Moneycontrol PRO
you are here: HomeNewsTrendsSports

How IPL turned into Decacorn with $10.9 billion valuation in 15 years

The media rights deal makes IPL the second biggest sporting league in the world, on a per match basis, said a report titled IPL-The Pioneer of Indian Unicorns.

March 23, 2023 / 06:05 PM IST
The 2023 season of IPL will begin on March 31 and go on till May 28.

The 2023 season of IPL will begin on March 31 and go on till May 28.

The Indian Premier League (IPL) considered as one of the biggest sporting leagues in the world turned a unicorn since its first year and in its 15th year went on to become a decacorn, a business with its value crossing $10 billion.

IPL's total value in 2008 was over a billion dollars, making it the first unicorn  from India, even before companies like Inmobi and Flipkart, said analysis, titled IPL-The Pioneer of Indian Unicorns by D & P Advisory."

Of the earliest set of 100-odd unicorns that exist in India currently like InMobi which turned a unicorn in 2011 and Flipkart in 2012, IPL did so in 2008, making it the oldest of the current set of unicorns.

"This unicorn (IPL) is the most profitable of all the startups out there. The league has been a game-changer for the Indian sports industry, and our analysis highlights its incredible success from the very beginning," said Santosh N, managing partner of D & P Advisory.

IPL's broadcast deal was worth Rs 486 crore in 2008 which has increased to Rs 8,736 crore in 2023.

At $6.2 billion for 2023-2027 cycle, IPL has recorded a three-fold jump from what Walt DisneyStar had paid for the previous 5-year cycle in 2017. For the first time in IPL history, media rights have been spread across broadcasters, breaking the monopoly of one company, said D and P India Advisory's another report.

IPL has brought an unprecedented windfall to cricket, due to lucrative media and sponsorship deals. With two new teams getting bought last year at a combined staggering value of $1.6 billion, the average price tag of a team has seen a 16-fold jump since 2008.

Since inception, the league's value has seen a 90 percent growth and currently stands at $10.9 billion (Rs 87 crore).

Santosh said that the renewed media rights deal was the major contributor towards the substantial jump in IPL's value. In addition, the increase in the number of matches going forward from 74 to 94 over the next cycle, newly signed sponsorship deals at the league level, higher ticket sales and in-stadia revenue were the other contributors to the increase in the IPL ecosystem value.

Title sponsorship rights value increased from 36 crore in 2009 to Rs 577 crore this year. Associate sponsorship rights value has grown from Rs 48 crore to Rs 414 crore.

While the cricketing league has seen significant growth, the advisory firm noted that it has the potential to grow its value further especially in terms of generating more advertising revenue.

During IPL 2022, advertisers paid between Rs 15-18 lakh for a 10 second slot. For digital, it ranged between Rs 199-277 per CPM (cost per mille). These rates appeared to be significantly higher for playoff games and finals. On the other hand, in NFL, the average unit cost for a 10 second ad spot was $160,000 in 2021-22 season2. For Superbowl, the final playoff game of the NFL, advertisers spent more than $6.5 million for a 30 second commercial.

According to a study from Standard Media Index (SMI), the total revenue from NFL ad sales stood at $4.4 billion. Similarly, ad rates in EPL were much higher than IPL. When compared to other leagues, IPL fetches advertising rates that are on the lower end. The ad rates charged are a function of the monetization potential of the viewers which in case of IPL is largely the low to middle income population of India.

If IPL gets a bigger window or broadcasters find ways to better monetise their content, the league can further grow its value. Also, the growing purchasing power of the Indian middle class should help increase ad rates in the future, the report added.

Also, IPL franchises are also more dependent on media rights revenue versus other global league teams. The report said that IPL franchises are expected to earn as much as 70 percent of their total revenue from the central rights that includes pool money from media rights sale and central sponsorships. While this contribution ranges from 45 to 55 percent in case of franchises of other big leagues.

It is important for the teams to look for and activate other revenue streams, like merchandising, which contributes 15 to 20 percent of the revenue generated by football clubs like Manchester United, Chelsea, Real Madrid and Barcelona, the firm said.

Multi-club ownership in cricket is a trend many franchises are following. However, it will be a difficult task given the huge sums of money that will be required by team owners and consent from various stakeholders, most importantly, the apex cricketing body BCCI.

Hence, to maintain their growth momentum, all teams need to continue broadening their footprint, forming relationships, and generating revenue opportunities in different markets, the firm said.

Moneycontrol News
first published: Mar 23, 2023 09:20 am