Indian Premier League (IPL)’s founder Lalit Modi, as is his wont, had predicted the media rights valuation to touch $ 8-10 billion. While, the final outcome from the rights sale, this year, fell short (6.2 billion), it still broke records – triple the previous value in five years.
Over and above the media rights are sponsorships, ticket sales, and in-stadia revenue. The latest round of IPL valuation report put together independently by D & P Advisory has pegged the collective value of the league to have gone up to $ 10.9 billion. “The IPL has moved to being a Decacorn – a business with a value more than $ US 10 billion. It’s a 75 % growth from 2020,” states the report.
Modi had predicted the rights value to double, come the next cycle, but the report is less enthusiastic. It forecasts a low probability of any further significant bump in media rights fee going forward.
Media rights drive revenue earning for sporting leagues around the globe. But in IPL’s case, earnings from TV and new-age media rights do all the heavy lifting. The Indian cricket board – BCCI keeps half the revenue and the other half is distributed amongst the ten franchises. The report estimates 70 % of franchise earnings coming from their media rights share.
“In NFL, Green Bay Packers, the only publicly listed team, earned 50 percent of its income from broadcasting fees in 2012. Per publicly available sources on the web, this proportion ranges from 45% to 55% in case of other big leagues,” the report further mentions. Analysts point to merchandising and match-day sales as key target avenues for franchises to become more profitable.
“The revenue from the central kitty in IPL is largely contracted. You are talking about the first and the tenth-ranked team earning virtually the same amount, perhaps with a 10 % difference. So, the motivation to do more isn’t enough. The teams haven’t cracked on how else they can earn, yet,” said Santosh N, Managing Partner, D & P Advisory.
The report downplays claims of IPL being branded as ‘the second most valuable league in the world’ over calculations based on per-match valuation ( ₹118 crores). As widely reported, other leagues have more matches, more teams and a greater playing window. “To rank it and compare it with the likes of EPL, NFL and MLB is not a straightforward exercise. Any attempt to do so using cliches like “second most valuable league”, etc. merely constitutes puffery. What IPL has achieved in its 15 years of existence is commendable, but it still has a long way to go,” reads an extract from the report.
It applauds the rise in IPL’s media rights value and points to shifting viewership towards digital, even as linear TV remains a ‘prized asset’ in the Indian market. However, the broadcasters are not necessarily laughing all the way to the bank. The report quotes advertisers to be paying ₹15-18 lakh ($ 20,000) for a 10-second TV spot and ₹199-277 ($3) per CPM (cost per mile) for a slot. In NFL, the average unit cost for a 10-second ad spot was $ 160K in 2021-22 season 2 and more than $6.5 million for 30 seconds for Superbowl.
“The ad rates charged are a function of the monetization potential of the viewers which in the case of IPL is largely low due to the middle-income population of India. Thus, monetization of media rights is a tough task for broadcasters in India which indirectly influences broadcasting,” the report observes.
“Gradually with the onset of 5G and India growing economically, it will begin to change,” Santosh said.