IPL Genius Market Strategies | IPL Business case study 2022

IPL Genius Market Strategies | IPL Business case study 2022

IPL is one of the most valuable sports properties in the world, and its television rights had been sold for a staggering 2.6 billion dollars. Star India has secured the contract with a huge 16,347 crore rupee deal.

What is the IPL?

The Indian premier league is one of the most notable achievements of the Indian sports industry, and we only know it as one of the summertime sports sensations. However, very few of us know about the business aspects of IPL which make it a marvel of Indian economic development.

The most astonishing fact about IPL

As for the IPL, it is astonishing that the brand value of the IPL has reached an insane mark of 4.7 billion dollars which is almost 35,900 crores even during the pandemic while most companies were incurring heavy losses in the 2020 season although ticket sales hit the bottom due to covered Vivo withdrawing from its title sponsorship, BCCI’s revenue from ill went from 2,200 crores in 2019 to 4,000 crores in 2020 season, and even on a bad day like today, the brand value of the IPL is at an insane mark of 4.7 billion dollars which is almost 35 900 crores.

Comparing the broadcasting rights of the IPL to the NBA and the Bundesliga at the world level as of 2020, the IPL accounted for 8.5 million dollars per match, while the NBA stood at 2.1 million dollars per match and the Bundesliga at 3.9 million dollars per match.

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How did the idea of the Indian premier league come into life?

The story begins in 2007 when Yuvraj Singh just mesmerized us with his six balls and six sixes movement and Indian cricket just won the t20 world cup. Right after this, the global economic crisis hit, which resulted in significant losses for businesses everywhere.

As we saw in the Shipyard episode, the 2008 economic crisis cost the global economy close to two trillion dollars; however, BCCI and Lalit Modi recognized a series of important market indicators which made it extremely conducive for domestic cricket competition in India. In the first place, India had won the t20 world cup and Indians were in love with the new t20 format.

Secondly, due to the length of the game, fans can easily watch the entire game, unlike an ODI that lasts for eight hours or test cricket that lasts for five long days. Thirdly, in the summer months, Indian audiences, especially their young ones, were looking for entertainment due to summer vacations, and they also observed that the league games around the world were always huge hits, generating big profits and a joyful audience.

For example, the premier league in England gave us Manchester United, and the NBA created Shaq and Michael Jordan among some of the best players in the world. Thus, BCCI hoped to develop a similar product for Indian teams in India, and thus the Indian Premier League was born.

Little did they know that in the next decade this venture would go on to become one of the biggest sports sensations ever so.

How does this business model of IPL truly function?

To answer it, let’s take a step back and look at the ecosystem of IPL very very clearly. The first set of stakeholders to take the game forward are the organizers and administrators, in this case, IPL’s organizers until 2021 was a company called IMG or international management group.

It is the board of cricket of control in India or bcci, that is the administrator of the game. The third stakeholder is a league, which in this case is the Indian Premier League so the IPL is effectively the bcci asset. The fourth and fifth stakeholder types are the franchises participating in the league.

 There are also the stadiums that house these franchises where these franchises play the game. They are nothing but your teams like Chennai super kings Mumbai Indians and the rest. Once the franchisees have gathered the sixth type of stakeholder which are the players and as you know player selection happens through an auction. So, when these teams play in the stadiums a great deal of revenue is shared between the home team, away team, and the stadium. The biggest stakeholder by far is the owners of the team.

 There are also members of the stakeholder group who are casual participants in the ecosystem, such as mobile streaming companies and broadcasters of the Indian Premier League. The reason they are so powerful is that they assist the leagues and players to directly communicate with the fans, as well as members of the stakeholder group such as hosta for streaming and Sony or set Max for broadcasting.

The 10th type of stakeholder, that is, the sponsors, are the companies that wish to leverage the viewership that is generated by the IPL, based on the number of fans and the demography of the fanbase. We have this 10th type of stakeholder, the fans, that watch the game for entertainment.

Initially, fans are only viewers, but as the fandom grows and the attachment to the franchise grows, this industry attracts a secondary stakeholder in the form of merchandise makers. Franchise owners are then able to decide whether to license the brand and take a cut from sales.

Which company owned the rights of IPL from the year 2008-to 2017?

Sony owned the broadcasting rights to the Indian Premier League between 2008 and 2017; it bought the rights from BCCI for 911 crores per year, then gave the ad spaces to companies that paid for the right to show advertising between games.

These IPL ad spaces command a huge price and work out at about 15 to 18 lakhs per second. That’s when we saw dream 11 nimbus Pepsi commercials, etc.

As Sony’s revenue is equal to the number of ad slots sold multiplied by the amount paid per ad slot minus the cost of the broadcasting rights then once the expenses are factored in the profits generated by the broadcasting partner and similar is the equation of the streaming partner also so initially when the league is not at all popular the broadcaster has to take a very big bet and selling the ad slots in the initial stages is very very difficult but as the popularity of the league increases the broadcaster keeps on increasing the price of the ad slots by which these broadcasters and streaming platforms make an enormous profit.

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How does BCCI distribute the money?

Earlier the bcci franchise was entitled to more than 50 per cent of the media rights money. However, as of 2021, bcci kept half of the money and the franchise distributed the other half among themselves. Furthermore, 45 per cent of the money is given equally among the teams, while the remainder is based on the teams’ performance.