After 10 years, IPL teams set to make profit for 1st time

NEW DELHI: The eight teams of Indian Premier League (IPL) will each generate at least ₹200 crore in revenue and turn a tidy profit at the end of the 11th edition of the tournament — a first in the history of the decade-old Twenty20 league — powered by their share of income from media rights.

Officials at the BCCI and the owners of some the teams confirmed that each team (and some of the eight have never made profits in the past 10 years) will earn a profit of at least ₹75 crore this season. Some teams could generate as much as ₹100-125 crore in profit. It has been known for some time now that this year will be profitable for the eight teams in the league, but it is only now that the exact magnitude of their profitability is becoming clear.

“It’s an absolute blessing. Whether they finish first or last, all teams will be financially stable this season. The cash flows for all teams will improve immensely,” said the former head of an IPL franchise on condition of anonymity.

“Some of them have been cash strapped for 10 years. The extra money could also help them to expand their sports business,” said the former head of an IPL franchise.

Behind the turn of fortunes is a steep rise in the share the teams get of the so-called central revenue from the Board of Control for Cricket in India (BCCI). This includes revenue from media and title rights, and league sponsors. The teams get 40% of this.

This amount will increase this year from ₹65 crore to ₹200-250 crore, largely on the back of the ₹16,347.5 crore that Star India will pay BCCI over the next five years for Indian and global media rights to IPL, and the ₹2,199 crore Vivo will pay over the next five years for title rights. In addition, teams also have their own sponsors (who add another ₹25-30 crore to each team), and share of gate receipts (₹10-15 crore).

On the cost side, each IPL team has to give a 20% share of revenue starting this year to BCCI (this replaces the franchise fee), pay local cricket associations for use of facilities, account for salaries to players and support staff, and spend on advertising and promotion.

The net equation will still be a happy one for the teams.

“Every team will make money this year. I’m hoping to fix my accounts and plug my losses with this money. In sports, even globally, returns don’t come easy. But I’m happy now because of what has happened with the media rights for IPL,” said Mohit Burman, promoter of KingsXI Punjab and director at Dabur India Ltd. His team lost money for the first seven years to the tune of Rs 70 crore.

Mumbai Indians, operated by Mukesh Ambani’s Reliance Industries Ltd (RIL), Kolkata Knight Riders, owned by actor Shahrukh Khan, among others, and Royal Challengers Bangalore owned by United Spirits are among the eight teams competing in IPL 11.

The brand value of IPL was over $ 5.3 billion in 2017, an increase of 26% from $ 4.2 billion in 2016 on the back of renewed title sponsorship deals and the expected increase in the price of the tournament’s broadcast and digital media rights, according to a report by Duff & Phelps, a New York-based corporate finance advisory firm.

The IPL has also consolidated BCCI’s position as the world’s richest cricket board.

BEHIND THE TURN OF FORTUNES IS A STEEP RISE IN THE SHARE THE TEAMS GET OF THE SOCALLED CENTRAL REVENUE FROM THE BCCI.