IPL 2017: How much money do franchises make?

Undeniably IPL is one of the most cash rich sports league in the world. With Virat Kohli getting paid 15 crores for a single season by the Royal Challengers Bangalore, one might wonder from where do the franchises attain the finances required to pay this mammoth fees.
Different teams have different owners and therefore different marketing strategies. We all are aware of the brand value of teams like KKR and RCB. Every team though have some common sources of income. Lets discuss them here.

Sponsorships: The biggest source of income for the controlling board (BCCI) and the franchises is the official sponsorship of IPL. For the current 10 edition, Vivo is the title sponsor of the tournament. Other sponsors include Amazon, Yes Bank, Vodafone etc. The sponsorship money is divided in specific proportions between the BCCI and the teams with the teams getting a total of 60% of the total amount.

Tournament Prize Money: Another source of income for the franchises is the prize money of the tournament. To give you an example of the scale of the amount, the winners of the 2016 IPL, the Sunrisers Hyderabad received an amount of 20 crores and the runners up received 11 crores. The prize money is even higher this year with the winning amount being 25 crores and runners up 13 crores. For every season, the top four playoffs qualifying teams receive 1 million USD.

Stadium Tickets: A lot of revenue is generated from the sale of tickets of the host stadium. The franchises make money from their respective “home” game. A part of the money also comes from the sale of merchandise in the stadium for example, team t-shirts, caps, banners etc. So it can be said that the teams necessarily depend a lot upon their fans. With every team having 7 host games, its enough opportunity to generate a large chunk of their income.

Media Rights: Currently, Sony holds the broadcasting rights for IPL for Rs. 8,200 crores up to 2017 while Star has the online streaming rights. More than the teams, it is the BCCI that makes money from the media rights. A major chunk of that money is distributed amongst the franchises by the BCCI. Apart from the main telecast, shows like ‘Knight Club’ for KKR serve as an extra income source through media.

Dedicated Sponsors: Every IPL team has its own set of dedicated sponsors. When you see a player’s jersey, you see less of the jersey and more of the sponsors. Marketing and publicity through the jerseys and bats of the cricketers is an easy but efficient method of raising revenue.

Where is all the money spent?

Matches: For every match played, the host team has to pay the host cricket association the match fees. This mostly consists of the rental amount for using the ground. Also fees for officials, equipment and maintenance add up to the expenditures for a match.

Players: Every team has its own set of national and international players they bid for at the auctions. The player remunerations decided for the season has to be paid by the franchises within a stipulated period predecided by the BCCI. Due to inability of fulfilling these criteria there have instances of some teams getting relegated from participating in the tournament.

Logistics: Another major chunk of the expenditures include the logistics of the team. The flight tickets, hotel bookings, transportation of the teams have to be dealt by the franchises. The support and administrative staff also accompany the players for the matches which add to the expenditures.

Marketing: Every franchise spends a certain amount on marketing before the beginning of a season. Marketing may include hosting promotional events like jersey launch, fashion shows, supporting new initiatives etc. Every team generally has its theme video song shot before the season. This kind of marketing strategies make the team more interactive with the fans.

So there goes on a lot behind the camera in building this major cricket league. The finances involved in this league is unparalleled and it only seems to grow every season.