ICC World Cup cricket is still the most popular sport in the world. But the last two decades have seen exceptions to this trend. ICC World Cup cricket is now very popular due to the Indian Premier League or IPL franchise system.
Needless to say, India, a country with 80 per cent of the world’s total cricket spectators, will outperform all other cricket tournaments in terms of popularity. However, the topic of discussion today is not about the popularity of the IPL; Rather, it is about the huge amount of money that is collected in the IPL.
It would not be an exaggeration to say that IPL means scattering of money. Huge amount of money is exchanged in this tournament. Players from all over the world come and gather in India. The franchises charge high prices for each person. The only thing on the page of the newspaper is the picture of the events of IPL. Only IPL news on television channels. Ever wondered where the money is coming from? Where is the financial benefit of the franchises that are buying players at such a huge price? Or what is the financial gain at all?
No, the IPL franchises have not opened their doors. Or they don’t have such a love for cricket that they will spend their pocket money to buy an IPL team. Franchisees ‘invest’ when they see that they have unadulterated and huge financial benefits.
There are many franchises who do not have the advantage of playing on the field but benefit financially. And that’s why they fought again the next year with double the effort.
Let’s find out exactly how much money is invested in the IPL and how franchises benefit from that huge investment.
IPL Media Rights
Given the huge popularity of the IPL, this sector is the biggest source of revenue for IPL franchises. This sector includes money from all television channels and online broadcasters.
The BCCI, the central body of the IPL, initially accepted the money. Subsequently, at the end of the tournament, the money is distributed among the franchisees at a fixed proportional rate.
But one thing to keep in mind here. The main purpose of media or broadcasting rights is the number of viewers. So the franchises that have been able to attract the maximum number of spectators in their matches, they will get several times the average amount of media fee per match.
In general, the number of spectators in the final matches is always higher. So media fees skyrocket in that case. If there is a huge number of spectators in any match other than the final, then the media fee for that match is also very high.
About 50 per cent of the total revenue of IPL franchises comes from this sector.
Franchise Brand Sponsorship
Brand sponsorship is the second largest source of revenue for IPL franchises. About 20 percent of the total revenue from this sector comes to the franchisees.
Each franchise allows different commercial establishments to run their campaigns in their team jerseys, caps, shoes and bags. In return they accept a hefty sum of money.
However, the amount of this money is different. If a business wants to present its logo in a bright and clear form, then it has to pay more.
Again near the chest in front of the players ‘jerseys, above or below the players’ names on the back of the jerseys, above the bags used by the players; Where the human eye falls most; The franchisees get the most money for the name or logo of the commercial organization.
According to the agreement with the franchise, the brands can also organize a special event with the players of that franchise if they want. In addition, many franchise players take part in TV commercials for their main sponsor brand. Through these, the franchisees get a lot of money.
IPL Ticket Sales
The franchises make money from the tickets for all the matches that take place at their home ground. The owners of the franchises basically set the ticket price for each match. However, care is taken so that the ticket price does not go up so much again, so that it does not go beyond the purchasing power of the common man.
The capacity of the spectators on the field, the recent popularity and success rate of the team and the quality of life of the people of that city affect the ticket price.
About 15 to 20 per cent of the proceeds from ticket sales go to the BCCI. A small portion goes to the original sponsor. And the lion’s share remains with the franchise.
However, the situation is not always the same. The IPL authorities want, however, that not a single seat in the gallery be left vacant, and that spectators watching the game on TV feel that this year’s event has been a huge hit. To ensure this, franchise owners are often forced to set a minimum ticket price so that spectators can come to the stadium and watch the game despite not having much interest.
8 to 10 percent of the total revenue of IPL franchises comes from ticket sales.
IPL Prize Money
The participating franchises receive a large sum of money for the prize money of the tournament. The 2016 champions Chennai Super Kings received a total of Rs 20 crore as prize money.
This money was divided into two parts. Rs 10 crore was distributed among all the players, coaches and all other staff of the team. The franchise owner got the remaining Rs 10 crore. Runners-up Sunrisers Hyderabad were also not left out. They got 12 crore rupees. The other two teams in the semifinals also received large sums of money.
In 2019, the prize money of the champion Mumbai Indians was Rs 20 crore. The sharing was just like before.
And runners-up Chennai Super Kings get 12 crore rupees.
Franchise Merchandise Sale
Merchandise sales are a reliable source of income for any franchisee and as the popularity of the franchise grows, so does the amount of revenue in this sector.
Each team sells their team jerseys, caps and shoes during the IPL season.
The jersey is again of two kinds; Official jersey and unofficial jersey. Official jerseys are usually made in very small numbers and sold at inflated prices. Unofficial jerseys, on the other hand, are made in large quantities.
Many franchisees again hand over the responsibility of selling jerseys, caps and shoes to another organization. Those companies make and sell these things at their own risk. Instead a large portion of their profits go to franchisees.
Merchandise sales are very popular in club football. About 40 percent of the football club’s total income comes from this sector. However, club football lasts almost all year round. Compared to that, the duration of IPL is only two to two and a half months.
5% of the total revenue of IPL franchises comes from this sector.
Money Received from BCCI
The franchises receive money from the BCCI for media rights, as well as official sponsorship and partnership in the IPL. As the main central authority for IPL management, the BCCI is financially well off. And so they share a portion of the profits with the franchisees.
How much money the franchisees will receive from the BCCI’s Central Pool depends on a number of factors. However, the biggest consideration is the position of the franchises on the league table.
Stall Rent
Stalls are set up inside the stadium so that spectators can buy food and drinks during each match. However, these stalls are not run by the franchisees themselves. They rent the stall to a third party and in return they get paid. Usually franchises deal with third parties as a number of matches. As the number of matches at home increases, so does the income in this sector.
Own Brand Promotion
The owners of IPL franchises are no ordinary businessmen. Each of them has its own number of small and large organizations. In addition to running commercial campaigns for sponsors for a certain amount of money, the owners also run campaigns for their less popular organizations or brands.
An example is the Ambani family, the proprietors of the Mumbai Indians franchise.
Speaking of the Ambani family, everyone will think of the Reliance Group. But in addition to Reliance, the Ambani family has many more businesses that are relatively lesser known.
Thanks to the IPL, the Ambani family is getting a chance to brand themselves under the banner of the Mumbai Indians franchise. While this does not seem to directly benefit financially, the latter plays an important role.
Gross Income
Although no franchisee ever discloses their financial statements to the public, one can get an idea of their earnings by looking at the BCCI’s annual contracts and the position of different teams in the points table. According to data from the 2016 event, all franchises have earned at least Rs 75 crore. And some franchises have earned a maximum of Rs 125 to 150 crore.
Feature Image Source – Fran9
Reference:
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