2022 Indian Premier League season is just around the corner and all set for yet another massive t20 carnival in India during April/May. 10 teams will participate IPL 2022 season which is set to be the biggest domestic event in cricket world. We take your through from the creation of IPL and how it became one of the most lucrative sports league in the world. So why not dig deep and analyze how IPL make money and what system they use to distribute the revenue among teams.
How IPL generates revenue and distribute among teams ?
IPL is controlled and administered by Board of control for Cricket India (BCCI) and every franchise pay a 10% total franchise value to BCCI. BCCI keep this money and use it for administration cost to organize IPL season every year. IPL cost and revenue system work on 10-year basis usually and we explain in detail how it really works. Before we get into more details, lets take a look at how much each franchise actually cost.
Buying an IPL franchise cost has risen exponentially since 2008. Most expensive Franchise sold in the first season was Mumbai Indians at 839 crores but it cost almost 8 times more money to buy a new Franchise in 2022 considering Luckhnow and Ahmedabad costed 7090 cr and 5600 cr respectively.
| FRANCHISE | TOTAL COST | YEARLY PAYMENTS TO BCCI (10% of total cost) |
|---|---|---|
| Mumbai Indias | 839 cr | 83.9 cr |
| Chennai Super Kings | 683 cr | 68.3 |
| Royal Challengers Bangalore | 837 cr | 83.7 |
| Delhi capitals | 630 cr | 63 |
| Sunrisers Hyderabad | 596 cr | 59.6 |
| Rajasthan Royals | 503 cr | 50.3 |
| Punjab Kings | 570 cr | 57 |
| Kolkata Knight Riders | 563 cr | 56.3 |
| Lukhnow | 7090 cr | 709 cr |
| Ahmedabad | 5600 cr | 560 cr |
So every franchise has to pay as much as 10% of the total franchise cost to BCCI every year. But how much money do they get back in return? To find that out we need to see how BCCI makes money and why the system it used to distribute funds among IPL teams.
IPL Revenue Stream & Distribution Channel:
IPL makes money in several ways and distribute a share of it to IPL teams.
1). Media Rights:
Domestic and international TV rights money is put into one pot. IPL’s new domestic TV deal with Star India from 2018 to 2022 is worth 16,347 crore INR over 5 year period. That is 3,269 crore INR per season.
- Domestic TV & Stream Media Rights: ₹440 crores a year
- Oversees TV & Stream rights: ₹90 crores a year
So for the 2022 season, IPL will clear over ₹530 crores just from domestic and international media rights. of which 50% is kept by BCCI and the rest of the 50% is distributed among 10 IPL teams on the basis equal basis. So since there are 10 IPL teams in 2022, each team will get 5% of the total media rights money. That translates to around ₹26.5 crores for each team for 2022.
2). Central Revenue:
the central pot includes money from the lucrative IPL title sponsorship and other main sponsorship and licensing fees.
Title Sponsorship & Other Licensing
Title sponsorship for IPL is one of the most expensive sponsorship deals in India. Tata struck a two-year deal with IPL to be the main title sponsor where TATA will pay Rs 670 crores over 2 seasons from 2022 and 2023. Rs 301 crore a year to be the title sponsor and Rs 34 crore a year extra for an increased number of matches making it Rs 335 crore a year.
Rs 335 crore per year TATA-IPL deal is lower than of the previous deal with VIVO who were paying Rs 440 crore per year under their 5-year contract from 2018 to 2023 which was terminated as the india-china border standoff accelerated.
- Title Sponsorship – ₹335 crores a year
- Official sponsors – ₹210 crores a year
- Umpire sponsors – ₹28 crores a year
- Official strategic timeout sponsor – ₹30 crores a year
So from the Central revenue stream, BCCI/IPL can clear over ₹668 crores in 2022 which will again be shared between BCCI/IPL and IPL teams. BCCI/IPL gets to keep 25% of the total money from the central revenue pot while each of the 10 teams will get 7.5% each.
3). Gate Receipts
Gate Receipts (money generated via tickets, hospitality, and on the group team merchandise sales) all are put in one pot. BCCI/IPL do not get any money from this pot, instead, it’s 100% shared between the 10 IPL teams for the 2022 season.
The below table shows how much IPL and IPL teams can make in the 2022 season. The numbers below are without the prize money awarded to IPL teams at the end of the season.
Note: There is a separate Prize Money pool for IPL teams and players which is announced before the start of each season. That prize money pool is different then the money we are talking about here.
| TEAMS | MEDIA RIGHTS | CENTRAL REVENUE | GATE RECEIPTS |
|---|---|---|---|
| TOTAL | ₹530 crores | ₹668 crores | |
| BCCI & IPL | ₹265 crores (50%) | NONE | |
| Mumbai Indias | ₹26.5 crores (5%) | 100 | |
| Rajasthan Royals | ₹26.5 crores (5%) | ||