Economics of IPL 2023: Decoding the jaw-dropping riches

The Indian Premier League remains the most lucrative T20 franchise competition globally. But what is the reason behind its resounding financial success? We decode it all here, thanks to Sandeep Rana.

Image credit: Sandeep Rana

From a deserted stadium a few years back to a cash-rich extravaganza, the Indian Premier League (IPL) has emerged from the pandemic stronger than ever!

As the world tunes in for another season of nail-biting cricket action, have you ever wondered how much wealth the IPL teams are raking in? Get ready to hit it out of the park as we explore the jaw-dropping riches behind one of the world's most significant cricketing events!

1. The Formula: How BCCI earns through IPL?
The Board of Control for Cricket in India (BCCI) earns revenue from the IPL through several means, including:

Broadcast rights: The BCCI earns significant revenue from selling broadcast rights to the IPL. Broadcasters pay the BCCI for the right to air IPL matches on television and digital platforms, and the BCCI shares a portion of that revenue with the IPL teams.

Franchise Fees: Each team participating in the IPL pays an annual franchise fee to the BCCI, which can be pretty substantial. The costs vary depending on the team's location and other factors, but can be worth several crore rupees annually.

Sponsorship deals: The BCCI also earns money from sponsorship deals with companies that want to associate themselves with the IPL. These deals can be worth millions of rupees, and the BCCI shares some of that revenue with the IPL teams.

2. Record-Breaking Revenue: How Much BCCI earns through IPL?
Disney-Star retained television (TV) rights for the IPL for ₹23,575 crore. Viacom18 secured two and a half bundles for ₹23,750 crore, including digital, non-exclusive digital rights and a few international countries.

IPL has witnessed an increase of 3x when compared to the previous cycle, with the National Football League (NFL) ahead by a small margin at $17 million.

It means BCCI is Set to Earn ₹107.5 Crore Per Game from TV and Digital Rights in the Indian Subcontinent in IPL 2023.

Ticket sales: The BCCI earns a portion of the revenue from ticket sales for IPL matches. This revenue can vary depending on the number of games played and the size of the venues where the matches are held.

3. How does the IPL Team earn with IPL?
IPL franchises earn money through 5 significant sources:

Media Rights: Franchises also earn a share of the media rights revenue generated by the IPL. Broadcasting companies bid for the rights to broadcast cricket matches, and the income earned through media rights is distributed among the franchises.

Sponsorships: IPL franchises earn a significant amount of revenue through sponsorships. Franchises have tie-ups with various brands that sponsor their teams, and the amount of money earned through sponsorships can vary depending on the popularity and success of the side.

Ticket Sales: Franchises also earn money by selling tickets for matches played at their home stadiums. The revenue earned through ticket sales can depend on various factors, such as the team's popularity and the stadium's capacity.

Merchandising: Another source of revenue for IPL franchises is merchandising. Franchises sell team merchandise such as jerseys, hats, and other cricket-related merchandise to fans, which can generate a considerable amount of revenue.

Prize Money: IPL franchises can also earn money through prize money awarded for various achievements during the tournament. The franchise that wins the event receives a significant amount of prize money, and there are other prizes for individual accomplishments, such as the player of the tournament and the highest run-scorer.

4. IPL vs Global Sports Leagues
The BCCI Secretary Jay Shah compared the IPL's value to that of the National Football League (NFL) in the US, which started in 1920. Like the IPL, the NFL relies heavily on media rights for revenue. The NFL has 32 teams and a five-month season, earning national income from media rights, merchandising, and licensing contracts.