The Indian Premier League - IPL launched in 2008 has achieved a very high level of popularity with more than 140 million TV audiences and a brand valuation of more than 4 billion USD. The high publicity and glamour filled, franchisee owned cricketing event has also seen unprecedented money paid as franchisee fees, players fees and through advertisement revenue along with scandals of match fixing. The business model needs appreciation for integrating a number of complex processes such as entertainment, glamour, marketing, pricing and hard-hitting cricket. The attached ppt conducts some analysis of the IPL business cases and provides rational revenue & cost structures implemented to make the event viable.

1. IPL- Business model
“An Innovative sports entertainment”

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Brief intro…..
• The season commenced on the 18 April 2008 with the final match held
on 1 June 2008 and so far 8 different sessions has been completed.
• It was initiated by Lalit Modi, who served as the league's first Chairman
and Commissioner and Board of Control for Cricket in India (BCCI).
• In 2010, IPL became the first sporting event ever to be broadcast live on
YouTube.
• Its brand value is estimated to be more than US $ 8 billion in eighth
season (Estimated).
• It became the biggest competitor of multiplex in India.

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TEAM PERFORMANCES
Notes: W = Winner; R = Runner-up; = Semifinals/Knockouts; DNP = Did not play/participate; TBC = To be confirmed
The 2015 season of the IPL offered a total prize money of ₹40 crore (US$6.0 million), with the winning team
netting ₹15 crore (US$2.3 million). The first and second runners up received 10 and 7.5 crores, respectively, with the
fourth placed team also winning 7.5 crores. The others teams are not awarded any prize money. The IPL rules mandate
that half the prize money must be distributed among the players

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IPL - BUSINESS MODEL

5. Internal Circulation Purpose – All data taken from different websites. It is useful for personal usage
BUSINESS MODEL OF IPL

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BIDDING PROCESS OF BCCI
Announcement of
tender inviting bids
Potential franchises
submit bids
Bids for more than 1
city
Awarding of
franchises
Auction of players
Bid amount need to
be specified
Each squad
minimum 16 players
with max 4
international
4 Players under 22
from BCCI pool

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TEAM CITY OWNERS PRICE (US$)
Year 2008
BRAND VALUE
Year 2015
CSK Chennai N. Srinivasan (India Cements) 91 million 72 million
DD Delhi GMR Group 84 million 40 million
KXIP Mohali Preity Zinta, Ness Wadia (Bombay Dyeing), Mohit
Burman (Dabur)
76 million 32 million
KKR Kolkata Shahrukh Khan (Red Chillies Entertainment), Juhi
Chawla.
75.9 million 69 million
MI Mumbai Mukesh Ambani (Reliance Group) 111.9 million 72 million
PW Pune Subrata Roy (Sahara India Pariwar) 370 million NA*
RR Jaipur Shilpa Shetty, Raj Kundra(UK Trade Corp Ltd) 67 million 45 million
RCB Bangalore Vijay Mallya (UB Group) 111.6 million 51 million
SH Hyderabad Sun TV Network 159 million 25 million
TEAM AUCTION
American Appraisal, a Mumbai based valuation firm has valued IPL at $3.2 Billion.
It has also predicted that league’s value will skyrocket to over $400 Billion by 2020

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Auction of broadcasting right
(Sony entertainment for 10 Years at 500 Crore ($1.026 billion)
Sponsorship revenue are directed to a central pool - 20% to IPL, 72% to Franchises & 8% serving as the prize money
Title sponsorship and corporate sponsorship
[DLF-5 Year at 250 Crore ($ 50 million) and Now Pepsi at 397 Crore ($ 66 million)]
Sponsorship revenue are directed to a central pool - 40% to IPL, 54% to Franchises & 6% serving as the prize money
Auction of franchises rights
Sale of tickets (20% allocated to IPL)
Official umpire sponsorship
REVENUE SIDE OF BCCI

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REVENUE / EXP SIDE OF FRANCHISEE
1. Share in revenue from broadcasting rights / Media rights :- To be shared
among the franchisee after removing IPL’s shares. (80:20 Ratio)
2. Share in the sponsorship money / Sponsorship rights :- 60 % amount collected
to be distributed equally amongst the franchisee
3. Share in revenue from sale of tickets / Gate receipts :- Major source of
revenue, 20% are allocated for IPL.
4. Other Revenues:
1. Revenue from in-stadium advertising
2. Revenue from own sponsorship
3. Sale of players to other franchises.
Main expenses Franchisees have to bear
1. Franchise fee to IPL
2. Player Acquisition cost
3. Stadium hire charges
4. Team costs (Coach, travel, insurance, office,
other expenses)
5. Marketing/ Promotion costs

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REVENUE SIDE OF BROADCASTING
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 to 3 4 to 5 6 to 10
broadcastingRevenuein%
years
teams gets
BCI gets

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REVENUE SIDE OF PLAYERS
Contract Price – as per basic Agreement
Prize Money – Winning of match
Bonuses at which team finishes
Daily allowance

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IPL – ECONOMICS &
SWOT ANALYSIS

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SWOT ANALYSIS OF IPL
STRENGTHS
1. Short span i.e., 2 ½ hours therefore fast-
paced and exciting
2. Can be played on a weekday evening or
weekend afternoon
3. Very appealing as a mass sport as a
spectator sport as well to TV audiences.
4. Revenue is maximized
WEAKNESSES
1. It is the verge of damaging the game that
generated it.
2. Stakes are very high!
3. Some teams have overpriced their
advertising/sponsorship in order to gain some
short-term returns
OPPORTUNITIES
1. Large potential mass audience is very attractive as a
marketing opportunity, especially for advertisers and
sponsors.
2. The long-term success of all of the franchises lies in
the generation of a solid fan-base who will generate
large TV revenues.
3. Different markets and revenue sources will emerge
for IPL.
4. Huge opportunity for merchandising.
THREATS
1. Maintaining the level of competition and interest in
IPL or else the revenue will fall.
2. It won't be a quick return on investment - so
owners need to be in it for the long-term.
3. Franchises are very expensive. Therefore breaking
even will also take time.
4. The most highly priced teams may not be those
that have the early success. Revenues will come from
the most highly supported teams.

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Q: How does IPL make money?
1. Auction of broadcasting rights
2. Title sponsorship and corporate sponsorship
3. Sale of tickets (20% of tickets allocated to IPL)
4. Auction of franchisees rights
5. Official umpire’s sponsorships
Q: How is the IPL income distributed?
1. Share of broadcasting money with franchisees
2. Share of sponsorship money with franchisees
3. Share of ticket money with franchisees
4. Inauguration expenses
5. Prize money: $5 million ($3 million for winner; $2 million divided among others)
Economics of the Indian Premier League
Continued….

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Q: What are the sources of income for an IPL Franchisee (ROI)?
1. Share in revenue from broadcast rights (equal share for all franchisee after IPL’s share)
2. Share in sponsorship money (60% of the amount distributed equally)
3. Share in revenue from sale of tickets
4. Revenue from in-stadium advertising
5. Sale of players to other franchisee
6. Revenue from own sponsorship and corporate sponsorship
Q: How is the Franchisee income distributed?
1. Franchisee fees – 10% of total franchisee costs every year to IPL
2. Players’ cost (Each franchise have paid around $4-6 million per year)
3. Match fees and Inauguration expenses
4. Rent of stadium (expense of around Rs.2.5mn per match)
5. Marketing and promotional cost (around $3-4mn per team)
6. Fee for coaches, physiotherapists and other members.
7. Administrative cost
Economics of the Indian Premier League
Key Challenges faced in respect of Accounting and Taxation of IPL