The Ultimate Business Model of IPL | How IPL Make Money

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Introduction of IPL

Indian Premier League(IPL) is the highest watched and attended cricket league in the world. It is the professional t-20 league played in India in April and May every year. The league was formed in 2008 by BCCI (Board of Cricket Control in India), which is the leading cricket body in the world after the ICC(International Cricket Council).

Brief details about IPL

LEAGUE NAMEIPL(INDIAN PREMIER LEAGUE)
FORMATTWENTY-TWENTY(T20)
HEADBCCI(BOARD OF CRICKET CONTROL IN INDIA)
FIRST EDITION2008
LATEST EDITION2019
TOTAL EDITION12
TEAMS8
CURRENT CHAMPIONMUMBAI INDIANS
MOST TITLESMUMBAI INDIANS
WINNING AMOUNT7.0 MILLION $
SPONSORVIVO
MOST RUNSVIRAT KOHLI
MOST WICKETSLASITH MALINGA
BROADCASTERSSTAR SPORTS, DISNEY+, HOTSTAR ETC.
WEBSITEIplt20.com
Source: Official website of IPL

Business Model of IPL

How IPL business model works

As Indian Premier League is the world’s highest revenue-generating league in the world. The league is held every year and till date there are 12 seasons played. It is the world’s largest cricket league so it will generate a large revenue through its business model and strategies.


The Business model of IPL revolves around Player Acquisition, Squad Composition, Twenty20 Tournament format, Salaries, Match Rules, Prize Money, Teams, Sponsorship, Brand Value, Broadcasting, and IPL Governing Council.


In this post, we will be discussing IPL Business model to check how effective and productive is the model that is generating a large amount of revenue in the country through the most popular professional Twenty20 cricket league.

What will you learn in this blog?

  1. How Does IPL Make Money?
  2. Discussing Revenues
  3. Bidding Process of Business Model
  4. Different Bidding Prices of Franchises
  5. Brand Value of Teams
  6. Conclusion
  7. FAQs

Introduction to Business Model

Indian Premier League is one of the largest leagues in the world. IPL is certainly the business about which a lot of peoples want to know. A large amount of revenue is generated by the league so we are decoding the business model of IPL that will help you to understand how this league is making money.

So, with such a huge amount of money which is involved in IPL, there is no doubt that such a game would have the financial aspects attached to it for sure. So, people need to know the business model of IPL and its revenue generation.

 We are going to discuss the Business Model of IPL below and We are going to talk about the different ways in which the IPL teams and the entire franchise manage to make money.

Also Read :- T20 Tournaments in the World

How Does IPL Makes Money?

As we all know that IPL is the most revenue-generating and the largest cricket league in the whole world. In 2014 it comes at number 6 spot in largest sports league. Now we are discussing the various modes through which IPL (Indian Premier League) Makes Money.

Sponsors

IPL sponsors

As we are talking about How IPL Makes Money, here comes the major step that is sponsors. Sponsors generates more amount of money for the league as well as the franchises.

As such, there is the main sponsor who is sponsoring the league. For example, the current main sponsor of the league is VIVO and on the other hand, the team sponsors whose names are printed on the jerseys of the players and for whom the players are doing advertisements. BCCI generates a large amount of revenue from the title as well as team sponsors.

Franchises

Franchises are also the main source of generating revenue. They have their own brand value in the market from which they generate a good amount of revenue, we further discuss the brand values of the teams later in the article.

They basically work on two process

  • Bids
  • Franchise Rights

Also Read :- Cricket Rules & Regulations

Broadcasters

As we all see the live telecast of the league on our television as well as on our mobile phones. The companies or we can say channels that are providing us the live-action has purchased the broadcasting rights. 

There are TV broadcasting rights that have permitted the channels to stream live. This is one of the major sources of income of the league. However, the funds or we can say the money raised is then divided into franchises and teams as well.

Tickets

This is the fundamental and well known factor as we all know that the amount generated by selling tickets is directly going to the league and some share is divided into the stadium and the state where the match is being played.

Merchandising

IPL Merchandise

A great amount of money can be raised by selling the merchandise, as the craze of the league in the nation the possibility of raising money is much easier and higher.

Discussing Revenues

There are two ways in which the revenue is generated, we are discussing both the ways below:

Central Revenue:

1. TV broadcasting rights: The match of IPL is live-streamed which happens as the Broadcasters have acquired the global broadcasting rights of the IPL which generates a good amount of revenue.

The earning of television ad during the live cricket match is also distributes in the franchise of both teams (which are playing on the ground) and IPL. The TV channel covers the live of the match and shows ads between the overs.

The TV channel pays shares of TV ad to the IPL and IPL distributes this amount to both franchises of IPL team and himself. This is the main reason why franchises want that their team should be playing more matches.

2.  Sponsorship rights: The amount earned by BCCI or an IPL organizing committee from the sponsorships of the IPL goes towards a central pool and after that a sizeable percentage of that is distributed equally among the franchises. A part of this money is added towards prize money a well.

Local Revenue:

The other small revenues can be considered under these categories which can include:

  • Ticket sales: The revenue earned from the selling of tickets gets divided between the two playing teams and the IPL organizer.
  • Percentage of Amount Distribution: 80% of total stadium tickets are with franchises, 20% with IPL organizers.
  • The amount earned from the sale of gate passes is a major source of revenue for franchise owners.
  • Local sponsorship of the team, which the franchises try to earn from the different brand available in the market and hence the popularity of the team
  • The franchises sell merchandise like T-shirts and caps through their web-site and other channels and this revenue stream can be a big money-spinner depending on the fan following of the team.
  • Player Trading was recently observed in the IPL where lots of players will be traded between different franchises. franchises make a neat profit from the sale of these players as they charge a premium on the price at which they bought them.

Bidding Process of IPL Business Model

IPL Bidding

The bidding process revolved around a few simple steps-

  • Announcement of tender inviting bids
  • franchisees submitting their bids for more than one city
  • Awarding of the Franchisees
  • Auction of Players
  • A particular amount decided for all Franchise.
  • Auctioning of Players
  • Each squad needed to have a minimum of 16 players with maximum 4 International Players
  • Four players under 21 from the catchment area

Also Read: T-20 Tournaments in the world

Different Bidding Prices of Franchises

Starting bidding prices for the franchise are given below do have a look at the prices: –

  • Mumbai Indians – $111m
  • Royal Challengers Bangalore – $111m
  • Deccan Chargers – $107m
  • Chennai Super Kings – $91m
  • Delhi Daredevils – $84m
  • Kings XI Punjab – $76m
  • Kolkata Knight Riders – $75m
  • Rajasthan Royals – $67m

Brand Value

IPL Brand Value

IPL is one of the leading brands present and it has been on its higher stake of 37% rise. It signed its broadcast deal with the leading sports broadcaster Star Sports which also increases the audience and the brand value of the league. As the teams also have the brand values and it varies. The list of brand values of the teams is given below:

Conclusion

Conclusively, these are some of the main details of the IPL Business Model that you need to know about.

We hope this article is informative for you. Being a nation that has immense passion and craze for the game of cricket, the business model of IPL has been highly productive not only for the brand IPL and Franchises, but also for the players.

The great efforts and dedication of players helped them make good money as well. At last, we can say the business model of IPL is one of the most successful and revenue-generating models present and it is pushing more people to opt for the sports career.

FAQs (Frequently Ask Questions)

Q.1: How Does IPL make money?

Ans: ‘IPL Sponsorship’ is the major source of income of IPL(Indian Premier League)

Q.2: How much money does BCCI make from IPL?

Ans:- According to BCCI, they contribute approximately 12 Billion rupees to the GDP of the Indian Economy.

Q.3: Is IPL a business or Game?

Ans: IPL is a game, but it is run according to a business model.

Q.4: Which is the richest team in IPL?

Ans: Mumbai Indians is the richest team in IPL.

Q.5: Is BCCI richer than ICC?

Ans: Yes, BCCI is richer than ICC.

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