IPL 2023: The Business Side of IPL - How Teams are Funded, Player Salaries and More

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The growth of the Indian Premier League has been a striking one. Since its inception in 2008, the franchise league has surpassed all the roof of expectations and has become one of the biggest sports leagues in the globe.

In the recent cycle, it bagged a gigantic deal of 48,390.5 crore INR broadcasting rights deal for its five-year cycle from 2023 to 2027, double the price they received for the previous cycle. It made the IPL the 2nd most valuable sports league, only after USA's National Football League (NFL).

With the growth of IPL, the franchises have increased their asset, and so has the BCCI. Today we shall focus on the mone side of the Indian Premier League. How does the business model of IPL work? What are the sources of revenue and how do the franchises earn their money?

How the IPL generate funds and earn money?

In the Indian Premier League, the main source of money earners are four - that is the BCCI, IPL Franchises, Media right holders, and the various sponsors associated with the teams and the tournament.

How does BCCI earn money?

The BCCI earns money mostly through Media rights and the flagship central sponsorships. 50 per cent of the total revenue generated from the aforementioned two sources goes straight into BCCI's kitty.

Apart from that, when a new team enters the league, the entire money generated from the bidding goes to BCCI. Lucknow Super Giants and Gujarat Titans combinedly paid BCCI

Also, around 15 per cent of the home tickets revenue for each franchise is BCCI's own.

How do IPL teams earn money?

The IPL teams have multiple sources of income. All the franchises get equal share of 45 per cent of the Media rights and central sponsors. Apart from that, teams do have their own sponsors (shirt sponsors, partnerships, other various sponsorship deals) and the entire revenue generated from those goes directly into the franchise column.

80 per cent of the home ticket sales can be kept by the respective franchise, and the teams generally with a bigger ground capacity earn the biggest amounts. And the final source of revenue for the franchises is the merchandise (jerseys, watches, caps, different show pieces) that they sell.

Teams also earn from the match-day food and beverage sales in the home stadiums.

How Media partners earn money?

The media partners and broadcasters earn their money from the viewership and the subscriptions on their apps and channels. In the 2023 season, Star Sports Network will show the IPL on TV but the digital rights were bagged by Viacom18, and it will stream the IPL live on JioCinema for free.

In the 2018 to 2022 cycle, the advertisers paid for around INR 14 lakh for a ten-second commercial during the match. And according to reports, the new media rights deal can hike a 30-second TV commercial price to around INR 1 crore.

How team sponsors earn money?

The exclusive team sponsors earn their money from the home matches of the respective teams. It also gets the exposure along with the sales of the merchandises.

What happens to 5 % of Media Rights and Central Sponsors revenue?

BCCI earns 50 per cent of the central revenue and 45 per cent of that amount is equally shared to the 10 franchises. What happens to the remaining five? It actually is taken by the four teams that qualify for the playoffs, as the winners of the tournament bag the biggest chunk of that money.

How are players salaries paid in IPL?

The players are paid by each franchises from all of their revenue sources. With a pre determined salary cap, the franchise can pay only a certain amount to their players and generally the deals are installment deals.

Players get a significant amount of their salary before the tournament starts, and they continue to get the remainder through installments. Also, players earn a chunk of the prize money if they win the tournament of reach the playoffs.

All the individual prize money (player of the match, dream11 game changer etc.) are spent in different ways and that depends on the individuals.