An array of art, no less a melting pot for music, mixed with more than a 100 spoken languages is what encompasses India’s 29 distinct and dignified states, along with its Union territories. So in the midst of it all, what’s the common thread that runs along? There is one thing and one thing only that glues this country together. You guessed it right, it’s cricket.
Simply put, it’s the most notably followed religion in the country, with the Indian Premier League being its birth-child. Sending a wave of jubilations across borders, as alarm bells of this glamorous tournament makes its way into the topic of every lunchtime. The IPL took its first breath in 2008 providing a whirlwind of entertainment at the core of every fan experience. 14 years later it continues doing just that.
So what is it that makes this league a huge success?
Media Rights
Rupert Murdoch’s Star TV are frontrunners in fishing for finance in the sea of sport. Star India has made the biggest catch by signing a five-year global media rights contract in 2018 for a whopping Rs 16,374.50 crores, which amounts to roughly Rs 3, 274, per year. Previously, Sony Pictures paid RS 8,200 crore for IPL rights over the span of 10 years, denoting a stark rise that we will be seeing plenty of in this blog. This investment comes with a substantial amount of planning that consists of a two-fold strategy
1. Television Broadcasting
Firstly, the company is banking on a minimum of 10-12% annual increase in its advertising and subscription revenues from television broadcasting, backed by a rise in viewership. Sony for instance, made Rs 1200-1300 in 2017 on IPL advertisements and another Rs 500 crore through subscription revenues. Based on the premise that Sony put a price of over Rs 11,000 for 5 year rights, Star would require a combined revenue from advertising and subscription of about Rs 2,200 crore each year to recover its costs. Banking on its minimum 10-12%, it can easily make revenues of about Rs 12,500 crore from the property in the five years.
2. Digital Broadcasting
Secondly, it’s betting big on digital and has targeted to double the time spent by viewers of IPL matches on digital platforms within a year due a sharp decline in data tariffs along with the growth of 4G services. This, in turn, will push its advertising revenues substantially in the next five years.
According to Star India analytics, viewing one match consumes about 1gb of data. Watching games on a digital platform proved expensive with a tariff of about Rs 185 per gigabyte. However, the most disruptive telecom provider in the country turned things around for good. Slashing prices by 95%, Reliance Jio charged less than Rs 10 a GB, thereby making matches an affordable spectacle to witness.
In 2019, Hotstar's digital platform saw over 15 billion minutes of usage by consumers, whereas the amount of time spent by TV viewers was stable at around 110 billion minutes.
According to a KPMG report, digital advertising, which was at Rs 7,600 crore in 2016, constituted 15 per cent of overall advertising revenues. That number is expected to go up to Rs 29,000 crore in 2021, constituting over 27 per cent of total advertising revenues.
In the midst of acquiring both the digital and TV rights, Facebook pledged $600 million. But, Star still got the better of Facebook in a consolidated bid, proving the league's desirability.
Sponsorships
The 14th edition of the IPL witnessed 14 different sponsors. Brands have continued their association with this mighty cricket league. Chinese phone manufacturer, Vivo recently renewed its contract at an increase of 554 percent over the previous deal, according to the BCCI. The tournament will be called Vivo IPL until 2022 following the new agreement which will cost the company about $340 million.
Star witnessed a significant interest from multiple brand categories including Ed Tech, Fantasy Sports, FMCG, Beverages, Financial Services, Pay Wallets and Home Décor. Among the many brands, PhonePe, Byjus's, Dream11 and Just Dial were its co-presenting sponsors. Cryptocurrency startup Coinswitch Kuber said that it had seen over three times higher sign-ups during the IPL.
| Ad space in the front of the team jersey | ₹15-25 crore |
| Ad space on the back of the jersey | ₹7-13 crore |
| Ad space in front of the helmet | ₹2-14 crore |
| Ad space on shoulder of the team jersey | ₹1.5-3 crore |
The pandemic caused quite a chaos as many sponsors including the tournament took a sizeable hit as it earns approximately Rs 700 Crore per year through these sponsorships.
Ticket Sales & Merchandising
Around 10 percent of the revenue for IPL teams comes from ticket sales. Each franchise is entitled to a minimum of 7 home matches which gives them a fair opportunity to generate money. This is one of the few mediums of income where fans and franchises are directly involved in a financial transaction. A major portion of the revenue generated from the sale of tickets goes into the pockets of franchise owners, with only fixed portion of the money given to the BCCI and sponsors of that team as per the agreement.
The merchandises include official jersey replicas, sports souvenirs and sports equipment among others things. Merchandising is a huge opportunity for IPL and the franchisees to monetise their brand, replicating the global sporting events. This market generates about $30 million.
Depending on the bidding frenzy, the value of the next 5 year cycle is projected to be between a whopping Rs 24,000 - Rs 40,000 crore. Still, IPL chiefs believe it can further challenge global sports giants. But to foster growth, the IPL needs to summon enthusiasm and interest beyond India. Over the years, the IPL has not only benefitted the Indian economy but that of South Africa and the UAE's too. Huge investments, unimaginable returns, consistent ratings, unparalleled consumer satisfaction and massive brand imagery are just a few traits of the Indian Premier League that puts it in the same bracket as the NBA and the Premier League.
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