Players are not getting the financial benefits of IPL

The 10 franchises will mostly build their teams anew, with each being allowed a maximum of ₹90 crores. This is just 6% more than in 2021. When IPL was started in 2008, then this purse was ₹20 crores per team. A 4.5x increase in player salaries in 14 years may sound generous, but the IPL ecosystem has grown much more than that in this period.

The team’s auction purse has grown at a compound annual growth rate (CAGR) of 11.3% since 2008. Spikes occur when the number of teams increases (2011) or when the Board of Control for Cricket in India (BCCI) conducts an attack. New broadcast deal (2018). In comparison, the sale of broadcast rights, the proceeds of which is split equally between the BCCI and the teams, grew at a CAGR of 19%.

Two other metrics of financial health—team revenue and valuation—have increased by 28% and 37%, respectively.

Thus, while more money is flowing in, it is the BCCI and the teams that are pocketing more than the players. The BCCI has also been tasked with developing the cricket ecosystem in India. But as per the limited data available, this is not where this new inflow of money is going.

shrinking part

Indeed, player salaries are declining as part of the team’s revenue. Take Kolkata Knight Riders (KKR). In 2010-11, the franchise earned a revenue of ₹62 crores, and paid its players ₹28 crore, or 46% of its revenue. Over the years, both of these zodiac signs increased. Its revenue doubled after the new TV deal started in 2018. Thus, in 2018-19, KKR earned a revenue of ₹448 crore, but paid its players ₹72 crores, or just 16% of revenue.

By comparison, in European club football, the salary-to-revenue ratio of the top 20 tier-I leagues ranged from 53% to 79% in 2018-19, according to the sport’s governing body, UEFA. The BCCI and franchises can expect another revenue jump in 2023, when the next five-year broadcast cycle begins and is expected to double from the current levels. ₹3,270 crore annually. It is set to further reduce the salary portion of the player.

under the cap

In the name of ensuring equality, the IPL rules neither give the players the right to choose their team nor negotiate their salaries. Although there is a window for player trades, transfers between teams are rare, and cannot be initiated by the players themselves. Indian all-rounder Ravindra Jadeja was punished with a one-year ban in 2010 for negotiating higher salaries with other franchises.

The salary cap sets a maximum limit on how much a franchise spends on a maximum of 25 players on its entire team. While the total squad spend in a franchise is broadly in a broad range, franchises like Rajasthan, Punjab and Hyderabad have consistently spent less than the maximum permissible limit. In 2014, four out of eight franchises worked over the salary range. In 2018 and 2021, only Bengaluru worked on the salary cap. Other franchises spent even less, some modestly and some significantly.

distribution pyramid

Meanwhile, the salary of the squad itself is unevenly distributed. For example, Virat Kohli alone earned 20% of Bengaluru ₹85 crore purse in 2020. The bottom 10 players accounted for just 3.5%. Equal distribution exists across franchises. However, there are instances like Delhi in 2020, where the disparity between the top two rungs is slightly less.

The reserve price for uncapped Indian players, who are at the bottom, is ₹2 million. Fewer starters but promising players like Devdutt Padikkal and Ruturaj Gaikwad are often bought at their reserve price. The annual retainer for Indian women cricketers is at similar levels: ₹50 lakhs to three Grade A players ₹30 lakh to 10 grade B players and ₹10 lakh to six Grade C players. Considering the huge benefits that BCCI is getting, it can share more with the makers of the show.