Ahead Of Its 16th Season, Indian Premier League Turns Into A Decacorn With $10.9 Billion Valuation

The Indian Premier League (IPL), which is considered one of the biggest sporting leagues in the world, has "turned decacorn," a term that refers to a business whose value has hit the $10 billion mark.

The IPL 2023 season begins next week, on March 31.

Rs 87 Crore Valuation For IPL

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Since its inception, the IPL's value has seen a 90 percent growth and currently stands at $10.9 billion (Rs 87 crore), according to a report titled 'Beyond 22 Yards,' The IPL Valuation Report 2022 by D&P India Advisory.

(Disclaimer: The value in INR is as per the IPL Valuation Report 2022 by D&P India Advisory)

Moreover, IPL was also India¡¯s first unicorn in 2008, with a $1.1 billion valuation at inception, according to the analysis in the report mentioned.

The 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.

In its 15-year history, the IPL has emerged as the premier sporting event in India, with a global viewership and massive fan following.

This year, for the first time in IPL history, media rights have been spread across broadcasters, breaking the monopoly of one company, the report said. At $6.2 billion for the 2023¨C2027 cycle, IPL has recorded a three-fold jump from what Walt Disney Star had paid for the previous 5-year cycle in 2017.

"Media Rights Helped Boost Valuation"

On a per-match basis, the media rights deal makes the IPL the second-biggest sporting league in the world, according to Santosh N, managing partner, as per a Moneycontrol report.

He said that the renewed media rights deal was the major contributor to 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-stadium revenue were the other contributors to the increase in the IPL ecosystem value.

While the IPL has seen significant growth, the report 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 and 18 lakh for a 10-second slot. For digital, it ranged between Rs 199 and 277 per CPM (cost per mille). These rates appeared to be significantly higher for playoff games and finals. On the other hand, in the NFL, the average unit cost for a 10-second ad spot was $160,000 in 2021-22 season 2. For the Super Bowl, 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, the ad rates in the EPL were much higher than the IPL. When compared to other leagues, the 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 the case of IPL is largely the low- to middle-income population of India, as per the report.

If the IPL gets a bigger window or broadcasters find ways to better monetize 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 Read: 6 Money Lessons You Can Learn From The Game Of Cricket

It's Important For IPL Teams To Have Other Revenue Sources

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Also, IPL franchises are 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, which includes pool money from media rights sales and central sponsorships. While this contribution ranges from 45 to 55 percent in the case of franchises in other big leagues.

According to the report, 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.

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, the report added.

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

Also Read: 5 Investment Lessons We All Can Learn From FIFA World Cup

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