How IPL Franchises Earn Money?

Over the years, the IPL has become very popular and changed how people view cricket around the world. It brings excitement every year, and fans always want more.

But the IPL is not just about the games on the field. One interesting part of the IPL is its business model. It focuses on marketing and bringing players from different countries to attract new fans and earn more from advertising. But How IPL Franchises Earn Money?

What is the business model of IPL?

The IPL business model blends cricket, entertainment, and marketing in a special way. It has ten teams from different cities in India, each privately owned. These teams compete against each other and share their earnings with the league. The IPL makes money from several sources.

It earns from selling TV rights to show the matches, deals with companies that sponsor the league, and sales of team merchandise like shirts and caps. Additionally, the league profits from player auctions, where teams bid for players, and endorsements, where players promote products. All these methods help the IPL make a lot of money and keep the league exciting.

How IPL Franchises Earn Money?

Sponsorship Deals: A Lucrative Income Stream

IPL teams make a lot of their money from brand sponsorships. Teams work with brands to display their logos on jerseys, sports gear, and other team items. The bigger the logo and the more space it takes up, the more money the brand pays to the team.

Teams also earn money from other marketing activities connected to the tournament. Sponsorships usually make up about 20-30% of the total revenue for an IPL team.

Merchandise Sales: Capitalizing on Fan Loyalty

According to a report, the market for sports equipment and clothing in India was worth $28 billion in 2022 and is expected to grow to $40.6 billion by 2027. Each IPL team sells merchandise like jerseys, caps, watches, and wristbands. They partner with retail stores to sell these items and earn money from the sales.

Naming Rights

IPL teams can make extra money by selling the rights to their team names. For example, the Delhi Daredevils became the Delhi Capitals after a deal with the JSW Group. Similarly, Kings XI Punjab changed to Punjab Kings after partnering with a digital company.

This money from naming rights helps teams cover costs like player salaries and facilities.

In summary, the IPL has a smart business model that has made it one of the most successful cricket leagues in the world. Its focus on marketing and attracting new fans has increased advertising revenue. The IPL shows that sports and business can work well together.

Ticket Sales/Gate Revenue

Another big way IPL teams make money is from ticket sales. Each team gets to host at least 7 home games, so they have a good chance to earn from ticket sales. About 10% of a team’s revenue comes from tickets.

The team that hosts a match gets a fixed share of the ticket sales, and all teams earn money from selling tickets. The franchises keep all the money from ticket sales and passes.

With most games packed with fans, the IPL is one of the most-watched leagues around. Ticket sales are a direct way for fans to support their teams financially.

Brand Value: Enhancing Franchise Worth

Brand value is very important for IPL teams. If a team has famous players like Mahendra Singh Dhoni, AB de Villiers, Virat Kohli, or Chris Gayle, it can attract big brands and investors.

When a team wins the title or even just makes it to the playoffs, its brand value goes up a lot. Teams that have won the IPL, like CSK, MI, and KKR, are at the top when it comes to brand value.

Selling Stake: A Strategic Financial Move

IPL teams can make a lot of money by selling parts of their franchise at the right time. For example, Delhi Capitals, which was once called Delhi Daredevils, sold a 50% share to Jindal Steel Works for INR 550 crore. Jindal Steel Works wants to increase its share to 100%.

GMR, the previous owner, nearly doubled their investment in the team over a decade. Recently, there were rumors that the owners of Rajasthan Royals might also sell 50% of their franchise. While such big deals don’t happen all the time, selling shares is an important way for IPL teams to earn money.

Player Auctions

Player auctions are an important part of the IPL and help teams make money. Every year, before the season starts, there is an auction where teams can buy players.

Team owners bid to get the players they want. The cost of each player depends on how well they play and how popular they are. Teams can also make money by selling players for more than they paid for them.

Unlisted Shares: A New Revenue Stream

Offering unlisted shares is new for Indian sports teams, but many European football teams do it. In India, Chennai Super Kings is one team that allows trading of their unlisted shares. This helps them raise a lot of money through these pre-IPO stocks.

Read Also :The Reason Why CSK Was Banned from IPL?

Conclusion

The Indian Premier League (IPL) is a big event for cricket fans everywhere and a major money-maker. Fans travel from all over the world to watch the IPL in India. The league makes money from many sources, including ads, sponsors, ticket sales, merchandise, and TV deals. The IPL has a huge impact on cricket fans and generates a lot of revenue.