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How Do IPL Teams Earn Money?

The highly anticipated 17th season of the Indian Premier League (IPL) cricket tournament is just 3 months away. The 10 franchises will fiercely compete for the coveted Twenty20 championship trophy and prestige. While substantial prize money contributes somewhat to team revenues, it is far from the biggest factor driving financial success. Let’s closely examine the major revenue sources for IPL teams and how they generate sizable profits.

Valued at a staggering $10.7 billion (₹89,000 crore) in 2023, the Mumbai Indians were the most valuable IPL franchise with a valuation of $1.3 billion.

Here are the top contributors to revenue of an IPL team:

  1. Central Revenue (45%)
  2. Brand Revenue (25%)
  3. Ticket Sales (15%)
  4. Prize Money (5%)
  5. Merchandising (5%)
  6. Other (5%)
Central Revenue (45%)

The IPL’s governing body, BCCI, earns massive revenues from the sale of extremely lucrative broadcast and digital rights. They distribute a hefty portion, currently 40-50%, equally among the 10 teams. This ensures financial stability regardless of an individual team’s on-field performance or popularity. The centralized approach promotes competitive parity, balance, and the league’s tremendous global appeal.

Brand Revenue (25%)

Brand sponsorships on team jerseys, stadiums, and high-profile marketing campaigns represent symbiotic partnerships between franchises and sponsors. Companies gain prominent exposure and access to millions of passionate fans. In return, teams secure vital upfront financial backing while strengthening their brand presence. This win-win relationship is an economic linchpin.

Ticket Sales (15%)

Teams receive approximately 80% of gate revenues from home matches, directly benefiting from their loyal local fanbase turning up in huge numbers. Beyond the immediate income, this link between fan support and financial return incentivizes competitive excellence on the field.

Prize Money (5%)

While not the primary revenue generator, substantial prize money awaiting the league’s top performers, especially the champion team, provides a competitive boost. These performance-based financial rewards encourage elite standards.

Merchandising (5%)

Capitalizing on their legions of loyal fans, teams sell vast quantities of jerseys, caps, and other memorabilia through physical and online stores. Each item sold represents an incremental revenue stream while simultaneously strengthening brand aura and fostering deeper emotional connections with fans.

Other (5%)

Proactive IPL franchises continue to explore diverse revenue options beyond the core channels. These include corporate hospitality packages, in-stadium food and beverage sales, additional brand sponsorships and activations, customized mobile apps, and online fan engagement initiatives. Such initiatives provide financial stability and unlock new digital growth avenues.

Fun Facts and Figures:

  • Rajasthan Royals witnessed a monumental 78% franchise valuation surge to $565 million in 2023, highlighting the league’s exponential growth potential even for smaller market teams.
  • CSK star MS Dhoni’s famous bat sponsorship deal is worth a whopping $25 million per year, demonstrating the incredible earning power of individual elite players.
  • A record-shattering $24,500 was paid for a premium ticket to the hotly contested 2023 IPL finals, evidencing the massive demand for high-stakes matches.
  • Merchandise powerhouse Mumbai Indians sold an astounding 1 million team jerseys in 2023 alone, underlining the lucrative merchandising opportunities.
  • Leveraging its unmatched digital presence and reach, the IPL boasts over 200 million social media followers, enabling global sponsorships and viewership expansion.

In summary, diversified and multiplying revenue streams centered around central distributions, sponsorships, ticketing, merchandising, and more provide financial vigor and stability for IPL franchises. This drives the league’s soaring popularity and prosperity. As the 17th edition approaches, these integrated monetization channels will fortify the teams’ financial frameworks for continued success.

Thank you for reading!

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