IPL & It’s Business: How India’s Biggest Tournament Came Into Play

  • Origin & History

Cricket has always been like a religion for India. It is seen as more than just a game. The players are considered as demigods and literally worshipped. The Twenty20 format of cricket created history. After the Twenty20 format of cricket was introduced to the world, cricket has just been overflowing out of everyone ears, it’s all about cricket.

Indian Premier League’s origin is quite interesting. It all started when Lalit Modi, the Vice President of the Board of Cricket Control in India (BCCI) envisioned the Indian Premier League. It is created along the lines of club football in Europe, specifically the English Premier League. IPL has been launched in response to the rebel Indian Cricket League (ICL) launched by Zee Group.

The format of Twenty20 cricket has emerged as a phenomenon after the Twenty20 World Cup was won by India and since then people have been totally immersed into it. There is no doubt where the Indian Premier League is headed, as far as viewership and profits for everyone associated with it is concerned.

The eight founding franchises were the Mumbai Indians, the Chennai Super Kings, the Royal Challengers Bangalore, the Deccan Chargers (based in Hyderabad), the Delhi Daredevils, the Punjab XI Kings (Mohali), the Kolkata Knight Riders, and the Rajasthan Royals (Jaipur). In late 2010 two franchises, Rajasthan and Punjab, were expelled from the league by the BCCI for breeches of ownership policy, but they were later reinstated in time for the 2011 tournament.

Two new franchises, the Pune Warriors India and the Kochi Tuskers Kerala, joined the IPL for the 2011 tournament. The Kochi club played just one year before the BCCI terminated its contract. In 2013 the Deccan Chargers were replaced in the IPL by the Sunrisers Hyderabad.

The inaugural season of the tournament started on 18 April 2008 and lasted for 45 days with 59 matches scheduled, out of which 58 took place and one was washed out due to rain. Rajasthan Royals defeated Chennai Super Kings by three wickets in a last-ball thriller at Mumbai on June 1, 2008 to emerge as the inaugural IPL champions.

  • The Legal Structure

IPL is an event organised by the BCCI. BCCI was registered as a Society in 1928 under the Tamil Nadu Societies Registration Act. The State Cricket Associations are its members who appoint the representatives through elections, forming the board currently chaired by Sourav Ganguly.

The BCCI, in turn, appoints a governing council for IPL which currently consists of six members who manage the entire event. There are no other direct employees, teams or committees who look after the IPL. It’s all about six people conducting the entire event by outsourcing the various functions to different companies.

  • The Business Model of IPL

Indian Premier League is the world’s highest revenue-generating league in the world. The league is held every year and till date 13 seasons have been 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.

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:

  • Mumbai Indians – $113 m
  • Kolkata Knight Riders – $108 m
  • Chennai Super Kings – $98 m
  • Rajasthan Royals – $90 m
  • Punjab Kings – $75 m
  • Sunrisers Hyderabad – $75 m
  • Royal Challengers Bangalore – $70 m
  • Delhi Capitals– $70 m

Revenue Streams

Since sponsors are the customers, the league earns its revenue from selling rights.

Sponsorships

Title Sponsor (Dream11, Vivo, Pepsi, DLF), Associate Sponsors (Polycab, Kamala Pasand, Asian Paints, ITC, Coco-Cola), Official Broadcaster (Star Sports, Sony Max), Official Digital Broadcaster (Hotstar), Official Partners (Altroz, Unacademy, Cred), Umpire Partners (Paytm), Official Strategic Timeout Partners (Ceat), etc. are all means through which corporates advertise themselves in the league, as their names are mentioned, announced, photographed and even talked about in the commentary (e.g. Ceat tyre strategic timeout).

Over years various creative methods have evolved in the sponsorship business. The IPL earns approximately INR 700 Crore per year through these sponsorships.

Broadcasters

The right to record and telecast the match Live or its highlights or its official videos anywhere on the internet remains with the broadcaster. The broadcasters like Star Sports and Sony Sports pay in exorbitant sums to BCCI to acquire these rights. Star Sports currently holds the broadcasting rights for 5 years (2018-2022) by paying INR 16,347 Crore to BCCI.

Merchandising

Revenue generated through the sales of official merchandise is another source of income for the IPL teams. The merchandises include jersey replicas, sports souvenir, and flags among others. Though it is a very popular business model in countries like USA, UK and Australia. It hasn’t proved to be as rewarding in India. Pricing of the products is said to be the major factor behind such minimal response.

Gate Revenue

Money earned through the sales of tickets for matches. Each franchise plays a minimum of 7 home matches, thus making them liable to be part of the financial transaction partly with the state cricket boards.

These are some of the main details of the IPL Business Model. 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. 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 as career.

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