With the start of IPL 2022, the next two months of cricket super action is going to start. Along with four-six showers, there are also IPL, BCCI, money-making tournaments for team owners and players.
Since the first season in 2008, both the popularity and earnings of IPL have been steadily increasing. Now we will understand how IPL teams make money in the end.
What is the business model of IPL? How does BCCI benefit from IPL?
Rajasthan and Chennai were banned for two years in 2016-17, during which Gujarat Lions and Rising Pune Supergiants joined. Two new teams have joined this year, namely Lucknow and Ahmedabad.
That is, this time the number of teams is 8.
How do teams make money from IPL?
The whole game of IPL is business. Both the BCCI and the team owners are making huge profits from each of these. Let's take a look at the earnings from different sources from IPL.
Earnings from IPL can be divided into three parts
1. Central Revenue: These earnings are about 60-70% of the total revenue from IPL. There are two main sources of revenue from central revenue: (1) media or broadcasting rights and (2) title sponsorship.
2. Advertisement and promotional revenue: About 20-30% of the revenue from this.
3. Local Revenue: About 10% of the total revenue comes from this. This includes earnings from tickets and other items.
(1). Media or Broadcasting Rights:
Since the inception of IPL, the most important source of revenue has been earning from its broadcasting rights.
Broadcast rights mean that IPL matches can be shown only by the channel that has the rights to them.
Sony held the broadcast rights in the IPL for the next 10 years from 2008 to 2017, which paid BCCI Rs 8,200 crore for it.
The broadcasting rights were re-bid in 2018 and this time it was Star Sports who won. Star bought IPL broadcast rights for 5 years from 2018 to 2022 for Rs 16,347 crore.
Media and sports experts believe that by 2023-2028, the media rights of IPL could be sold for Rs 30,000 crore.
Let us now know how much money the team and BCCI get from this. That is, now the BCCI and the teams get half the money from the broadcasting rights.
In the first 10 seasons of the IPL, the BCCI and the teams earned Rs 8,200 crore from broadcasting rights, which is Rs 820 crore every year. In 2018, Star Sports bought the media rights for 5 years for Rs 16347 crore, which is approximately Rs 3270 crore every year.
(2) Title Sponsorship
Title sponsorship is also a major source of income for IPL teams. Title sponsorship means nomenclature before IPL like DLF, IPL, Pepsi IPL, Vivo IPL and now Tata IPL.
Brands spend a lot of money to put their name on the front of IPL titles, which is a huge advantage in promoting their brand.
DLF, one of the largest real estate developers in the country, bought the title sponsorship rights for Rs 200 crore for five seasons from IPL 2008 to 2012.
After this Pepsi spent Rs 397 crore for the next five seasons. However, Pepsi parted ways in 2015, just two years before their contract expired. BCCI then sold the rights for two seasons (2016, 2017) to Chinese smartphone company Vivo for Rs 200 crore.
Vivo again bought the rights for Rs 2199 crore for five seasons from 2018 to 2022 but due to the India-China dispute Dream11 became the title sponsor in 2020 and paid Rs 222 crore for it.
Vivo returned in 2021 and bought the title sponsorship for Rs 439.8 crore. Tata won the title sponsorship for two seasons in 2022 and spent Rs 600 crore on it.
How much did IPL teams generate from Central Revenue during 2018-2021?
Earned from IPL's Central Revenue i.e. Broadcasting Rights and Title Sponsorship The BCCI's earnings from IPL 2008 to 2017 were Rs 8400 crores, i.e. Rs 840 crores annually. Whereas BCCI estimates that from 2018 to 2021, there will be an earning of around Rs 15,500 crore. That is, about Rs 3700 crore every year.
By dividing these earnings equally between the BCCI and the teams, the 8 teams earned about Rs 1900 crore annually i.e. Rs 235-240 crores per team from the central revenue.
2. Advertising and Promotional Revenue
Advertisements and promotions generate huge revenue for the teams. Teams have their business model of earning. Under this, they enter into agreements with many companies.
Companies also pay teams for advertisements and promotions of players' and umpires' jerseys, helmets, wickets, companies' names and logos to be displayed on the field and boundary line. Teams also get players to promote other brands.
Many teams also have players promoting their brands – such as the Mumbai Indians' Gionee ad featuring several Mumbai Indians players including Rohit Sharma.
Teams also make money by selling merchandise with their names and logos on them like T-shirts, hats, gloves, etc.
According to reports, teams like Mumbai Indians earn up to Rs 50 crore every year from advertising and brand promotion.
3. Local Revenue: The third source of income for IPL teams is tickets sold on the field. Tickets sold in a match earn around Rs 4-5 crore. 80% of that money goes to the home team.
This means that teams earn around Rs 3-4 crore from every match through tickets. However, the team's earnings have declined during COVID-19.
How much do IPL teams earn every year?
If we add the earnings of the teams with the central, advertising and local revenues, then in the last few years, each team has earned around Rs 300 crore annually in the IPL.
However, they also have to spend a large part of this earning. How much do teams spend.
Out of this, IPL teams spend around Rs 90 crore every year on player fees.
Teams spend Rs 35-50 crore every year on Operation Cast, which includes flight and hotel stay of players.
That is, the team spends Rs 130-140 crore every year on both these expenses.
In addition, the teams have to pay Rs 50 lakh to the state association for organizing each match – i.e. Rs 3.50 crore for 7 matches in each season.
Also, teams have to give 20 per cent of their total earnings to the BCCI, which according to the team's earnings, is about 25-30 crores.
How much do IPL teams get every year
Now, if we deduct the cost of IPL teams from around Rs 300 crore per year, i.e. around Rs 160-165 crore, the teams get a profit of around Rs 130-140 crore per year.
Prize money: IPL prize money is also a source of income for the top 4 teams. In 2021, the winning team got Rs 20 crore and the runner-up team got Rs 12.5 crore. The third and fourth-placed teams got Rs 8.75-8.75 crore respectively. 50% of the prize money i.e. half goes to the owner of the team, while the remaining half is distributed to the team.
Adding the prize money, the annual profit of the top 4 teams of IPL is Rs 140-150 crore.