ipl business model

IPL Business Model: How Does an IPL Business Work?

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  • What are its eligibility criteria? And how are the teams bought?

  • How are the players selected?
  • How does an IPL team earn money even after investing this much?

When these many people watch something then the brands get involved if someone has money then they can buy an IPL team.Or are there are some specific people or companies that can buy an IPL team?


If someone wants to buy an IPL team then he has two options he can buy IPL teams in these ways only. 

  • The first way is to talk to the owner of the existing team. And buy their shares just like LIC has done. LIC bought 6% shares of Chennai Super Kings.


  • The second way is to wait for BCCI to announce the launch of a new team.
lic stocks , csk share
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Because it’s unlikely that you’ll be able to form a team if you go there with money. When BCCI wants to add a team, it follows the procedure. When the BCCI issues an invitation to buy a team, only companies with a valuation of 3000 crores are eligible to apply. The earning capability of a corporation is referred to as valuation.

How much money will we get if a company is sold? When the BCCI issues an Invitation To Tender, the qualifying corporations must purchase it based on revenue and profit. It will set you back Rs 10 lakhs + GST. This is a one-time fee that cannot be refunded. This document contains all of the terms and conditions. Without it, we won’t be able to participate in the IPL bidding process.

We will no longer receive ITT on any shop; instead, you must e-mail us. BCCI has stated that anyone interested in ITT should email ittipl2021@bcci.tv by October 5, 2021. Furthermore, if you have purchased the ITT, you are not required to participate in the bidding process. Your ITT could be cancelled with no notice or explanation. People that are shortlisted in this procedure are allowed to participate in the bidding process. The teams in the bidding process have a starting point, which is usually between 1700 and 1900 crores.

The team will not be sold for less than this. Following that, bidding begins, and the highest bidder wins the team. Lucknow, for example, was sold for 7000 crores, while Ahmedabad was sold for more than 5000 crores.

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After purchasing a team, you must purchase players.
Which players will be auctioned off? Players must first register for this.

So, if I play cricket, can I register? That is not the case. There are three ways for players to register.

  • The first is capped player, the player who has played even a single match from team India is called capped player.
  • The second is foreign countries players.
  • The third is uncapped players. The state association sends these players.

There are between 1100 to 1500 players in the pool. Out of these, 500 or 600 are chosen for further consideration.

The best example of this is Hardik Pandya, an uncapped player who arrived on the state’s recommendation.

When a farmer goes to the APMC market to bid on grains, the bidders collude against him, and the farmer suffers losses. That is why farmers are demanding MSP.

The same thing should not happen in the IPL, where teams planned to buy Dhoni for 20 lakhs and then rotate him through the lineup. To circumvent this, when players register, they pick their starting pricing. This price ranges between 20 lakhs and 2 crores.
Following this, the players have little control over the process. One team spent all of their money to acquire all of the good players and make the World11. The excitement of the IPL will be ruined.

  • That is why there are rules in the bidding process.

A single squad cannot have fewer than 18 or more than 25 players. It also cannot have more than eight foreign players. Every team is allocated a limited sum known as a purse, and the purse has a limit, which was initially 85 crores and is currently 90 crores. Out of this 90 crores, a squad of 18 to 25 players is to be formed first, followed by bidding for Marky players. Big players are referred to as “marky players.” Their starting price is 2 crores, and bidding is done in groups. As an example, the batsman group will arrive first, followed by the ballers group, and then the bidding will take place in those groups.

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It is critical to choose the correct players. This is why the team employs data science. Which player has the skill to hit hard? Who is the victor of the match? And where should you spend the most money if you have two players with the same stats? Data science is applied in all of these instances. Teams hire data science and analytics professionals by paying them a large compensation.

Player bidding is done in a fairly controlled manner. Players with starting bids ranging from 20 lakhs to 1 crore might raise their bids by 5 lakhs. You can increase your bid from 1 crore to 2 crores by 10 lakhs. This completes all of the teams. Every year, a mini-bidding war is held. Players that are no longer valuable in mini-bidding are released by a team. And the bidding takes place between the freed players and the newcomers. Every three years, a big auction is held. A team must release all players save four before or after this date.

A large sum of money is required to purchase an IPL team. Purchasing a team, the salary of support personnel and player fees, administrative and operational costs, hotel and flight tickets because matches are held in several locations all necessitate large sums of money. In addition, the BCCI must get 20% of all earnings made by a team. The winning team receives only 20 crores after investing so much.

  • IPL's business approach is quite unique. No team is reliant on the prize money of Rs. 20 crore. So, how do IPL teams make money?

  • The first and most important source of money for an IPL team is TV rights. The channel with IPL broadcasting rights can only stream the IPL

Sony had broadcasting rights from 2008 to 2017. If you wanted to watch IPL at the time, you had to do so on Sony. Sony paid 8200 crores for this during a ten-year period.

The bidding process was then completed. Star India paid 16347 crores for the broadcasting rights from 2018 to 2022. The BCCI receives 50% of this cash, while the remaining 50% is distributed among IPL teams. Previously, BCCI received 20% of this sum, with the remaining 80% distributed among teams.
Gradually, the share has risen to 50%.

  • Why do stations pay such a high price for broadcasting rights?

The IPL is widely watched on a global basis. In 2019, 462 million people watched the Indian Premier League (IPL). And when this many people watch anything, the company becomes involved. A 10-second ad that runs in between matches costs between 12 and 13 lakh rupees. This amount may appear to be little, but when multiplied by 45 days, it represents a substantial profit. As a result, all channels are ready for bidding.

Title sponsorship is the second source of income. You may have noticed that IPL is not always referred to as IPL. It is sometimes referred to as DLF IPL, Vivo IPL, Pepsi IPL, and now TATA IPL.

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The company pays a large sum for using the IPL to call out their company’s name. And every corporation wants to be associated with their brand. That is why there is bidding on this, which is known as title sponsorship.

DLF paid 200 crores between 2008 and 2012 to use the name DLF IPL instead of IPL. After that, Pepsi gave 396 crores for the next three years, while Vivo gave 2199 crores from 2018 to 2022.

Because of the China-India war, TATA was given this thing for 300 crores each year. The BCCI keeps 60% of the revenue produced, while the remaining 40% is distributed among the teams.

The ticket price is set by the home team, regardless of where the game is played. Tickets worth 5 crores are sold on average. The host team keeps 80% of the money, while the balance goes to the ground association. If you notice a logo or name on the t-shirts worn by team members, brands will pay for it. During the game and inside the boundary, you’ll see the name of any firm, such as on boundary roads, wickets, helmets, bats, an umpire’s t-shirt, or anyplace you see the name of any brand. Teams get compensated for all of this. The team’s owner arranges for their players to advertise for other businesses. The advertising are performed by players wearing team jerseys, and the money is paid to the team’s owner. In addition, each team owner has their own brand and promotions. They get it done with the help of their players. You may have noticed the Jio Dhan Dhana Dhan advertisement. Following that, each team has its own merchandise—shirts, bats, kits, and gloves with the team’s name on them.

Despite the fact that, in some cases, the BCCI receives a cut of the money, the team is required to provide the BCCI a cut of 20% of the total amount earned. However, you may have noticed that the team owners are keen for their team to win. At the very least, it makes the top four. Because when these four teams qualify, the other team’s match is halted. However, these four teams are given the opportunity to play further games. Extra games mean more tickets, more sponsors, and more money.

The second advantage is that as the team rises to the top, its brand value rises as well. It receives more money for advertisements and sponsorship than other teams.

The money spent on advertising by CSK and the money spent by Punjab There is a significant difference between them. As a result, the winning team has the upper hand. The second point to mention is that the top four teams will be invited to the Champions Trophy. As I previously stated, they are entitled to further matches as a result of their attendance. As a result of playing there, the profit increases.

For the first ten years, IPL teams suffered losses. Deccan Chargers were unable to pay its players’ salary at the time, hence the BCCI disbanded Deccan Chargers and founded Sunrisers Hyderabad. The Deccan Chargers were unable to maintain their lead at the time, but the other teams did. Because each of these teams has its own brand and product. They used IPL teams to advance to the next level. However, as soon as Star India purchased media rights at double or triple the price, all of the teams began to benefit. The costs of title sponsorship and other ads have also risen.

Opponents of the agreement claim that spot-fixing is the primary source of money for these teams. The first instance was when CSK and Rajasthan were banned for two years. Aside from that, I didn’t receive any evidence of spot-fixing. Is it finished now or not? It is a point of contention.

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