IPL Teams' Revenue Stagnates Despite A Stable Central Pool

Despite being India's most-watched sport, revenue of Indian Premier League teams have stayed stubbornly stagnant for the past four years.With the share from central pool remaining largely constant over the broadcaster deal period, a stagnant growth for the teams' revenues can be attributed to a lackluster growth in sponsorships, merchandise sales and ticket sales..Franchises earn a major part of their revenue from a central pool collected by the Board of Cricket Council in India, which is then distributed equitably among the teams.This central pool is formed in a large part by the broadcasting fees collected for a fixed period, combined with sponsorship fees, and fees received from old and new franchises..Half of the revenue generated by BCCI gets retained, while 45% is shared equally among the franchises, and the remaining 5% is distributed on the basis of the team's performance..A major part of the central pool is formed by broadcasting fees, which are set to be updated in the current year's results.For the upcoming five-year period through 2027, Star India won the television broadcasting rights for Rs 4,700 crore a year, and Viacom18 - JioCinema won the digital format for Rs 4,800 crore a year.This compares to the Rs 3,300 fees paid by Star India and Hotstar over CY18-22, who held the rights to television as well as digital broadcasting..While the amount received from the central pool may thereby rise over the next reported financial results, the five-year period that follows may see further stagnation in franchise revenues should the trend in revenues from sponsorships, merchandise sales and ticket sales persist..Massive broadcast rights deals drive core revenue, a guaranteed inflow that supports franchise valuations.However, teams also have supplementary revenue streams independent of the central pool, such as sponsorship deals, ticket sales, and match rewards, which make up their non-core revenue.Traditionally, these non-central pool revenues were expected to grow steadily, reflecting the increasing popularity and commercialisation of the IPL. Many teams had signed multi-year sponsorship deals with brands like Jio, Byju's, and Hero MotoCorp.But despite the league's continued success, with viewership soaring and global interest intensifying, team revenues have hit a plateau..Note: Revenues for 2022 and 2023 see the addition of Gujarat Titans and Lucknow Super Giants..A main reason for this might be the short format of the league.'The short format is a constraint to both stadium revenues on account of the low number of matches and team merchandise sales on account. While IPL teams do well on broadcasting and sponsorship revenue, match-day revenues lag global leagues due to IPL's short duration of about 2 months compared to global football leagues, which run through the year,' according to a Jefferies report..The impact of stagnant non-core revenue extends beyond the ticket booths.Franchises have not been so far able to scale up revenues on the non-BCCI front. Commercial revenues and stadium revenues have so far remained muted for Indian franchisees. Globally, this revenue is seen as significant compared to the central broadcasting revenue earned by many football franchisees.Notwithstanding the exponential surge in the valuations and revenue of the IPL, the financial growth of individual teams depends on how each franchisee can raise sales from non-broadcast revenues. So far, they have failed to develop this segment, which includes merchandise, ticketing and other events.

IPL Teams' Revenue Stagnates Despite A Stable Central Pool

The financial growth of individual teams depends on how each franchisee raise sales from non-broadcast revenues. So far, they have failed to develop this segment.

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