What is the Indian Premier League worth, how is it funded

Updated: 08 January 2011 12:24 IST

As hammers started coming down on players' auctions for the IPL, the question again doing the rounds is: How much is this extravaganza worth?

What is the Indian Premier League worth, how is it funded

New Delhi:

As hammers started coming down on player-auctions for the fourth edition of Indian Premier League (IPL) Twenty20 tournament, the question again doing the rounds is: How much is this cricketing extravaganza worth and how is it financed?

But the question is neither easy to answer, nor is it possible to get a complete fix on the numbers as the web of financing involved for this much-watched blitz is complicated, and comprehensive information is extremely hard to come by.

Yet, based on whatever official information is available from the Board of Control for Cricket in India (BCCI) and from the 10 franchisees -- owned by Who's Who of India's celebrity and business world -- one can get a glimpse into the money involved.

As a brand some consultancies like the London-based Brand Finance have valued it at a little over $4 billion. But that was before Kochi and Pune franchisees were allowed to participate.

And leading data-base sportingintelligence.com said IPL salaries were the second highest after American National Basketball Association's league.

Coming to revenues, the first tranche came from franchise auctions of eight teams for the first three editions of the tournament. The money involved was as much as $725 million to be paid over 10 years.

Then two more franchisees joined the league -- this time promising a much larger pie of $700 million together. This is the money the board will use to run the tournaments and use for player salaries from specified money apportioned among the franchisees.

For the franchisees owning the teams, the money comes from a host of avenues.

"The revenue for each IPL team comes from five main streams. The first revenue stream is the central broadcasting revenue," said a report jointly prepared by the Federation of Indian Chambers of Commerce and Industry and consultancy KPMG after IPL season three.

Sony Entertainment Television, now renamed Multi Screen Media that owns Sony Max, along with the Singapore-based World Sport Group, had signed a deal in January 2008 to pay the board a litle over $1 billion spread over 10 years for the global broadcast rights.

This was later enhanced to nearly $1.9 billion.

This money is to be shared, with 20 percent retained by the board, around 8 percent for prize money and rest to go to franchisees. There were even plans for IPL to go public, but after the financial mess of last year, where that matter stands is anybody's guess.

The second and the third stream of money comes from sponsorship. There are the central sponsors like realty major DLF and local sponsors which whom each franchisee is free to enter into a pact based on set guidelines. How much money these fetch is unclear.

Then there is actual gate sales -- not an encouraging proposition as yet.

"The fourth revenue stream is from ticket sales. In Season One, ticket sales accounted for as low as 7 percent of total revenue to as high as 25 percent for various teams," said the FICI-KPMG report.

Merchandising is the next revenue stream for franchisees who can retain 80 percent of the amount and share the remaining 20 percent with the board. Along with new avenues, experts predict the future collections from merchandising to be bright.

"IPL also provides significant opportunity to enhance revenue streams through internet and mobile platforms. Google's two-year agreement with IPL to offer live and on-demand access to Season 3 matches on YouTube is a step in this direction."



Topics : Cricket
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