IPL: A money making machine

In India, cricket is a major sport, and the IPL is a huge deal for all cricket fans. The Indian Premier League is the most talked-about league in the world, and easily the most profitable.

Indian domestic cricket has undergone massive changes as a result of the commercially driven Indian Premier League.

Former Vice President of BCCI (Board of Control for Cricket in India) Lalit Modi was inspired by the model of EPL (European Premier League) and wanted an Indian version of it, thus he established IPL (Indian Premier League) in 2008, focusing on cricket rather than football. Since India is rife with cricket fans, the IPL gained popularity in the very first edition and became a worldwide sensation.

IPL’s franchise model relies on the idea of inviting private firms to become franchise owners. Due to the high price of franchise rights, other companies saw value in investing in the tournament, which is how money was raised. The tournament’s title sponsorship is contested by some of India’s largest conglomerates.

Moreover, the BCCI is able to generate large revenues through the sale of IPL media rights. As part of this revenue distribution method, the BCCI is able to receive revenue from broadcasters and online streams. Afterward, it divides this sum between the teams after deducting its part. When all results are tallied, the team with the highest ranking receives the most money. According to Business Insider, media rights generate about 60 to 70 percent of all IPL teams’ revenue.

Sponsorships are another important revenue stream for all the IPL teams. They invest their money in the team’s jerseys for the purpose of advertising with the logo. Sponsors spend more money if they want more visibility. Twenty to thirty percent of the IPL teams’ revenue comes from sponsorships.

The more people view screens, the more is the advertising. Every inch can be monetised. Every square inch produces advertising revenue, whether it’s on jerseys, caps, stadium seats, stumps, etc. BCCI divides these revenues with the participating teams.

IPL events were started by BCCI mainly to generate media rights for broadcasting ICC-sponsored events, among others, while the organisation still earned most of its revenue through broadcasting media rights for national and international cricket matches. Over the last few years, the revenues generated through IPLs have dwarfed the revenues from these sources.

Business models like this are only successful because they are carefully planned and well executed to mobilise working capital along the right axes.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s