it is evident that it is brilliant. Essentially, it has developed as a valuable property as part of the development of a cricket tournament. The tournament allows companies to aggressively market and advertise their products or services.
Brand sponsorships are an important source of revenue for IPL franchises. A franchise ties up with a brand in order to offer them visibility on the team’s uniforms and kits by including their logo. The sponsorship revenue is even made up of the barricades that are near the boundary lines.
The BCCI divides the IPL revenue with the teams after deducting a portion according to the revenue distribution model. Percentages are in proportion to each other, much like a weighted average. You get a larger share of the media revenue if you rank higher at the end of all matches. IPL teams earn about 60-70% of their revenue from media rights.
Ticket Sales/Gate Revenue
Another major source of income for the IPL franchises is the sale of tickets to games. Each team has the right to host a minimum of seven home games, ensuring that they have an equal chance of earning revenue. Around 10% of a team’s IPL revenue comes from ticket sales. As a result of the sale of tickets, all IPL team owners make money. The home team receives a fixed percentage of total ticket sales.
IPL teams earn a significant portion of their revenue from the sale of official merchandise. It includes official jersey replicas, sports memorabilia as well as sports equipment. IPL and its franchisees have a huge opportunity to monetize their brand through merchandising, and the IPL has begun to mimic global sporting events.
On a contract basis, the food and beverage stalls that serve spectators during matches are given to a third party, who in turn subcontracts them.
Is the IPL just about money and sponsorship instead of pure cricket?
Young people can use it as a stage on which to display their unique abilities. Seemingly. To compete with the world’s best players. To sharpen their abilities. The Indian Premier League (IPL) is all about entertainment and money.
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