How do IPL team owners earn money?
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IPL is a cash-rich, popular T20 league that is insanely loved all over the globe. But have you ever wondered how exactly do IPL team owners earn money?
IPL franchise owners invest a big part of their income in buying teams, players, and then paying the players as well. And they make all this money from the investments through IPL only. At the end of the day, IPL teams and their owners walk away with profits anyhow.
So let’s see what are those ways through which IPL teams owners make money.
Sponsorship
It is the most essential way of making money for the IPL teams owners. About 20-30 percent of the IPL revenue is built through brand sponsorship, which increases during the IPL season. IPL team owners sign a contract with the brands to endorse their logos and brand names on the team’s jersey, practicing kit, boundary walls, ropes and other marketing stuff. For instance, further branding is done by the games too. And in return, brands pay a hefty amount of money to the teams.
Teams are paid the most for endorsing the logos on the players’ jerseys. And different parts of the jersey have a different amount of charges that are being fixed between the team owners and the brands. For instance, the chest part is usually the most expensive one.
Media Rights
According to an estimate, the current viewership of IPL is approximately 46 Crores. So, BCCI makes use of this popularity and sell their media rights to broadcasters. In return, these broadcasters pay a huge amount of money to the BCCI.
BCCI after keeping their share, distribute this money among all the teams. Before this, all amount was being shared among the 8 teams. But this year, the money will be divided among 10 teams. It’s a fixed source of income for the IPL franchise owners and pays the heaviest among all other ways, such as 60-70 percent of the team owners’ income is through selling media rights. Star Sports bought these rights back in 2017 for 5 years and paid roughly 60 crores to each team per match. So, you can estimate how big of an asset this is.
Prize Money
Prize money is another way in IPL to earn money. Although a huge part of it goes only to the top four teams. Still, players from the other teams can win individual financial rewards for their performances.
The budget for the IPL winning prize money is being decided by the BCCI and the funding is done through different sponsors or other methods. For example, back in 2020, the budget for the prize money was low, because of the money spent on Covid-19 regulations and shifting the league to UAE. However, prize money for the last year was the highest. It was INR 20 crores and CSK won this hefty amount with KKR winning 12.5 crores being the runner-up team. IPL team owners keep 50% of this amount and the rest goes to the players.
Ticket Sales
Ticket selling is another way through which IPL team owners earn money. Though, a fixed portion of this revenue goes to the BCCI and the team sponsors according to the agreement. Still, IPL teams and their owners to earn a good amount through this.
About 15% of the IPL franchise’s revenue depends upon ticket selling. And this amount is significant enough to make an impact. For instance, during IPL 2020, due to the Covid-19 pandemic, this revenue percentage dropped and affected the IPL teams and owners’ revenue negatively.
Brand Value
Brand value is one of the most important aspects that can help team owners earn money accordingly. The higher the brand value, the more profit they’ll make. So, brand value is the financial assumptions of a team that increases with ranking and addition of the higher value players in the team.
For instance, players like Virat Kohli, Faf du Plessis, Chris Gayle, and MS Dhoni has higher brand value comparatively. And them joining in any team brings more value and sponsors to the team. Also, with players that have a crazy fan following, the selling of the Merchandise will be more and so the team owners will earn more.
According to the ranking of teams by their value, the Mumbai Indians ranks first, with a brand value of 707 crores. The 2nd place of the ranking is Kolkata Knight Riders, the cost of the team is 624 crore. 3rd place at CSK with a value of 598 crores. It is worth noting that the rookie team Gujarat Titans takes 8th place thanks to their fabulous victory in the IPL 2022. The cost of GT is estimated at 385 crores.
Selling of Stakes
When it comes to earning some more revenue, IPL team owners have some ways for it. They can charge for the extra shows during the IPL by directly using their players for the brand’s marketing, as in ads or stuff. And in these ways, selling stakes is also the one. It is mostly used as a last option for the team owners.
They sell the stakes within the team and make. However, after this, the profits get distributed among the stakeholders. For example, Delhi Capitals IPL team (formerly being known as Delhi Daredevils) was bought by the GMR group back in 2008 for 84 million USD. The team owner sell 50% of the stakes to the JSW group back in 2018, in return for the 77 million USD.
Merchandise Sales
For IPL team owners, this is another way of making money. Though it goes unnoticed and you might think it isn’t that effective. But, it’s a great way of making money without putting much effort into it.
Also, where the pandemic has caused a lot of financial damage to the franchises, it impacted the merchandise business positively. Fans were buying goods from their favorite teams and supporting their teams morally as many were not able to attend the match in person. So, you might have seen fans wearing tees and caps and watching the match online.
Resultantly, there was a benefit in revenue with the Merchandise sales in the recent years. Alongside tees and caps, teams also sell their replica kits, cups, wristwatches and many more.
