IPL is considered as one of the biggest festival seasons of India. The excitement level of cricket fans during IPL is always unmatchable. The ad breaks, the signature tune of IPl and many other things captivates our mind during an IPL season. But do you know how your favourite Indian tournament IPL earns money? Today, we will let you know about the business model of IPL. But before understanding the business model of IPL, you should know the history of IPL in India. Let’s discuss it.
How did the IPL start in India?
Indian Premier League ( IPL) is organised and controlled by the BCCI, the Indian cricket representative at International level. The idea of IPL tournament is said to have come from the similar tournament, ICL organised by a private company, Zee Entertainment Enterprises in 2007. The BCCI was unhappy with the ICL(Indian Cricket League) seeing Indian cricketers going to play in the ICL. The Indian Cricket Board even announced a ban on cricketers who will play in the ICL. The salary of the players in the domestic tournaments were increased by the BCCI in order to stop the players from playing ICL. In short, the BCCI didn’t want a cricket league which was out of its control.
On 13 September, 2007, BCCI announced a tournament with the similar concept of ICL, that is ‘Indian Premier League’. However, Lalit Modi, the then Vice President of BCCI denied taking any inspiration from ICL. Since ICL didn’t get the required recognition by the BCCI and ICC, it ended in 2009 after organising 2 seasons.
The mega blockbuster seasons of IPL started in India from April, 2008 under the authority of BCCI. Now let’s understand what is the business model of IPL and how IPL teams earn money.
IPL Business Model
The BCCI is the governing body of the Indian Premier League and it’s a private entity. The Indian Government has no control in the regulations of BCCI and IPL .
However, BCCI is not the only component in the Business model of IPL. BCCI along with Broadcasters, Sponsors and IPL teams comprises the four main components of IPL Business model.
Broadcasters are the tv channels on which we watch IPL matches. For example, Star Sports channel has been broadcasting the IPL since 2018.
- IPL teams
IPL teams are generally owned by private companies and private individuals like big businessmen and famous celebrities. For example, Shah Rukh Khan owns the Kolkata Knight Riders (KKR) team, while Reliance company owns the Mumbai Indians (MI) team.
Sponsors are the private companies who sponsor IPL, IPL teams and give ads to television channels. For example, Vivo, Dream 11, TATA are the various sponsors of the Indian Premier League.
- Board of Cricket Council of India(BCCI)
The India’s cricket board, BCCI has the authority to organise the IPL tournament. The BCCI earns a lot of money from various sources by organising the IPL.
How does the BCCI earn money from the IPL?
There are two main sources of revenue from which the BCCI gets money. These are:
We very well know, big national and international companies sponsor their ads during the IPL. There are mainly two types of sponsors who give money to the BCCI for their brand promotion.
- Title Sponsors
Companies pay a lot of money to the BCCI to become the title sponsor of an IPL season. We have seen brands or companies’ names used along with the name of IPL. For example, DLF IPL, Pepsi IPL, Vivo IPL, TATA IPL etc.
For the first five seasons of the IPL, DLF had become the title sponsor of the tournament by paying Rs. 40 crore per year to the BCCI.
During the 6th season, Pepsi had sponsored the IPL by paying 79 crore to the BCCI. Vivo then took over the position of title sponsor by paying an amount of Rs. 100 crore per year in 2016-17 and Rs. 400 crore per year during 2018 and 2019. In 2020, Vivo being a Chinese company had to withdraw from title sponsorship due to tensions between India and China. Dream 11 had then sponsored the IPL season in 2020.
Vivo regained its position as title sponsor in 2021 by paying a hefty amount of Rs. 440 crore per year to the BCCI. In the present season of IPL, TATA company is the title sponsor. According to media reports, TATA is expected to pay an amount of Rs. 330 crore per year to the BCCI. Also, TATA has signed this contract for two years. This means in 2022 also, TATA will be the title sponsor of the IPL.
- Official sponsors
Official sponsors are the brands which sponsor different aspects or things of IPL. For example, CEAT Tyres sponsors the strategy break of IPL by paying 30 Crore to the BCCI. In the same way, we have heard terms like Dream 11 Game Changer of the match, Cred Power Play etc. All these terms define the companies sponsoring the different parts of IPL.
It is important to know that whatever BCCI earns from the title and official sponsors, it takes 50% of the revenue and gives the other 50% to the IPL teams. It is estimated that BCCI earns approx 210 crore from official sponsors.
By giving rights of broadcasting the IPL to broadcasters, BCCI earns a huge sum of money. BCCI in exchange of money gives the authority to tv channels that they can broadcast the IPL. For example, BCCI had got a sum of Rs. 8200 crore for giving media rights to SONY for broadcasting IPL for 10 seasons on its channel. In 2016, Star Sports purchased the media rights to broadcast IPL in exchange for 3,300 Crore per year from the BCCI. Also, Star Sports gets more revenue through ads than the amount it spends on purchasing the media rights. Star Sports charges 14.5 lac from companies for broadcasting a 10 sec ad on its channel.
Again, the revenue which comes from the broadcasters, BCCI takes its 50% and gives another 50% to IPL teams .
How do IPL teams earn money?
Companies, Businessmen and Celebrities spend a lot of money in buying an IPL team. It is estimated that an IPL team owner has to spend a minimum of 200 crore for the maintenance of his team. The maintenance includes players’ salary, transportation and training. But how does the team owner manage to spend such a hefty amount on players? How do the IPL teams make money? Let’s discuss it.
IPL team owners actually earn a lot from team sponsors, BCCI and other sources. Here are the main revenue generating bodies for IPL teams.
- BCCI shares 50 % of its revenue with IPL teams. This is one of the primary sources of money for IPL teams .
- Team sponsors are the main revenue generating body for IPL teams. Companies sponsor the jerseys of the players of a particular team. Brands give money to IPL teams and in exchange IPL teams’ players wear jerseys having multiple logos of the brands. On an average, an IPL player has 6 logos of sponsored brands on his jersey, 2 logos on pants and 2 logos on cap.
- Third revenue generating body for IPL teams is ticket money. When a team plays in its home stadium, then it gets 80% of the ticket money, while the Home State Cricket Association takes the other 20%. For example, Mumbai Indians will take 80% of the ticket money if it is playing in Wankhede stadium of Mumbai. Every team gets an equal opportunity to play in its home stadium.
- IPL teams merchandise their jerseys, keyrings, mobile covers, pants, caps etc to make money in the market. The teams having high brand value make more money through merchandise and business.
- The last source of money for IPL teams is the winning price of the IPL trophy. The winning IPL team gets 20 crore, the Runner-up gets 13 crore and the loser of qualifier-2 and eliminator gets 7 crore and 6.5 crore respectively.
Conclusion:- Today, IPL itself has become a brand name in India as well as outside India. The money this tournament earns can’t be compared to the earnings of any other cricket tournament in the world. This is the power of IPL that even daily soaps’ TRPs go down during IPL days. At last, it is not wrong to say that India is very lucky to have the IPL.