IPL 2016 Revenue Stream

The Indian Premier League has amassed about Rs. 2500 crore in overall revenue in its recently concluded ninth season, growing at a double digit pace over the year before. The figure includes revenue that TV and digital channels made from advertisements, as well as teams from sponsorship, ticket sales and merchandising, and BCCI from on-ground sponsorship.

The biggest chunk of revenue came from TVs as advertisers vied to grab ad spots when matches were telecast during the nearly two-month long tournament, which with its fast paced short format has become very popular in this cricket crazy nation. Official broadcaster Sony Pictures Networks India (SPN) made just under Rs 1100 crore while the eight IPL franchises together earned Rs 200-230 crore from Sponsors.

The Board of control for Cricket in India generated Rs 220-250 crore from on-ground sponsorships, whereas Hotstar the digital rights holder got around Rs 40 crore. This season IPL made ticketing revenue of Rs 150-160 crore. India is a market where a lot of new brands are launching. This need to chase salience and eyeballs and IPL viewership has remained rock. IPL is celebrated like a festival that unites once a year and brings families, friends and colleagues together to enjoy the spirit of cricketainment.

IPL has developed many unique skill sets and generated lot of job opportunities that are making a difference to the larger sports and events industry in India. In terms of ticketing revenue, Royal Challengers Bangalore (Rs 25-26 crore), Mumbai Indians (Rs 24-26 crore) and Delhi Daredevils (Rs 22-24 crore) topped the charts, followed by Rising Pune Supergiants (Rs 18-20 crore), Kolkata Knight Riders (Rs 16-18 crore), Sunrisers Hyderabad (Rs 15-16 crore), Gujarat Lions (Rs 14-15 crore) and Kings XI Punjab (Rs 13-14 crore). The BCCI ended up with almost Rs 10 crore in its kitty from ticketing revenue.

IPL is progressively growing at a 10-12% rate year on year. It may not be galloping, but it is definitely not sinking either. It is going in the right direction. Another small revenue stream for the franchises was merchandising, which is estimated to have generated Rs 17-20 crore for the teams put together. While it is hard to put a definite number to it, there is substantial revenue to the broadcaster from the TV channels that are subscription based.

SPN may allocate this revenue, estimated to be anywhere from Rs 250 crore to Rs 400 crore to the three channels – Sony Max, Sony Six, and Sony ESPN, which air IPL. SPN payout to the BCCI of Rs 820 crore per year (the 10 year deal is worth Rs 8200 crore) as well as Franchises fee has not been considered for the estimates. A major chunk of this goes into a central revenue pool, from where it is distributed among the Franchises.

IPL: Super Bowl for Advertisers

Cricket is most watched game in India. It may be because of famous cricketers like Sachin, Kapil Dev, MS Dhoni and others or it is due to back to back cricketing action. Despite five months of regular cricket, the hype around the sport is far from waning. Advertiser’s interest in the Indian Premier League (IPL) is proof of this. There were many successful campaigns launched between these time periods including the most successful #MaukaMauka campaign in India. 

IPL tournament is similar to Super Bowl in US, the annual championship of the National Football League (NFL), which is known for Brands showcasing of their biggest campaigns of the season. There are some of the big spenders in on advertising in the popular cricketing league this year. Amazon India latest campaign and its biggest so far have managed to capture the attention of audiences with its catchy jingle and tag line: ‘aur dikhao’ (show more). The advertisement has been created by Orchard Advertising.

Hector Beverages Pvt. Ltd has rolled out its first television and multimedia campaign for its range of Indian ethnic beverages under the Paper Boat Brand. Vodafone India has chosen to lead its biggest campaign so far this year by highlighting the speed and efficiency of its 3G network. The mobile commerce firm Paytm continues with its advertising spree on television and other mediums. The company has said it is setting aside Rs 50 Crore just for this season of IPL out of total advertising budget this year.

The cola brand has taken to crowdsourcing for its latest campaign for IPL crash the Pepsi IPL. As part of the global Pepsi Challenge Program, the company is asking consumers to make a 30 second advertisement showing their love for brand. Winners will get exciting prizes. Snapdeal has roped in Hindi movie actor Aamir Khan for its latest campaign, with the tagline, ‘Dil ki Deal’. These advertisers are spending Crore in outreaching customers and compete with their competitors.

There are other advertisers who are not spending in TV ad but are spending in getting their names placed on Players jerseys and caps. Mankind, Rupa, Nokia, Aircel, Hero Honda, Royal Challenge, Videocon, UltraTech, WHSmith, Spice Jet, Just Dial are among the ones. In my opinion it is a tournament where advertisers are spending around 1000 crore this year. This is a good symbol for Indian Economy and other leagues in different sports will make companies to spend more money on advertisement.

Importance of Sports for Economy

Today sport emerges as an important component of Socio-economic development of a country. The active participation in sports improves community health and productivity, reduces medical expenses, imbibes discipline in character, generates great leaders, and enhances social cohesion. The execution of a mega sporting event helps in developing infrastructure, generates employment, secure inflow of foreign capital, generates players and athletes, and thus contributes significantly to the economic development of a country. Therefore, it can be said that the impact of sports on economy and society is multi-dimensional.

There are many sports played in India but cricket is most famous game in India. Since a decade, Indian sports ministry is well focused on increasing the sports facility in India. India has hosted several international sporting events after Independence including 1982 Asian Games to ICC Cricket world Cup in 2011. India is rich in giving great athletes to the world. In sports such as Cricket, Hockey, Wrestling, Shooting, Chess, Badminton, Football, Golf, Kabaddi, Races, Billiards, Baseball, Boxing, Tennis, Formula 1, Polo, and Rock Climbing. Still, India needs to work more on infrastructure and other facilities. In the 11^th Five Year plan, government allocated INR 46,360 Million for development of sports in country. Since then India had hosted Formula 1 Races, Hockey World Cup, Common Wealth Games, and Cricket World Cup.

Businesspersons and celebrities in India also worked with government to promote and develop different sports in India. IPL in Cricket, IBL in Badminton, PKL in Kabaddi, ISL in Football, IHL in Hockey, and IPTL in Tennis, all these leagues in India worked in creating sports hype in the country. Social Media had also played a very important role. Whenever any major sport event occurs in a country then it gives benefit to different sectors. People spend more on tickets, purchase sports brand products, visit restaurants and clubs, watch TV, and many more. Travel Company, Beverages Company also makes huge profits at the time of events.

However, there are certain incidents where government ended up in making loss. Terrorists attacks in Pakistan in 2008, forced ICC to ban cricket matches in Pakistan because of which economy shrinks of that country. Recently in India, West Indies left the tour in between leaving behind loss for sponsors, state sports authorities, BCCI, and other major partners. This forced BCCI to impose a fine of $42 Million to WICB. This may also let BCCI to ban West Indies players play in IPL. Sports contribution in England reached to 1.9% of their total GDP in 2010. FIFA world cup 2014 in Brazil raised business for local players by double.

Hence, it can be seen that sports play an important role in shaping up an economy and government to promote sports in country. This will increase the business for local players who make sports equipments; it will also provide business to airlines and other transport business, media, brokers, and a medium of creating platform for young generation. Adventurous sports like Mountain Biking, Rafting, Cycling, Kayaking, are also positioning in India now. This all will led to increase in employment and will increase money in the economy. 

Indian government will have to make more efforts to promote every sport in India. For this first, the allocation of funds, such as the percentage of budget, should increase to broad base sports. Secondly, sports should be made as an integral part of education system. Third, effectiveness of developmental projects should evaluate periodically. Fourth, Uniformity should be maintained in sports activities of various states of India to provide equal participation opportunity to its citizens. Finally, a structure of good government should incorporate to make the system transparent and accountable. Government should revisit the sporting framework of India. Otherwise, the immense potential of country in sports can never be realized.