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The Business behind the IPL

Updated: Oct 15, 2020

It's 1993. Doordarshan, the monopoly in broadcasting and television demands money from the BCCI to have their matches broadcasted. Cash strapped BCCI had no choice but to pay 5 lakhs every single match to pay for the broadcasting cost. Little did they know the tide was about to change.

We all know about the IPL. Call it cricket, call it entertainment, it still is a huge relief for every single citizen at home as partial normalcy returns. The IPL is the 4th largest domestic league in the world. The first game of the 2020 IPL was broadcasted to 200 million devices, but the exact number of people is not known. A league with such a reputation is a haven for brands looking to advertise their products or services. But that's not the only stream of revenue for them, in fact, the figures are dwarfed by the media rights revenue. Around 72% of The IPL's overall revenue is broadcasting rights. This year, the bid was won by Star for a staggering 3269 crore rupees, compared to 640 crore rupees sponsors had to pay to broadcast their brands to millions of people.

The BCCI now makes 25.75 lakh rupees for every ball bowled in the IPL

Title Sponsor: Dream11 - 222 crores

Official Partners:

Cred - 120 crores

Tata Motors - 120 crores

Unacademy - 120 crores

Umpire Sponsor - Paytm

Strategic Timeout Sponsor - CEAT

The rest of the money earned by The BCCI is the franchise fee, which requires every franchisee to pay a certain amount of money back to the BCCI. The major costs the BCCI are outweighed by the revenue made.

How do Franchises make money?

Franchises are in other words teams, and they play an integral role in the IPL. They don't miss out in making crores of profits either. Some franchises are owned by listed companies. A prominent example would be CSK, which is owned by India Cements. Other franchises are partly owned by film stars such as Shah Rukh Khan with KKR and Preity Zinta with KXIP. The rest may be a separate private company owned by a larger group, such as Indiawin Sports with MI. All of these big stars and companies have the capital to start because launching a successful franchise requires a heavy investment.

The main source of revenue for franchisees is the BCCI's revenue pool share, where the BCCI equally distributes 50% of its total revenue to all the 8 franchises.

Other sources of revenue include-

~ Sponsorship

~ Licensing

~ Merchandise revenue

~ Gate revenue (N/A this year)

Some of the main costs a franchisee must pay are-

~ IPL Auction (Team Purse)

~ Stadium Operation and Rent

~ Marketing

~ Travel and Accommodation

~ Support Staff

~ BCCI Fee

Most teams make roughly 100 crores in profits every season, but that number is expected to decrease as the IPL is being played in a Bio-Bubble, hence no spectators or gate revenue.

That is how the teams and the BCCI make money out of the IPL. A growing league with a colossal amount of viewers and huge profits is surely one of the most successful of all time.

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