IPL 2019 has been started and once again next 50 days are going to be the most exciting days for the cricket fans. IPL was started in the year 2008 for the first time and after that its popularity keeps on increasing year by year. As we all know players get a huge amount for playing in the IPL even uncapped players get crores of rupees. We have seen many uncapped players who become a millionaire overnight. Absolutely IPL is one of the biggest platforms for showing talent in front of international players. Many players who are now an important part of the Indian cricket team has come from IPL such as Jasprit Bumrah, Hardik Pandya, KL Rahul, and many more players has reached the International level just because of Indian Premier League(IPL).
Apart from that IPL is a very big platform for youngsters to showcase their talent and to earn a huge amount of money do you know how IPL teams earn money?
In this year ’s auction, every team has got the maximum limit of 80 crores to spend on buying players. Other than buying players there are many more expenses which each team has to spend like expenses on staff, hotels, travel, etc. So on investing so much money they also want to earn even more. Let’s find out how IPL teams earn money and decode the business model of IPL 2019.
How IPL teams make money?
The major source of income comes from the sponsors of IPL like VIVO, Dream11, Tata Motors, etc. VIVO is the title sponsor of IPL11 so major income comes from VIVO. All money which comes from the sponsors is not directly given to the teams. The money is divided in 60:40 ration between IPL teams and BCCI. 60% of the money collected from sponsors are distributed equally among all the teams and BCCI alone keeps 40%. We can consider IPL as a company and different teams which are taking part in IPL are just the franchise of the company other well-known companies. That is why BCCI takes 40% of the total money collected by sponsorship.
This is the fixed and guaranteed amount that every team will get in every season. The ratio of distribution might change in the upcoming years. Initially, the ratio was 80:20, then it becomes 70:30 and now in 2019, it is 60:40.
Star India gets the media rights for IPL in Rs 16, 345 crores for five years(2018-2022). Star India will broadcast IPL for the next 5 years from 2018 to 2022. The money collected from media rights is also distributed in 60:40 ratio i.e 60% of the money distributed among all teams and 40% of the money goes to BCCI. This is another guaranteed income that each IPL team earns.
Every team also has own dedicated sponsors which pay a huge amount of money to the franchise. The logos and names of the companies which you can see on the dress of every IPL team are actually the dedicated sponsors of their respective franchises. The profit from dedicated sponsors depends on the deal that the franchise has made with the sponsor. The income generated from dedicated sponsors might differ from team to team. It completely depends upon how big the company is sponsoring the team. And also there is not only one dedicated sponsor each team has there are many sponsors for every team. In fact, the team’s jersey is full of sponsors. For example sponsor of Mumbai Indians is Samsung and that of Kings XI Punjab is Aaj Tak. This is another way from which each team makes money.
Teams also earn good amount of money by selling tickets. But only the home team can earn by selling tickets of their home ground. Price of tickets is fixed by the franchise at the start of the tournament and it depends on the city, the way of living in that city, etc. The team which has a bigger seating capacity in the ground makes more money by selling tickets and the teams which have smaller ground makes less money. It is an big advantage to the teams which have bigger ground. As we know Eden Garden stadium at Kolkata is the biggest stadium in India and hence Kolkata Knight Riders(KKR) earns most among the other teams by selling match tickets. The capacity Eden Gardens stadium is around 75k this is one of the reasons why KKR is one of the most successful teams in IPL if we talk about profit that each team makes.
During IPL, the IPL teams also make some money by selling official jerseys, caps, wrist watches, etc. This is not the best way for the teams to earn money but it is quite good and makes good money.
The Times of India reported that the sports gear business market growth in the country is 100% annually and the value is projected to be approximately $30 million. This was way back in 2014, and the numbers have grown exponentially.
Of course, it is needless to say that IPL teams can also earn an attractive amount of money by winning the IPL title. The winning amount of the IPL 2019 is 15 crores and the runner up prize is 10 crores.
The prize money won by IPL teams is distributed between players and owners in 50:50 ratio. Minimum 50% of the prize money is distributed among all the players of the team. Minimum 50% distribution among the players is necessary but if the owner wants to give more than 50% it is up to him. This is another big amount that a team can win. This winning amount makes a huge difference in the total profit of the franchise.
Before IPL auction, a transfer window is opened for some time. During that time a team can exchange a player with other player with some money as compensation.
The food and beverages stall that serves people during the matches are given on contract basis to the third party.
The third party has to pay some money to the team as per the deal with the franchise. This is a fixed amount of money that every team earns per match.
Where IPL teams Spend Money?
The biggest investment is made while buying players for a season. For IPL 2019 each team has allowed wallet of 80 crores to buy their players. Additionally, each team also has to pay to support staff like a coach, mentor, physio, etc.
Also, there are expenses like booking the flight tickets and hotels for the players and care staff, running the authoritative workplaces for meeting coordination of the group.
The teams need to pay a specific amount to the cricket association so as to have their home games. For eg: Shahrukh Khan and Jay Mehta pay a specific rental amount to the Cricket Association of Bengal (CAB) so as to utilize the Eden Gardens arena for KKR’s home ground.
Additionally, every franchise spends a specific sum on advertising before each season starts. Advertising may include shirt release, fashion shows, etc. Each team spends on Television Ads and music recordings to interact better with their fans.
IPL is a big stage for players and also for owners to make money. The players which participate in IPL has the best opportunity to earn big. Team owner may earn profit or go in loss it depends on situation but players are always in win-win situation. After knowing the investments that each team make for the IPL, many people thinks that every team must have earned lot of money. But this is not true, every team is not earning very good amount of money even some teams also goes in loss. Profit of loss of a team depends on the performance of the team is a particular season and many more commercial aspects like sellling of tickets, money collected from sponsorship, how long a team plays in the tournament, etc.