IPL: The biggest money-making league in the cricketing world

In India, cricket is like a religion, and cricketers are like gods, who are blessed, loved, and often criticized for their mistakes from time to time. However, things were not like this earlier, as the game had not evolved as much at that time. After the first season of the ICC Men’s T20 World Cup in 2007, which was played in South Africa, a young team surprised the world by emerging as champions, despite the absence of legendary players like Sachin Tendulkar, Rahul Dravid, and Sourav Ganguly. This came after a disappointing performance in the ICC Men’s ODI World Cup 2007, where India was knocked out in the group stage following a defeat to Bangladesh. A young team was then sent to South Africa for the marquee event under a new leader.

It would not be wrong to say that no one expected these young players to emerge as champions by defeating top teams in the world. However, as it is often said, the T20 format suits younger players, who bring immense passion and energy to the game. Seeing this, the BCCI launched a new T20 league in India, the Indian Premier League (IPL), shortly after India’s historic win in the ICC T20 World Cup. 

The league's unique selling proposition was the inclusion of both national and international players, playing for different franchises in the 20-over format for the first time. But this is just one side of the story. Apart from forming a league with both national and international players, the Indian Premier League has developed a highly lucrative revenue-generating model driven by Indian fans, which is unknown to many. The IPL ranks 13th among the leagues generating the most revenue in the world, after the NFL.

Let’s look at the business model of this cash-rich league in India

Being one of the biggest leagues in the world, the Indian Premier League follows a unique business model that combines cricket, entertainment, and marketing strategies.

Broadcasting and Media Rights:

1. Media Rights Auction: You might not know, but media rights are a significant revenue generator for the IPL. The sale of TV and digital streaming rights to media companies is one of its largest sources of income. For instance, from 2023 to 2027, the IPL sold its media rights for a record ₹48,390 crore (around US$6.2 billion).

2. Revenue Sharing: Another source of revenue for the IPL comes from media rights, which are shared between the Board of Control for Cricket in India (BCCI) and the franchises. A small percentage goes to the central IPL fund, while the rest is distributed among the teams.

3. Digital Streaming: With the growing demand for online viewing, platforms like Disney+ Hotstar (now Viacom18) have paid significant sums to secure digital rights. Advertisements and subscriptions from these digital platforms contribute heavily to the league's earnings.

Sponsorships:

1. Title Sponsorship: Title sponsors play a major role in the IPL’s income. For example, Tata Group replaced Vivo in 2022 as the title sponsor for ₹440 crore over two seasons.

2. Central Sponsorships: In addition to title sponsorships, the IPL has various central sponsors (e.g., Dream11, Paytm) that contribute directly to the central revenue pool. These sponsorships cover categories like beverages, online gaming, and more.

3. Franchise Sponsorships: Another way IPL generates revenue is through franchise sponsorships. Individual teams sign their own sponsorship deals with brands, which include kit sponsors, jersey placements, and stadium branding, generating additional revenue at the team level.

Franchise-Based Model:

1. Team Ownership: IPL franchises are privately owned by corporations, Bollywood superstars, or business tycoons, who bought teams through competitive bidding. The franchise fee was a one-time upfront payment during the auction, and teams also pay an annual fee.

2. Revenue Sharing: Teams receive a share of central IPL revenues (from broadcasting and sponsorships) but also generate their own income through local sponsorship deals, merchandise sales, ticket sales, and in-stadium advertising.