How The IPL team Owners Make Money & Players Get Paid? Firstly, IPL is completely based on a long term investment. In the first few years of IPL, KKR has been the only team to rake profits consistently.
Yes, we know IPL involves big money. Yes, we know that KKR as a team has one of the strongest brand values in the IPL. Yes, we know that Virat Kohli is the highest paid cricketer in IPL 2016. But do we know how the IPL economics actually works?
Here we try to decode the IPL economics System and see how the teams actually make profits and where do the teams really spend their money. We also look at how the players are paid in the IPL. There are Many Different Ways Through Which Ipl Team owners Make Money.
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- 1 This Is How The IPL Teams Owner make Money?
- 1.1 1. Sponsors
- 1.2 2. Stadium Price (Ticket Price)
- 1.3 IPL has always been welcomed warmly by the Indian fans. Almost 60% of the matches in IPL have a full house. The home team gets to keep a share of the ticket sales. That is the reason each team has 7 home games.
- 1.4 3. Media Rights:-
- 1.5 4. Main Sponsor
- 1.6 5. Brand Value
- 1.7 6. Merchandising
- 1.8 7. BCCI Central Pool:
- 1.9 8. Stall Rentals
- 2 How are the IPL players paid?
This Is How The IPL Teams Owner make Money?
Let’s take the example of the IPL jersey of RCB above. RCB is paid by Hero Cycles, Lloyd, Tata, Britannia and Lyf. The companies get publicity, and the teams are paid a win-win situation handsomely.
So The major source of income comes from the Title sponsors such as DLF and VIVO along with Freecharge, Maruthi Suzuki, Yes Bank and Vodafone which are the official partners. Around 60 percentage of the income that BCCI generates is given to the franchisees. Accompanied by these, every IPL team has its set of dedicated sponsors. These sponsors play a huge role for the teams. Each teams jersey is filled with supporters. These authors strike a big deal and make a lot of publicity for themselves.
The logos on the player’s jersey, helmets, teams training kits and the barricades near the boundaries all form part of sponsorship revenue. The more prominent the sponsors want their name displayed, the more the money. Usually, he names written on the chest in bold and behind the players are the highest revenue generating sponsors for a team, as they are prominently visible to the television audience. The terms agreed are generally for a year. The sponsors also get certain added perks like organizing certain events with the team players and promoting their brand as part of the sponsorship deal and also get a certain number of free hospitality tickets. The sponsorship revenue forms about 20 to 30 per cent of revenue for an IPL team.
2. Stadium Price (Ticket Price)
This is one source of revenue where the franchises have control over around 80% of control. Last year runners up RCB earned around Rs 25 crore from ticketing alone while the winners SRH made around Rs 15 crore from ticketing. Ticketing is usually around 10% of a franchisees’ revenue. A team with superstars attract crowds to the stadium. Higher the popularity more will be the ticketing revenue.
Ticket revenue reportedly forms around 10% of revenue for IPL teams.
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3. Media Rights:-
Sony India has been the official media sponsor of IPL for a decade. Sony takes a contract from BCCI for a certain sum, of which, a certain sum of money is given to each team based on the TRP Ratings by BCCI. Sony TV in return, earns money in the form of advertisements. For a 10 second slot of an advertisement, companies shell out money in lakhs. huge stake of income comes from the broadcasting rights. Sony Entertainment has struck a media broadcast rights deal with the BCCI for Rs. 8,200 crores up to 2017.
There is a revenue distribution model in the IPL, where the BCCI collects hefty revenue from the broadcaster and online streamer, and shares it with the teams after deducting some amount.
The percentage is in proportion, much like a weighted average. If you rank higher at the end of all matches, you get more share of the media revenue.
Media rights reportedly forms about 60-70% of all revenue earned by IPL teams.
- The next deal (a 10 year one till 2017) is expected to bring around 16,000 crores which is more than double of what Sony is paying now.
4. Main Sponsor
Every year, we see the title sponsor of IPL changing. For the year 2016-2017, the title sponsor has been Vivo.
- Rs 220–250 crore from on ground sponsorships (Title sponsors Viivo and other associate sponsors like Vodafone, Yes Bank, Freecharge, Maruti Suzuki, CEAT Tyres, Tata Sky, Coca-Cola, Vimal Pan Masala, Amazon, OPPO, Park Avenue, Moov) Vivo alone committed Rs 200 crore for 2 years.
- Rs 150–160 crore Ticketing revenue
- Rs 40 crore for Hotstar
It can’t deny the fact that actors like Shah Rukh Khan and Preity Zinta add glamour to the league. Also, players like Virat Kohli, MS Dhoni and Yuvraj Singh are associated with many brands. Their association with a team increases it’s ‘brand value’ and attracts many sponsors. Eg. SRK endorses 20+ brands. Hence most of these brands act as sponsors for his team too.
5. Brand Value
The total prize money pool for 2016 IPL season was around $7 million (₹47 crore). The winners of 2016 IPL got around $3 million (₹20 crore) while the losing finalists RCB got $1.5 million (₹11 crore). Other two teams in play-off will get ₹7.5 crore each. Teams who didn’t qualify for the play-offs will not be getting any prize money.
7. BCCI Central Pool:
While media rights form a major portion of the money that franchises get from the BCCI, there are official sponsorships and partnerships too.
The amount in the BCCI central pool is distributed among franchisees based on several factors, including their position in the league table.
8. Stall Rentals
The food and beverage stalls that serve spectators during matches are given on a contract basis to a third party who in turn sub contracts it.
It is usually a fixed term for a fixed amount that each franchise collects on per stall per match basis.
How are the IPL players paid?
Players are get paid in millions and billions so this is big question how ipl players get paid? See every details below.
Before getting a team up and running for a particular season, one needs to pick the right players for a tournament as big as the IPL.
Every team is given a purse from which they have to bid for the players at the auctions. A team cannot exceed the purse value hence they have to be extremely judicious while bidding aggressively.
Players are bought by the franchises for an entire season and the bidding starts from the base price that each player is allotted. After winning the bid for a particular player, the franchise gets the particular player to sign a contract with them.
There is a lot of money to be won for the players even during the tournament. There are big prizes on offer for the player of the match, player with maximum sixes and the best fielder after each game. After the tournament ends, the orange cap holder (most runs in the tournament) and the purple cap holder(most wickets in the tournament) are given handsome rewards by the IPL.
- Rajasthan Royals, the winner of the inaugural edition of IPL and Chennai Super Kings, which won the title twice, are likely to be defranchised for next year’s eighth season of IPL. This could eventually lead to a revenue loss of more than Rs 1,000 crore or Rs 10 billion to the tournament.
- Knight Riders Sports has been the most successful franchisee, with net profits of Rs 10.42 crore or Rs 100 million, Rs 6.34 crore or Rs 63 million and Rs 9.18 crore or Rs 91.8 million in 2011-12, 2012-13 and 2013-14, respectively. This was after it reported a net loss of Rs 11.28 crore (Rs 112 million) in 2010-11, according to details filed with the Registrar of Companies (RoC). The company’s revenue fell a little to Rs 129.48 crore or Rs 12.9 billion in 2013-14 from Rs 138.65 crore or Rs 1.38 billion the previous year.
- controlled by industrialist Mukesh Ambani’s wife Nita Ambani — the owner of the Mumbai Indians IPL team, has an accumulated loss of Rs 101.05 crore, according to its filings with RoC. In 2013-14, it reported a loss of Rs 5.04 crore or Rs 50 million, against Rs 4.4 crore or Rs 44 million the previous year.
- K P H Dream Cricket, co-owned by Bollywood actor Preity Zinta and the owner of Kings XI Punjab, reported a loss of Rs 4.35 crore or Rs 43 million in 2013-14. It had made a profit of Rs 78 lakh in 2012-13 and losses of Rs 1.5 crore (Rs 15 million) and Rs 35 crore (Rs 350 million) in 2011-12 and the previous year, respectively.
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