The IPL business is worth $10 bn; where does it go from here?

The renewed media rights deal has driven up the value of the ecosystem, says D and P Advisory’s 2022 IPL valuation report.

India’s foremost media spectacle - the Indian Premier League (IPL) - is now worth $10 billion. It is a decacorn. 

According to D and P Advisory’s 2022 IPL valuation report, the IPL ecosystem now generates business worth $10.9 billion. Unsurprisingly, the renewed media rights deal has driven up the value of the ecosystem. 

The 2023-27 IPL media rights auction ranks among the high-octane corporate dramas of the year. The television and digital rights were split between the incumbent Disney Star and Reliance-backed Viacom18. The Board of Control for Cricket in India (BCCI) sold the media rights for a hefty sum of Rs 48,390 crore, or $6.2 billion, in June 2022.   

The success of the IPL has led to other countries also creating their own T20 leagues. Indian team owners are trying to replicate the multi-club ownership model, as a part of their long-term strategy.

The Knight Riders Group owns the right to Trinbago Knight Riders in the Caribbean Premier League and a franchise of the UAE T20. It also has plans to build cricket stadiums in Los Angeles, United States, in partnership with Major League Cricket. Reliance Industries, the owners of Mumbai Indians, recently unveiled two new franchises in UAE’s International League T20 and Cricket South Africa T20 League. 

While the success is commendable, the report is quick to caution that “the value appreciation may not be as fast as seen in the earlier years”. The league, which has been dubbed the second most valuable league, “constitutes puffery”, say the authors of the report. There are several areas where the league “has a long way to go”, the report states. 

Monetisation challenge

The challenge of monetising this behemoth of an entertainment show has only grown in size, because of the exorbitant price at which each bidder bought the rights. Yes, the T20 cricket format has the right characteristics for maximum monetisation, however, that alone isn’t enough.

“The IPL is significantly behind other leagues, like the English Premier League (EPL) and the National Football League (NFL), from an ad rates standpoint,” observes Santosh N, managing partner, D and P Advisory. EPL commands about $120,000 per 10 seconds for a TVC, whereas the ad rate for crucial matches in the IPL is about $20,000 per 10 seconds. 

The monetisation potential of viewers is also low. This compounds the challenge for broadcasters. “The target audience in India is middle class to lower middle class - the masses. Because of a stark difference in purchasing power, the average revenue per user from India is much lower than that of users in a country like the United Kingdom,” Santosh adds. 

While broadcasters have created several avenues to monetise the IPL, there are more opportunities to grow, says Santosh. Speaking about the gaps in the monetisation model of the IPL, he says, “Broadcasters managed to squeeze in every conceivable second into advertising breaks; they can't do anything more on that front. They will need to go for a technology play and attract the right set of advertisers to improve monetisation.”

“Further, what brands will spend on the IPL, hinges on the RoI. Unless the RoI that advertisers derive from the IPL improves, ad rates can't increase.” Only an increase in ad rates will translate into more significant revenue for broadcasters. 

“Could broadcasters explore targeted advertising on television, just as they do digital,” Santosh wonders. Innovations of this kind could help broadcasters charge a premium on ad rates. 

The IPL added two new teams in 2021 and is on track to add a couple more during the next few years. The number of matches is set to increase from 64 to 90. It is already at 74 right now. A longer IPL season, with more matches, will also increase the scope for monetisation. 

Complex media rights bundles?

When the BCCI auctioned the 2023-27 media rights, it brought in an additional bundle - digital rights to telecast only the playoffs. But this bundle didn't take off. Viacom18 outbid others to secure exclusive digital rights and protect its negotiation power with advertisers. 

EPL’s broadcast rights reside with multiple media companies. EPL matches in the UK are broadcast live on television by Sky Sports, BT Sport and Amazon Prime Video. BBC Sport is the free-to-air highlights broadcast partner in the UK. 

Santosh feels media companies will be reluctant to split the rights to maximise monetisation opportunities, even if the BCCI introduces a complex bundling mechanism. It is not in their interest to let go of rights for the most crucial part of the season and have a limited number of matches to monetise. 

Could there be a day when different broadcasters hold rights to telecast matches of certain leagues? Santosh says that would be hard to achieve with a league as young as the IPL.

“Team loyalties are still in a very nascent stage for the IPL. Fan loyalties are persona-driven and not team-driven for the IPL, as a result, the dynamics here are very different from the leagues that have decades of fan loyalties with them.”

Regular auctions that lead to shuffling among players, don't help in cementing fan loyalties either. 

Santosh says that maybe in another decade’s time, the IPL will be a mature league that will allow for more complexities in how media rights can be sliced.