IPL Finances Explained: How Money works during the biggest Cricket Fest of India?

Did you know that in 2019, the IPL generated $614 million (over INR 4500 crores)? That is more than 30% of global cricket revenues. It is no surprise because the IPL economy goes beyond tickets and sponsorships alone. There is much more to the money fest, including auctions, brand deals, and online gaming. Let us understand IPL finances in greater detail.

Auctions

Every year, the world's best T20 players go through the process of IPL auction. Before the auction, every team gets a fixed budget. Each team can buy a maximum of 25 players, and no more than 8 of them can be foreigners.

Like every year, IPL auction 2020 lived up to its hype. For IPL 2020, 332 cricketers went under the hammer. Out of these, the eight teams bought 62 players: 33 Indian and 29 overseas.

Kolkata Knight Riders made the most expensive purchase of Australian cricketer Pat Cummins for INR 15.50 crore. Other top buys included Glen Maxwell (INR 10.75 crores by Kings XI Punjab), Chris Morris (INR 10 crores by Royal Challengers Bangalore), Sheldon Cottrell (INR 8.5 crores by Kings XI Punjab), and Nathan Coulter-Nile (INR 8 crores by Mumbai Indians.) The teams spent a whopping 140 crores combined to buy the best T20 players from the world.

Here is what each team has spent on auctions this year :

TeamsAmount Spent (INR Crores)Kolkata Knight Riders27.15Kings XI Punjab26.20Royal Challengers Bangalore21.50Delhi Capitals18.85Chennai Super Kings14.45Rajasthan Royals14.15Mumbai Indians11.10Sunrisers Hyderabad6.90

Remember, this is the amount spent on IPL auctions alone. Overall, teams have spent much more on retaining their key players. For instance, Mumbai Indians have spent nearly INR 72 crores on players, including the amount spent on auctions. Rohit Sharma has a salary of INR 15 crores. Among all the players retained, Virat Kohli is the league's highest earner with a salary of INR 17 crores. Kohli was also the most expensive player in IPL 2019 with a similar salary. To put some more perspective on the numbers, over the past 13 years, MS Dhoni has earned INR 137.8 crores from IPL salaries alone.

Sponsorship

IPL sponsorships are another significant part of IPL finances. Nearly 60% of IPL revenues are from sponsorships. Media rights holder Star India has set a revenue target of INR 3,000 crores from sponsorship sales. For IPL 2020, Dream11, the fantasy gaming platform, won the IPL title sponsorship rights for INR 222 crores. This whopping sum gives the gaming platform IPL sponsorship rights for 4 months and 13 days. Dream11 outbid two educational technology companies, BYJUs (INR 201 crores) and Unacademy (170 crores.) The sponsorship is expected to give a huge boost to the IPL online games on the Dream11 app, which has over 8 crore users.

Image Source:  https://www.dream11.com/

Apart from the title sponsor, official partners Tata and Unacademy are paying INR 80 crores. Ceat, which has been a long-time partner for strategic timeouts, is paying INR 30 crores. And, as an umpire sponsor, Paytm is paying INR 28 crores.

Disney+Hotstar has got 13 sponsors for the live streaming of the event. This number compares to 10 sponsors last year. In addition to being a title sponsor, Dream11 is also the ‘Co-presenting' partner for the live streaming of IPL 2020. Boost has grabbed the ‘Co-powered by' slot. Other firms advertising on the streaming platform include Maruti Suzuki, Flipkart, HDFC bank, and Swiggy, among others. According to industry estimates, IPL 2020's revenues from digital advertising and sponsorships are likely to cross INR 300 crores.

The lure of sponsorships does not end here. Each franchise has its own principal sponsor. Then there are official partners, merchandise sponsors, and other sponsors.

Here are the estimated team sponsorship revenues for this year:

Image source: https://www.exchange4media.com/ipl-news/ipl-2020-franchises-to-earn-rs-10-15-crore-minus-central-pool-revenue-107444.html

Tickets

IPL 2020 is going to be played behind closed doors. As a result, teams will lose on the lucrative revenues from ticket sales they have enjoyed over the years. Each big team earns INR 35 to 40 crores from ticket sales alone. Smaller teams earn between INR 18 to 20 crores. Ticket sales contribute to nearly 10% of team revenues. The ticket sales for the playoff games are reserved for BCCI. It is believed that in 2019 the board made INR 20 crores from ticket sales of playoffs.

To shed some more light on the IPL ticket economics, Royal Challengers Bangalore has never won an IPL. However, the stadiums are always fully occupied for their matches. The Chinnaswamy Stadium in Bengaluru has a capacity of 35,000, yet for any IPL game, there are many more people than that at the stadium. The cheapest seats start from INR 750 each. Ticket prices for corporate boxes can go as high as INR 7,000 each. Finally, the most expensive tickets (VIP hospitality) are worth INR 35,000 each.

Then there are food and beverage expenses within the stadiums. Franchises give food and contract stalls to third parties on a contract basis. Each franchise collects a fixed amount for each match on a per stall basis. The food and beverage economy is not limited to stadiums alone. Restaurants, pubs, and online food delivery apps provide special discounts to cash in on the IPL craze.

Brand Details

Apart from principal and associate sponsorships, a lot of brands associate themselves with IPL franchisees in different capacities. Recently, Mumbai Indians had four global brands (Marriott Bonvoy, Colgate, Cadbury Dairy Milk, and William Lawson) for multi-year deals. There are also sponsorship slots on jerseys and helmets. The rate card for sponsorships varies from INR 1 crore for the back of the helmet to INR 4 to 5 crores for a logo at the back of the jersey to as high as INR 7 crores for the front of the jersey.

KKR has Exide as a sponsor for the jersey's sleeve, Royal Stag as a sponsor for the non-playing hand on the jersey, and Asian Paints as a sponsor for the pants of their official attire. Each franchise also has its set of partners. Chennai Super Kings has announced Levista Instant Coffee as their Official Licensed Coffee partner. KKR has the Telegraph as their media partner, Fever 104 as their official radio partner, and Sprite as their official drink. Jio is a sponsor for all teams. Dream 11 is also a sponsor for several franchises, including KKR.

Brands also spend on individuals for endorsements. Even though MS Dhoni has retired from all forms of cricket (except IPL), he continues to attract attention from sponsors such as Dream 11. Paytm's gaming arm Paytm First games has recently signed Sachin Tendulkar as its brand ambassador to cash in on the online gaming fest during IPL.

Online Gaming:

The online gaming ecosystem is another huge revenue generator during IPL. As per a FIFS-KPMG 2020 report, the revenues of online fantasy sports companies in FY20 stood at INR 2,400 crores. That is a substantial increase from their revenues of INR 920 crores in FY19. Nearly 35-40% of these revenues come from IPL. Mobile Premier League is offering a season ticket worth INR 99 for unlimited access to fantasy cricket contests during the IPL season. MPL and Paytm First Games expect to cross 80 million and 100 million users, respectively, by the end of IPL.

Fantasy cricket involves creating virtual teams and appointing a Captain and a Vice Captain for the teams. Players get points based on the performance of their players, which can be converted to real cash. For example, in the Dream 11 app, players get 2x points for the runs scored by their chosen captain. If someone chooses MS Dhoni as their captain and he scores 60 runs in a match, this will give the player 120 points. There are also bonuses for boundaries, sixes, half-centuries, and centuries scored by their chosen players. Once players create a team, they can enter contests as per their budget. Based on the performance of their players, they can convert these points into actual cash. They can easily withdraw their winnings and transfer to their bank accounts.

Online gaming provides a good opportunity to earn money for those who understand their cricket. Remember, there's skill involved, and only those who follow the game are likely to win money. Players need to be aware of different cricketers' forms, which will help them choose winning teams. Beginners can join free leagues to get a feel for the game. Once they are confident, they can try their luck by investing in small amounts. One they are fully confident, the IPL is a really good opportunity to make a quick buck. There are many students and young professionals who have made fantasy cricket as a second source of income.

Just like any other game, there could be ups and downs. Some days players may win, and some days they may lose. mPokket understands the challenges faced by college students to meet their short-term cash needs. mPokket provides instant loans for students through its user-friendly mobile app. The hassle-free process with minimal documentation makes mPokket the best instant loan app in India.

References:

1. https://www.thecricketer.com/Topics/ipl/icc_t20_world_cup_ipl_pulling_power_simon_hughes.html
2. https://brandequity.economictimes.indiatimes.com/news/marketing/ipl-2020-disneyhotstar-nets-13-sponsors/78118384
3. https://www.livemint.com/sports/news/fantasy-sports-firms-look-to-tap-ipl-frenzy-on-board-new-users-11600404591604.html