How did IPL's GENIUS Business Model make it a MONEY MACHINE FOR India? : IPL Business case study thumbnail

How did IPL’s GENIUS Business Model make it a MONEY MACHINE FOR India? : IPL Business case study

The ipl is one of the richest sports properties in the world the indian premier league has just sold its tv cricket rights for a staggering 2.6 billion dollars you heard it right star india has bagged this huge deal with 16 347 crore rupees hi everybody the indian premier league.

Is by far one of the most remarkable achievements in the indian sports industry but while most of us only know it as the iconic summertime sports sensation very few of us know about the business intricacies of ipl that makes it a capitalistic miracle for the economy of india and the most astonishing thing about ipl is that even.

During the pandemic while most of the companies were incurring heavy losses in 2020 season in spite of the ticket sales hitting rock bottom due to coved in spite of vivo retracting from its title sponsorship bcci's revenue from ipl shorter by almost 100 going from 2200 crores in 2019 to 4 000 crores in 2020 season and today the brand value of ipl.

Stands at an insane mark of 4.7 billion dollars which is almost 35 900 crores and if you compare the broadcasting rights of ipl at the world level as of 2020 while nba stood at 2.1 million dollars per match bundesliga stood at 3.9 million dollars per match whereas the indian premier league stood way ahead at 8.5 million dollars per match.

So the question is with so much of money flooding into the ipl ecosystem how does this ecosystem of indian premier league work how do ipl teams make money in spite of losing the competition and most importantly as students of business what are the study materials that can help you understand this billion dollar global sports industry.

This video is brought to you by cuckoo fm but more on this at the end of the video this is a story that dates back to 2007 and this year was very very special in the history of indian cricket why because yura thing had just mesmerized us with six balls and six sixes movement and the indian cricket team had just won.

The t20 world cup and the very next year itself the 2008 recession happened because of which businesses all across the world started incurring heavy losses and like we saw in the abc shipyard episode the 2008 crisis costed the global economy close to two trillion dollars but amidst all of this chaos bcc and.

Lalit modi spotted some critical market indicators that made the market extremely conducive for a domestic cricketing league in india number one because india had won the t20 world cup indians had fallen in love with the new t20 format number two since this game lasts only 3 hours fans can easily watch the entire game unlike an odi which.

Lasts for 8 hours or test cricket that goes on for 5 long days and lastly during the summers indian audience especially the kids desperately needed something for entertainment because they were on summer vacations and they also observed that the league games were always a big big hit all across the world which eventually drew.

Both great revenues and a passionate audience classic examples of the same being the premier league in england which gave us manchester united and the nba championship in the us which gave rise to some of the richest players in the world like shaq and michael jordan therefore bcci wanted to build a similar product for indian teams in india.

And this is how ladies and gentlemen the idea of the indian premier league came to life and little did they know that in the next 10 years this venture will go on to become one of the biggest sensations in sports history so the question is how does this business model of ipl function well let's try to understand the.

Ecosystem of ipl very very clearly the first set of stakeholders who actually bring the game to life are organizers and administrators in this case ipl's organizers until 2021 was a company called img or international management group and the administrator is still the board of cricket of control in india which is known as bcci then after these.

Two we have the third stakeholder which are the leagues which in this case is ipl so ipl is practically your bcci asset then we have the fourth and the fifth type of stakeholders who are the franchise who participate in the league and the home stadiums that provide the venue for these franchise to play the game these franchises are nothing but.

Your teams like chennai super kings mumbai indians and the rest then the franchisees rope in the sixth type of stakeholders who are the players and as you already know the player selection process happens through an auction now whenever these teams play in the stadiums the great revenue is shared.

Between the home team away team and the stadium then we come to the most influential and the most casual stakeholders in the ecosystem who are the streaming platforms and the broadcasters of the indian premier league and the reason why they are so so powerful is because they help the leagues and the players get.

Directly in contact with the lifeblood of the game who are the fans and the members of the stakeholder group includes hosta for streaming and sony or set max for broadcasting and finally we have the most important stakeholders of ipl who are the fans who watch the game for entertainment now based on the number of fans in the.

Demography of the fanbase we have the 10th type of stakeholders which are sponsors and as we all know these are the companies that actually want to leverage the viewership of ipl to give visibility to their product or services now initially fans are just viewers but as the number of fans and the attachment of.

The game of the franchise increases this industry attracts a secondary stakeholder which are merchandise maker this is where the franchise owners can actually decide whether to license the brand and take a portion of the sales or to set up an in-house merchandise department to sell products directly to the fans apart from that we also have.

Fantasy games like dream 11 that actually use the game to build a business around the fans of the games i'll get to the business model of dream 11 in the upcoming episode but for now all you need to know is that these are the primary and the secondary stakeholders of the indian premier league and this brings me to the most.

Important part of the episode and that is the economics of ipl now let's start with the first stakeholder since bcci is the administrator of the league bcci uses the league as an asset and sells media and digital rights for the ipl to broadcasters and streaming platforms these broadcasters in turn sell ad.

Spaces to brands which wish to get visibility for their products or services so if you saw during the 10 year period of 2008 to 2017 sony owned the broadcasting right to ipl and it bought the broadcasting rights from bcci for 911 crores per year then sony gave away its ad spaces to sponsors who paid to show ads between.

The matches these ipl ad spaces command a huge price and fall somewhere around 15 to 18 lakhs for every 10 seconds and this is where we saw the commercials of dream 11 nimbus pepsi and so on and so forth so 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 we'll get 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 and the value of ipl has increased by such an insane rate that when the deal with sony expired star network paid 3270 crore each year for the next five years for the exact same.

Broadcasting rights and this makes it a total of 16 350 crores that's a crazy growth of 258 percent now this money that is obtained through the sale of these rights is then distributed between the franchise and the bcci earlier franchise were entitled to a more than 50 media rights money but with time the franchise share has now come down as of.

2021 bcci kept 50 of the money while the franchise distributed the remaining 50 among themselves and in this also around 45 of the money is distributed equally among the teams while the remaining 5 is distributed on the basis of the team's performance in the season this is the economic relationship between pcci the franchise the.

Broadcasters the streaming service and the advertisers and now we come to the individual team partners this is where we have a company like air cell that did not air commercials but just placed its logo on the chennai super king's jersey these are called the individual team sponsors and these companies do not just.

Pay money to appear on the jerseys but can also use the intellectual properties of the franchisees like the players images or using the logos of the teams in their advertisement now out of the revenue that the franchise generates all franchise must pay a 20 cut to bcci each year as a fee this fee is then used to organize matches pay associations and.

For other organizational purposes now this individual sponsorship is a very very big deal because based on the fan falling and the viewership of the team matches the individual sponsors may choose to pay more or less to these franchise for example if you look at the fan base of all the franchise in the ipl as of 2021 csk have emerged as the.

Strongest franchise with 26.8 million fans followed by mumbai indians at 24.8 million fans then by rcb with 13.3 million fans these three franchise combined accounted for 75 percent of the total fan base in india while the remaining five teams combined contribute to the balance of 25 so obviously according to the success of.

Each team in the tournament and more importantly based on the fan following of the players in the team the brand value of teams itself varies very very vastly this is the reason why while csk and mi command a brand value of 79.5 million and 76 million dollars respectively the not so popular teams like rajasthan royals have a brand value.

Of just 34.4 million dollars this is how the ecosystem of ipl works and as a result of this capitalistic miracle in 2015 alone the indian premier league contributed to 11 500 crores to the gdp of india and this ipl is just a glimpse of the fast-growing domestic indian sports industry and in the next 10 years it is expected that these.

Indian leaks might go on to become some of the most valuable leagues in the world and this brings me to the most important part of the episode and that are the study materials to help you dig deeper into this billion dollar sports industry before we move on i want to thank our partners cuckoo fm for supporting our.

Content people if you want to know more about the business of cricket then i would highly recommend you to listen to the indian pesa league show on cuckoo fm cuckoo fm is india's leading audiobook platform with over 1000 plus hours of content library with 4.5 plus rating and a huge library of non-fiction content my recent favorite book summaries on the.

Platform are the art of war and the theft of india and if these kind of subjects intrigue and if you want to consume these contents in your own regional language then do use the code think20 for a 20 discount and not just that if you're among the first thousand people to click on the link you can get a 50 discount if you use the code think.

50. so if this sounds useful to you go ahead use the link in the description and the first thing you need to downl is the rise of different team franchise all across the world and you must try to understand the business behind sports for this i would highly recommend a youtube channel called athletic interest.

And this channel covers the business of the sports industry very very well secondly if you're a sports enthusiast and if you want to understand the intricacies of how a sports franchise works you must watch this documentary called the last dawns on netflix and lastly if you find time do read this book called the real mattered way which.

Talks about the rise of one of the most successful sports teams in the world that's all from my side today guys if you learned something available please make sure to the like button and not make youtube bubba happy and for more such insightful business and political case studies please subscribe to our channel thank you so much for watching i.

Will see you in the next one bye bye

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