IPL is booming but are we in the big league yet?

Now another new one is coming. Later this month, the Board of Control for Cricket in India (BCCI) will issue the tender for the five-year period 2023-2027. In 2009, Sony Entertainment Television paid ₹8,200 crore, or annual fee, for broadcast rights for nine years ₹911 crores. The current five-year deal with Star India is worth it ₹16,348 crores. that’s about ₹3,270 crores per annum, or a compound annual growth of about 15%. Industry experts believe the next cycle could be something else ₹30,000 crore , translates into a compound annual growth of about 13%.

Since the last round, the leading bidders have seen a sense of strength. Reliance, which runs Viacom18, launches Jio to become a leader in mobile and internet services; It also received investment from Facebook and Google. Star was acquired by Walt Disney. Last month, Zee and Sony said they were merging in India. If the battle for the IPL rights is fought, the new TV deal will take the IPL further in the ranks of sports leagues globally and enhance its Covid-hit brand value, as it did in 2018.

leaving the biggies behind

The most attractive leagues from a broadcast point of view are the European Football League and the US League for American Football, Baseball and Basketball. Their broadcasting rights dwarf those of the IPL. For example, the EPL ordered an annual broadcast fee. ₹31,000 crores in 2021, almost 10 times the IPL. Even then ₹6,000 crore annually, is catching up to do IPL.

There are two important differences between IPL and these leagues. The first relates to the period. There are eight teams in the IPL and it runs for two months in a year. Most leagues consist of 20-30 teams and last six to nine months. The second is global reach. For example, the contribution of foreign rights to the EPL broadcast deal has increased from 28% in 2007 to 39% now. In the case of the IPL, while Star’s winning bid was a consolidated bid, the highest individual bid for the international rights was only 5% of Star’s bid.

unit price

However, when the broadcast charges are compared on a per match basis, the IPL is higher. The per match fee paid by Star India for 60 IPL games per season is approx. is equal to ₹54 crores. It exceeds the German and Spanish football leagues and the American basketball and baseball leagues. But it is less than EPL and NFL. The 20-team EPL schedules 380 games per season and averages around ₹81 crores per game.

IPL is looking to add two teams next year. This will increase the number of matches in the current round-robin format to 94. so ₹30,000 crores, i.e. fee per game approx. ₹64 crores. However, considering the busy international cricket calendar, it is not easy to add IPL matches. If the IPL changes its format to avoid the corresponding increase in the number of matches, the fee per match will be higher. But the size of its overall rights will remain small compared to other global leagues.

Franchise Premium

A big broadcast kitty will pick up all the boats in the IPL seas. According to the latest available BCCI Annual Report, broadcast revenues accounted for 62 per cent of IPL’s revenue in 2016-17. These broadcast revenues go into a ‘central pool’, which is divided between the BCCI and the eight franchises. IPL teams earn most of their earnings from the central pool. For example, the Kolkata Knight Riders franchise earned almost three-fourths of its revenue in 2018-19 from this central pool.

In 2018, the bumper deal with Star India nearly doubled the revenue of IPL teams, with most of them graduating ₹300-400 crore band. A bigger broadcast deal also means the two new franchises will have to pay more to participate. Industry analysts expect the new franchise to be near-perfect ₹4,000 crores each. Considering the strong revenue streams and remarkable growth of IPL, BCCI could be another big earner.

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