What if IPL broadcast rights breach ₹30,000 crore?

On 18 April 2008, the Indian Premier League (IPL) announced its arrival amid much pomp, fanfare and a relentless assault by Kolkata’s Brendon McCullum on a hapless Bengaluru side. In less than 15 years, the IPL has established itself as not only the preeminent cricketing franchise tournament but also worthy of mention across all sports, across the globe. Its success has pivoted around broadcasting deals, with each new one dwarfing the previous one.

Another new one is now due. Later this month, the Board for Control of Cricket in India (BCCI) will release the tender for the five-year period of 2023–2027. In 2009, Sony Entertainment Television had paid 8,200 crore for the broadcast rights for nine years, or an annual fee of 911 crore. The current five-year deal with Star India is worth 16,348 crore. That’s about 3,270 crore per year, or a compounded annual growth of about 15%. Industry experts feel the next cycle could fetch around 30,000 crore , translating into a compounded annual growth of about 13%.

Since the last round, key bidders have seen realignments of strength. Reliance, which runs Viacom18, launched Jio to become a mover in mobile and internet services; it also garnered investments from Facebook and Google. Star was acquired by Walt Disney. Last month, Zee and Sony said they were merging in India. If the battle for IPL rights is pitched, the new TV deal will catapult IPL further up the ranks of sporting leagues globally and shore up its covid-hit brand value, as it did in 2018.

Trailing the Biggies

The most lucrative leagues, from a broadcasting perspective, are European football leagues and the US leagues for American football, baseball and basketball. Their broadcast rights dwarf that of IPL’s. For instance, the EPL commanded an annual broadcast fee of 31,000 crore in 2021, nearly 10 times that of the IPL. Even at 6,000 crore annually, IPL has catching up to do.

 

There are two crucial distinctions between the IPL and these leagues. The first relates to duration. The IPL features eight teams and spans two months a year. Most leagues have 20-30 teams and run for six to nine months. The second is global reach. For example, the contribution of overseas rights in the EPL broadcast deal has increased from 28% in 2007 to 39% now. In IPL’s case, while Star’s winning bid was a consolidated one, the highest disaggregated bid for international rights amounted to just 5% of Star’s bid.

Unit Value

However, when the broadcasting fee is compared on a per match basis, the IPL is high up. The per match fee paid by Star India for the 60 IPL games per season works out to about 54 crore. That’s higher than the German and Spanish football leagues, and the American basketball and baseball leagues. But it’s lower than the EPL and NFL. The 20-team EPL schedules 380 games per season and averages about 81 crore per game.

The IPL is looking to add two teams next year. This will increase the number of matches in the current round-robin format to 94. At 30,000 crore, that would mean a per game fee of about 64 crore. However, given the busy international cricketing calendar, it’s not easy to add IPL matches. If the IPL tweaks its format to avoid a corresponding increase in the number of matches, the per match fee will be higher. But its overall rights size will continue to be smaller than other global leagues.

Franchise Premium

A larger broadcasting kitty will lift all boats in the IPL sea. Broadcasting revenues accounted for 62% of IPL’s income in 2016-17, according to the latest available BCCI annual report. These broadcasting revenues go into a ‘central pool’, which is divided between the BCCI and the eight franchises. The IPL teams earn most of their revenues from the central pool. The Kolkata Knight Riders franchise, for example, earned nearly three-fourths of its revenues in 2018-19 from this central pool.

In 2018, the bumper deal with Star India nearly doubled revenues of IPL teams, with most graduating to the 300-400 crore band. A bigger broadcasting deal also means the two new franchises will have to pay more to participate. Industry analysts expect the new franchises to go for nearly 4,000 crore apiece. Considering the IPL’s robust revenue streams and remarkable growth, the BCCI might pull off another big payday.

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