The Mint of Cricket — IPL
The game of cricket originates from the British’s land but is popular in India compared to any other country. Yet, what has become the staple of any sports fan is club sports, and what better than IPL as an example to describe the growing popularity and fame it has gained over the last decade as the prime club cricket league. Before getting much into the monetary storehouse of IPL, it’s fair to look back on how cricket became prevalent in India than the sport’s home, UK.
Written by : Varun Patel
Graphics : Sambhav Jain
The year 2005 and the attendees to watch in house matches of England cricket team are dwindling. You might reckon this is due to people finding the comfort of watching the sport on TV, hence falling numbers. Well, the TV viewership number didn’t look fascinating either. Since the advent of the limited-overs format, the traditional test cricket format hasn’t found its fit, with viewers’ attention span plunging. After ECB sold the broadcasting rights to ESPN, cricket on TV was a pay to watch service, and viewers didn’t like this much. Hence cricket in the UK started losing its charm. That’s not the case with India. Cricket has a total of 1 billion fans worldwide, and India makes 90% of that number.
In the picture, IPL. The cash-rich league of cricket in the world. The growth in its brand value over the years has been impossible. To give an idea, in 2018, IPL was valued at a whopping $6.3 billion. In 2008, when a Singapore marketing Agency announced the league, World Sports Group (WSG) bagged a 10-year broadcasting rights deal for $918 million, making this deal as one of the top 20 biggest media rights deals of all professional sports. Post-2017, when the contract came to an end, BCCI called in for new bids for broadcasting rights. Significant proposals included giants like Sony, FOX entertainment, and Facebook (which offered $600 million for a 5-year rights deal). In the end, FOX walked away with a $2.5 billion bidding-war win. This would translate to an amount of $8.47 million per game.
For comparison, take these global sports per game prices
· NFL: $22.5 million
· EPL: $13.3 million
· NBA: $1.9 million
· MLB: $630,000
Huge numbers right, but there is more. Just two years after the deal, Disney closed a $71 billion deal to acquire FOX entertainment assets. One of these assets is Hotstar, the official streaming platform for IPL.
This sums up how broadcasting rights inject cash into the league. Albeit, there is another primary source via which BCCI and IPL manage to keep the mint alive — Title sponsorship. And sponsors loosen their purses heavily to claim the title sponsor spot. The reason, quite simple. Brand value and high viewership. Brand value has been justified above; what stands out is the viewership. IPL 2018 saw a record number of 769 million viewers throughout the season, immeasurable for a sport like a cricket whose roots aren’t widespread like football. This battle of title sponsors has been won by four bidders successfully so far. DLF, Pepsi Co, Vivo, and Dream 11. Vivo in 2017 bagged title sponsor rights for $341 million in a 5-year agreement. Though during the pandemic and other diplomatic tensions, IPL 2020 title sponsor opportunity was claimed by Dream 11, fantasy sports Unicorn, which paid roughly Rs. 222 crores in the deal. Though it might look appealing, this is short of what IPL would’ve received from VIVO in the five-year agreement on a comparative scale. Nonetheless, it’s something to work with than nothing.
And the question that intrigues all is how IPL makes franchises rich, or let’s say breakeven. When the IPL began, there was no clear statement on how this would be a win-win for teams and franchises. Surprisingly, in the initial stages, most of the incoming revenue was pocketed by BCCI, leaving none for the franchises. Later, BCCI started giving a share to the teams. 40% of media and sponsorship amounts received would be equally distributed amongst the franchises. But this was just a mole; what franchises needed was a molehill. Here’s where franchises make their mint to make money.
Team sponsors:
Every team has its sponsors; on kits, jerseys, tracks, you’d find a logo within an inch of every space. That’s the game of ad spaces. Sponsors pay team franchises to have their logos on the respective kits. One analysis succinctly puts it up — “The IPL promised instant and far-reaching visibility to brands. The brands, in turn, poured millions into the T20 league in sponsorships — sometimes with the league itself, but mostly with individual franchises which were less expensive.”
Team sponsorships are not too different from startup companies attracting VCs. Most of the teams in IPL are guilty of overspending — on talent, marketing, fan-building, etc. They seem to have done this while ignoring the bottom line. Startups do that too sometimes, going all out to acquire customers and build a loyal, returning base.
This is where IPL teams have fallen short. You see worldwide football franchises like Real Madrid, Barcelona, Manchester United, etc., these are cash-rich. And the reason stays that they have a loyal fan base who stick along. Unlike in IPL, fans are likely to switch the favorites once they like moves. The truth is, cricket fans support a player than they support a team. This hurts brands. They want to have a streamlined audience that doesn’t fluctuate.
So when a team wins the title, it grows its fanbase and, eventually, the brand value. This might cause the teams at the bottom to struggle to find sponsors even at a discounted rate. But if your team has a celebrity or some player with high brand value, it won’t hurt the management to keep the cash churning in.
Ticketing:
Ticketing is another source via which teams manage to keep their accounts filled in. The revenues each team earns from home ground Gate money share 20% of it to BCCI and save 80%. That’s a decent bargain. The catch again here is stadium capacity. The larger you accommodate, the more you charge, and the greater you cash in. That’s a reason why franchises with larger home grounds have the edge over smaller ones.
Merchandising:
This mode has been relatively providing with lower cash stream compared to branding and ticketing. A part of the reason being that the idea of merchandising is still novice to Indian sports. According to data from the International Licensing Industry Merchandisers’ Association, it plays a minuscule role with a mere 1.3% of the total sales of licensed merchandise. In 2016, Indian retail sales of licensed products were at $1.4 billion, of which only $18 million was through sports merchandise. Globally, sports retail sales make up $25.3 billion, constituting 9.6% of the overall $262.9 billion of global retail sales of licensed merchandise.
In an interesting attempt, the most successful IPL franchise, Mumbai Indians, started a fan loyalty and membership program to attract and maintain a stable fan base.
IPL is more than a sporting event; it’s an opportunity for businesses, brands, teams to bank on to make big money. And not to miss out on how brands find a way to fit in despite losing direct title/team sponsorship. Brands associate for player awards, strategic timeouts, boundary cushions, LED screens, and Umpire sponsors. Breaks between overs cost brands seconds to make their space and presence felt. What adds to the brand value is the association of Bollywood stars to teams. Shahrukh Khan owned Kolkata Knight riders is one of the highest valued teams due to his popularity around India and the world.
For the burgeoning media industry in India, the popularity of the IPL translates into consumption that is through the roof. The IPL is a rating bonanza if ever there was one in India. Essentially, 47 days of a broad, captive audience. There’s a reason it feels like a 2month long festival every year. The media loves this windfall and celebrates it unabashedly.
Indian middle-class population has grown paced in recent years, and the adoption of TV and Mobiles in these households is at full tilt. With increasing audiences, IPL could become superior, maybe along with the leagues of NFL or Superbowl.
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