From ‘DLF Maximums’ and ‘Karbonn Kamal Catches’ to ‘Dream 11 Gamechangers’ and ‘Vodafone Super Fans’, brand collaborations have been an indispensable part of the ‘festival of cricket’, IPL.
The IPL has a brand value of $4.7 billion, as per an annual report by Brand Finance. With two new franchises – the Lucknow Super Giants and the Ahmedabad Titans, the IPL is all set to widen its horizons. When the BCCI announced the winners of the bids for the two new teams, the huge sums spent to purchase these teams left cricket analysts across the world dumbfounded.RP Sanjiv Goenka Group spent a whopping Rs. 7,090 crores for the Lucknow franchise while CVC Capital Partners won the bid for the Ahmedabad franchise for Rs. 5,625 crores. Rs. 7,000 crores was the approximate value involved in the infamous ‘Satyam’ scandal that shook Corporate India.
How much does an IPL franchise earn every season and what are the revenue streams?
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– Broadcasting revenue:
Firstly, broadcasting revenues from Star India for the IPL are divided equally between the BCCI and the franchises. Star India paid a sum of Rs. 16,300 crores for the media rights for the 2017-22 cycle, which translates to approximately Rs. 3,270 crores per season.
– Ticket Revenue
Gate revenues are another major source of revenue for the franchises. Ahmedabad’s Narendra Modi Stadium has an estimated ticket revenue capacity of Rs. 25 crores per match while Lucknow’s Ekana Stadium could rake in Rs. 15 crores per match through gate revenues. The home team keeps around 80% of gate revenues, with the other portion shared between the BCCI and sponsors.
– Sponsorships and brand integrations
Sponsorships are another stream of revenue for these franchises. CSK, one of the most popular franchises, has partnerships with 18 brands.
– Other sources
Merchandising, licensing, and events account for a small portion of the franchise’s top line. The prize money for the winner of Rs. 20 crores and the runner-up of Rs. 12.5 crores add to the franchise’s revenue .A franchise should be able to generate annual revenue between Rs. 400 and 600 crores from all these streams, depending on its popularity and performance.Every year, franchisees receive a purse of Rs. 90 crores to bid for players at the auction. Additionally, each franchise incurs administrative expenses of about Rs. 100 crores.Accordingly, a franchise should realize net earnings between Rs. 200 and 400 crores per season. RP Sanjiv Goenka-led Lucknow Super Giants should be able to achieve a nominal breakeven by around 15 to 20 IPL seasons. It’s an awfully long period and we haven’t even considered the impact of inflation.
