Over the years, IPL has become very popular and changed how people see cricket worldwide. It brings about a new level of excitement every year, and fans can’t get enough of it.
While the league is undoubtedly entertaining, there’s much more to it than just the on-field action. One of the fascinating aspects of the IPL is its business model. It focuses on marketing and bringing together players from different countries to attract new fans and make more money from advertising.
What is the business model of IPL?
The IPL business model is based on a unique combination of cricket, entertainment, and marketing strategies. The league follows a franchise system where ten teams representing different cities in India compete against each other. The franchises are privately owned and operate on a revenue-sharing model. The league generates revenue through various sources such as broadcasting rights, sponsorship deals, merchandise sales, player auctions, and player endorsements.
How do IPL team owners make money?
Sponsorship deals are a crucial source of revenue for IPL franchises. The teams sign agreements with various brands, including apparel companies, beverage manufacturers, and mobile phone brands. These deals provide the franchises with a considerable amount of money, which helps them cover their expenses.
The IPL follows a revenue-sharing model to ensure that all franchises benefit from the league’s financial success. Broadcasting rights account for a significant portion of the league’s revenue. The Board of Control for Cricket in India (BCCI) sells these rights to various broadcasters, and the revenue is shared between the BCCI and the franchises.
Merchandise sales are another source of revenue for IPL franchises. The franchises sell team jerseys, hats, and other accessories, contributing to their earnings. The popularity of the IPL has resulted in a significant demand for merchandise, and the franchises are cashing in on it.
Player auctions are a crucial part of the IPL, and they are also a significant source of revenue for franchises. Each year, before the start of the league, there is an auction where teams can buy players.
The team owners bid for the players they want to include in their team. The price of the players depends on their performance and popularity. The team owners can make a profit by selling the players they bought at a higher price than they paid.
The players in the IPL are some of the most popular players in India. They are highly sought after by brands for endorsements. The franchises can make a commission by arranging endorsements for their players. The more popular the player, the higher the endorsement fee, and this translates into more money for the franchises.
The IPL franchises can also sell the naming rights of their team to a sponsor. This has been a significant source of revenue for many IPL teams.
For example, the Delhi Daredevils changed their name to Delhi Capitals after signing a deal with JSW Group. Kings XI Punjab changed their name to Punjab Kings. This change occurred after the team signed a deal with a digital entertainment company.
By selling naming rights, franchises can earn substantial amounts of money, which can go towards salary and facility expenses for players.
To summarise, the IPL has a unique business model that has made it one of the most successful cricket leagues in the world. The league’s focus on marketing and attracting new audiences has led to a surge in advertising revenue. In short, the IPL has revolutionised cricket and sports leagues’ business model, proving that sports and business can thrive together.