Updated: 13 June 2022
The team owners of the 10 TATA IPL 2022 teams spend a lot of money to buy the team and players. These team owners are big corporates who bank their money on IPL teams. A lot of money is involved in raising an IPL team. It is very important to know how IPL franchises make money. There are multiple ways by which they do so.
After the successful bid of two new IPL teams, from which BCCI earned 12715 crores, people will have a question where and how do IPL franchises earn money?
Here we discuss how IPL franchises/team owners make money
BCCI earns a lot of revenue from the media rights that it sells to broadcasters. If we remember in 2017, Star India brought IPL broadcasting rights for 5 years by spending 16,347 crores. This translates to roughly 60 crores per IPL match. BCCI shares these media rights with all 8 teams. (now they will share with 10 teams) . It is expected that BCCI could get 40 to 50 thousand crores for IPL 2023-27 media rights.
IPL 2023-27 media rights (TV, digital rights) will be announced soon.
The major source of income for IPL franchises is sponsorship. If we look at any IPL team dress, we see a lot of logos of different brands. The logo on the player’s jersey, the team kit, advertisement on the boundary ropes, etc. These brand companies provide a hefty amount to the teams for their brand promotions.
Another source of how IPL franchises make money is merchandise sales. These teams sell the caps, jerseys, etc of the players via online medium. By this, they earn a lot of money.
Ticket Sales/Gate Revenue–
The revenue from ticket sales is one of the most important sources of how IPL franchises make money. It is estimated that ticket sales contribute to 15% of the total revenue for IPL franchises. They depend a lot on this income source.
IPL Prize Money–
IPL prize money is also another way by which the IPL franchises earn money. The teams are given prize money according to the rank they get in the points table. In VIVO IPL 2021, CSK won the IPL title, and they received 20 crores.
Similarly, KKR got 12.5 crores for being the runner-up. This way, the IPL prize money is distributed to the teams.
The brand value of IPL teams also plays a major role in how IPL franchises make money. The team which has a lot of star players attracts a lot of brand value.
Players like Virat Kohli, Rohit Sharma, MS Dhoni, Glenn Maxwell, etc bring in a lot of brand image to IPL teams. According to Forbes 2022 report, Mumbai Indians (MI) were ranked as the most valuable IPL team with a brand value of $1.3 billion (9900 crores). CSK is the second most valuable team in terms of brand value, they became the first IPL franchise to cross one-billion-dollar valuation. The IPL team which performs better gets more brand value compared to others.
The IPL franchises also make a lot of money by just selling stakes in the team. A very recent example is Delhi Capitals. This IPL franchise was formed in the year 2008 for 84 million USD by the GMR group. In the year 2018, Jindal South West (JSW) brought a 50% stake in the team for 77 million USD.
These are the few ways by which IPL franchises make money.