Unpacking the term ‘franchise’ in the world of IPL cricket
In the IPL, the term franchise signifies more than merely a cricket team with eleven players. A franchise is a business entity that owns and operates a team representing a city or region in the league. Each franchise is privately owned, with investors investing millions to secure the rights to run a team. However, it’s not just about cricket—these franchises are multimillion-dollar businesses meticulously designed to generate revenue, attract sponsors, and engage fans.
Owning an IPL franchise is costly. In 2008, the Mumbai Indians were purchased for $111.9 million, while the Chennai Super Kings cost $91 million. By 2021, the Lucknow Super Giants became the most expensive team, with the RPSG Group paying $940 million.
Each season, franchises invest ₹90-110 crore in player salaries and expenses for travel, staff, and stadium operations. However, smart business strategies ensure that these teams remain highly profitable.
The BCCI sells media rights and distributes a portion to the teams. The media deal for the years 2023 to 2027 is valued at an impressive ₹48,390 crore ($6.2 billion), with each match priced at ₹118 crore. This remarkable financial structure positions the IPL as one of the wealthiest leagues in the world.
IPL jerseys serve a dual purpose as both team apparel and lucrative advertising space. Title sponsors can invest ₹50-75 crore each season, while sleeve sponsors contribute around ₹20-30 crore. Notably, the Chennai Super Kings boasted 18 sponsors in a recent season, highlighting the financial potential of these partnerships.
Franchises significantly profit from merchandise sales, including jerseys, caps, and fan gear. The sports merchandising market in India is valued at ₹2,500 crore (approximately $300 million). Notably, teams like the Mumbai Indians manage to sell over 1 million jerseys each season, highlighting the strong demand and popularity of sports apparel.
Ticket sales play a vital role in the financial success of sports teams, especially with only seven home matches each season. For instance, stadiums such as Wankhede, which has a capacity of 33,000, can generate an impressive ₹50-70 crore per season. Additionally, the demand for premium tickets highlights their value, with prices exceeding ₹10,000 each.
Winning the IPL transcends mere glory; it involves substantial financial rewards. The winners of the tournament take home a remarkable prize of ₹20 crore, while the runners-up receive ₹13 crore. Additionally, the teams finishing in third and fourth place are rewarded with ₹7 crore and ₹6.5 crore, respectively. This financial aspect highlights the significant stakes involved in the league, blending competition with lucrative incentives.
Success significantly enhances a team’s valuation, which in turn attracts potential sponsors. The Mumbai Indians, valued at ₹8,400 crore, and Chennai Super Kings (CSK), valued at ₹7,600 crore, currently dominate the rankings in this regard.
With growing global interest, IPL franchises are expanding their business models. Higher broadcasting deals, global academies, and overseas investments could push their earnings even higher. One thing is clear—IPL is more than cricket; it’s a billion-dollar business game!
