Insights on the IPL Business
In India, IPL has become a part of our culture. Here's a look at the team valuation, media rights, and sponsorships that make up the IPL business.
Rahul Mathur
Now: Building @Insurance_Dekho Earlier: Founder @VerakInsurance (YC W21; acquired) Hiring for Eng, Marketing, Sales & Ops roles
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In India, IPL has become a part of our culture - March to May evenings are “booked out” to watch the games.
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
Telecasts are watched by 350mM+ fans. However, IPL as a business isn’t well understood.
Sharing some insights on the “IPL business”: -
1. Team valuation
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Initial price in ‘08 was $60M to $90M each (which was paid over 10 year window)
- Newest franchises were bought for $650M & $880M respectively
- Franchises are today valued between $800M to $1.2bn - implying > 20% CAGR for owners!
Great investment for owners! -
2. Team revenue model
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Teams get ~ an equal share of 40% of net revenue of IPL
- The new broadcast contract is worth approx. $60M per year per team
- Teams also make money from tickets, merch sales & other offline events; but broadcast rights are the biggest revenue item -
3. Team P&Ls
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Approx. cost is ~ $15M to $25M per team per season
- Which means under new broadcast rights - the owners are making $30M to $40M+ per season
- Exact numbers unknown but this is an insane profit for a team owner!
- In other sports leagues, franchises lose money! -
4. What makes the IPL unique?
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Player auction process & player earnings cap forces equality amongst teams - uncertainty drives viewership (literally anyone wins e.g. Gujrat last season)
- Short playing season but each game is worth in $16.5M broadcast rights (2nd only to US NFL) -
5. Broadcast Rights
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Star retained the TV rights for $3.1bn for 5 years
- Viacom18 (Reliance owned) bagged rights to digital streaming for $3.1bn for 5 yrs
- 1st time digital rights cost more than TV
- V broadcast right cost has become x6 since release -
6. Fun facts
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
- Last year, IPL purchased a $630M event cancellation & loss insurance policy
- Title sponsorship cost has grown x12 from $5M with DLF in ‘08 to Tata paying $62.4M in ‘22
- Disney+ reported 6% subscriber churn due to losing IPL rights! -
Most of these insights on the IPL business have come from the Business Breakdowns podcast - definitely worth a listen (via URL below)
— Rahul Mathur (@Rahul_J_Mathur) March 9, 2023
PS: IF you find IPL’s business interesting - they have a great analysis of America’s NFL league - lots of comparisonshttps://t.co/IvRL4pdlxD