The Indian Premier League (IPL) franchise owners are looking at minting big money as their revenue from IPL’s media rights may soar, boosting their EBITDA (earnings before interest, taxes, depreciation and amortization) incomes along with valuations to new levels.
This is because the media rights for the IPL cycle 2023 to 2027 have crossed the Rs 43,000 crore-mark, with the value of rights for every match surpassing the Rs 100-crore mark on the combining worth of TV and digital price.
All this has come at a time when broadcasters were contending for the media rights of the most sought after cricket tournament today.
The IPL media rights auction will carry over on Monday as well, according to rules set by the Board of Control for Cricket in India (BCCI).
How Franchisees Earn Revenues From IPL
IPL which is the world’s richest cricket league draws broadcast subscriptions by the millions and attracts huge advertising revenue. IPL teams get a share of the television rights as well as sponsorship money, along with approximately 10 to 15 per cent of ticket sales.
Meanwhile, franchisees earn most of their revenues from a central pool that constitutes 85-90 per cent of their revenues. Under this, the franchisees receive a 50 per cent share of what the BCCI makes from official sponsors’ rights and media rights. The funds set aside for them (franchisees) are then divided among them all.
If the winning bid comes to Rs 45,000 crore, the franchisees’ revenues from media rights will more than double to Rs 450 crore, according to media reports, significantly up from the Rs 201.65 crore that all 10 franchisees earned in 2022.
Disney Star paid around Rs 4,033 crore for 74 matches in 2022 for the IPL media rights basis a per match price of Rs 54.5 crore.
The average revenue of the eight franchisees comes to approx. $35.2 million and EBITDA of $9 million, according to a Forbes report. As the media rights are likely to rise steeply, the valuations will also soar. Seven of the 10 IPL franchisees’ valuations are already above $1 billion, it added.
Meanwhile, Private Equity (PE) funds have sniffed a big opportunity and have begun putting money in franchisees. Private equity firm CVC Capital Partners, which has sports investments in the top soccer tournament, the Spanish La Liga, and Volleyball World, bagged the Ahmedabad franchise at Rs 5,625 crore.
IPL – A Revenue Generator
BCCI treasurer Arun Dhumal told the media recently that the cricket governing body earned $533 million from the IPL in 2020. However, its finances are veiled in secrecy. "IPL is the hottest property in cricket and it has just been expanded to a 10-team tournament, which means there will be more matches," Dhumal told Reuters. "All of it should reflect in the value of the new media rights, which we expect to be significantly higher than our previous deal,” he added.
IPL, which is not in its 15th year, is expected to earn BCCI additional revenue of Rs 1,271.5 crore per year from the new teams, in addition to Rs 444 crore which the governing body has received from VIVO as a reassessment fee.
As the IPL expanded to 10 teams this year, the auction for the new franchises’ ownership rights attracted international bidders comprising the Glazer family, the owner of Manchester United. However, they were eventually tapped out by Sanjiv Goenka’s RPSG Ventures, who won the bid by paying $930 million to BCCI and formed the Lucknow Super Giants.
Broadcast Rights – BCCI’s Biggest Money-Spinner
Day 1 of the media rights auction for the IPL cycle 2023-2027, for both digital and TV, ended at Rs 43,050 crore on Sunday, June 12, 2022.
The teams spent around $75 million in the player auction held in February, wherein, Mumbai Indians retained Ishan Kishan for $2 million and Punjab Kings paid $1.52 million for English all-rounder Liam Livingstone.
Disney-owned Star India paid $2.55 billion to bag a five-year digital and TV rights deal that expires at the end of this season. The next package, for 2023-2027, is pegged by analysts to swell to as much as $6.6 billion.
Meanwhile, Amazon has pulled out of the race to own the media rights to the IPL for the next five years. The number of bidders this time - Disney-Star, Sony, Viacom-Reliance, Zee, Fun Asia, Super Sport and Times Internet - is half that of the previous auction when 14 companies were in the fray for the broadcast rights of the IPL from 2018 to 2022.
