How IPL Franchises Earn Money?

Cricket isn’t just a sport in India; it’s a full-blown passion. At the center of this cricket fever is the Indian Premier League (IPL), a spectacular event that has changed the way cricket is played and perceived. Beyond the boundaries and the sixes, the IPL is a financial behemoth, generating massive revenue and contributing significantly to the Indian economy. But how do IPL franchises make money?

The IPL Business Model

The IPL has grown exponentially since its inception in 2008, with revenue streams expanding into multiple avenues. The league’s business model is designed to generate income from various sources, including media rights, sponsorships, ticket sales, merchandise, and more. In 2024, the earnings of IPL team franchises are expected to hit record highs, showcasing the league’s immense financial muscle.

Read More : How Long Is an IPL Match?

1. Media Rights: The Biggest Revenue Generator

One of the primary ways IPL franchises earn money is through media rights. The broadcasting rights for the IPL from 2023 to 2027 were sold for a whopping INR 48,390 crores, with TV and digital rights being the most significant contributors.

• TV Rights: Disney Star secured the TV rights for the Indian subcontinent, paying an astounding Rs 23,575 crore.
• Digital Rights: Viacom18 bagged the digital rights with a bid of Rs 23,578 crore.

This massive deal highlights the IPL’s popularity and its impact on sports broadcasting. With matches streamed across various platforms, including JioCinema, the IPL reaches a global audience, further boosting its revenue.

2. Sponsorship: A Lucrative Income Stream

Sponsorship deals are another significant source of income for IPL franchises. Everything in the stadium, from the players’ jerseys to the bails on the stumps, is a potential revenue generator. Teams partner with companies to promote brands, often using player jerseys as a marketing tool. A typical IPL jersey features multiple brand logos, and the franchises also create advertising content to further promote these brands.

For example, in IPL 2024, CSK partnered with at least 18 brands, with Etihad Airways as the official sponsor. These sponsorship deals contribute massively to the franchises’ overall income.

3. Merchandising: Capitalizing on Fan Loyalty

Merchandising is another essential revenue stream for IPL teams. The sale of official merchandise, such as jersey replicas, sports equipment, and souvenirs, allows franchises to monetize their brand. The market for gaming accessories in India is growing rapidly, with an annual growth rate of 100%. Each franchise sells its own line of merchandise, including T-shirts, caps, wristwatches, and more, which helps boost their income.

4. Gate Revenue: The Impact of Packed Stadiums

Gate revenue, or the money earned from ticket sales, is another vital source of income for IPL franchises. Each franchise hosts a minimum of seven home games, providing ample opportunity to generate revenue from ticket sales. Although gate revenue contributes a smaller percentage (around 10-15%) of the total income, packed stadiums with dynamic pricing can still generate substantial profits, especially for home teams.

5. Brand Value: Enhancing Franchise Worth

Brand value plays a crucial role in how much IPL franchises earn. Teams with high-profile players like MS Dhoni, Rohit Sharma, and Virat Kohli attract more sponsors and investors, which boosts their brand value. Winning the IPL or reaching the Playoffs also enhances a team’s brand value, making it easier to secure lucrative sponsorship deals. Teams like MI, CSK, and KKR, which have won the IPL multiple times, enjoy the highest brand values.

6. Prize Money: The Rewards of Winning

Prize money is a significant income source for IPL franchises. The winning team receives a substantial prize, with the 2023 champions taking home Rs 20 crore. The runners-up, third, and fourth-placed teams also receive hefty sums. The prize money is typically split between the players and team owners, with the winning team getting the largest share.

7. Selling Stake: A Strategic Financial Move

Selling stakes in an IPL franchise can be a highly profitable move. For instance, Jindal Steel Works bought a 50% stake in the Delhi Capitals franchise for INR 550 crore. Such deals allow franchise owners to capitalize on their investments, sometimes doubling their initial expenditure.

8. Unlisted Shares: A New Revenue Stream

Some IPL franchises have started offering unlisted shares as a new way to generate revenue. For example, Chennai Super Kings (CSK) is one of the few franchises whose unlisted shares can be traded. This innovative approach provides franchises with additional capital and a valuable source of funding.

How Much Revenue Does IPL Generate in Dollars?

The IPL is not just a cricketing event; it’s a massive business venture. The league’s overall revenue is estimated to be in the billions of dollars. For example, the broadcasting rights alone for the 2023 season fetched $2.55 billion. The total revenue generated by the IPL, including sponsorships, merchandise, and ticket sales, contributes significantly to the Indian economy.

How Much IPL Team Earn Per Year?

The earnings of an IPL team can vary depending on various factors such as sponsorship deals, media rights share, and performance in the league. On average, an IPL team can earn anywhere from $20 million to $50 million per year. Teams like MI and CSK, with their high brand values and successful track records, are at the higher end of this spectrum.