CHENNAI: In the first 17 editions of the Indian Premier League (IPL), Chennai Super Kings (five), Mumbai Indians (five) and Kolkata Knight Riders (3) have taken home the crown 13 times between them. Royal Challengers Bengaluru, one of the founding eight, have underachieved. Even if they reached the final three times, they have ended up on the losing all side on all of those occasions.
But, from a commercial stand point, their lack of a trophy cabinet hasn't mattered. According to the IPL valuation report put out by Houlihan Lokey (a leading global investment bank) in 2024, the franchise's valuation was pegged at $227mn. In 2023, they finished outside the playoffs but in the one year between 2023 and 2024, their valuation jumped 16.4%.
On the eve of the 18th season of one of the richest sporting leagues on the planet, Bengaluru continue to be the gold standard when it comes to monetisation. Per the official club website, they have 43 partners (seven better than Mumbai Indian's 36 who are second in this particular category) including one for official renewable energy.
They also have one of the costliest tickets on general sale (at the time of writing, it's `42,000). But none of this matters.
For, in the IPL, on-field success is only aspect of the game. Because on field success is completely divorced from the marketing team's ability to sell the product. According to the Houlihan Lokey report from last year, Chennai was the IPL's most valued side ($231mn). It kind of makes sense as they one of the most successful sides. Mumbai was No. 3 in terms of valuation. The team sandwiching them? Bengaluru.
Manchester United rewrote the rules of what's possible in terms of partnerships when they brought on board an official noodles partner immediately after Sir Alex Ferguson left the club. While none of the 10 IPL sides have a noodles partner, most of them have pretty much nailed the commercial aspect of the league.
How did the teams get to this stage where they are all profitable irrespective of where they finish in the league table?
The short answer to that is the media rights and the way its distributed equally among all franchises. Consider this. For the ongoing five-year cycle alone, the IPL earns north of `50,000 crore. Over 40% of this is divided among the franchises equally. On top of this, franchises get to keep any and all gate money and they are free to sign as many sponsors as they want.
Here's where the IPL differs from, say, the English Premier League. Sponsors will not be lining up to, say, partner Leicester. Even if they did win a league title and the FA Cup in the last 10 years, it's a hard sell. They are almost guaranteed to go down with no assurance of their immediate return to the one of the biggest products in world football (the Premier League).
IPL? It's a closed league so there's no threat of relegation. There is a surety that the IPL would expand at some point in the near future so teams will end up playing 18 games rather than the 14 they play now. All of this means there's a warranty that all the brands forming an orderly queue to sign up with franchises know what they are getting. "The IPL," Manoj Badale, lead owner of the Rajasthan Royals franchise, was quoted as saying by Houlihan in their report, "as a product has always been investible. Having been inspired by US sports leagues, and particularly the model of the NFL, the IPL was always going to attract institutional investors. A closed league (no relegation) offers long-term security, a hard salary cap ensures a level-playing field and competitive parity and an equitable commercial model in which central income is split equally amongst franchises secures contractual revenue for franchises."
Considering the Board of Control for Cricket in India (BCCI) has shown their business acumen even during a raging pandemic, businesses know their bucks will translate into something meaningful. It also helps that the IPL is exempt from paying taxes thanks to a 2021 Income Tax Appellate Tribunal (ITAT) verdict as it held that the IPL promotes the game. "If there is a change in scenario," Houlihan observed in the report, "and the IPL income is deemed not exempt from taxes, then the value of the business will be impacted by 25%."
It's satisfaction guaranteed. It doesn't matter that Punjab have won only twice at home over the last two seasons. Going into the current season, they are partnered with 17 companies including an 'official tools partner'.
The IPL also has other advantages. Considering the shorter duration (when compared to most of the famous European football leagues or each of the Big Five in the US), it's easier to get the audience hooked onto something. The narratives are tighter and the subplots are easier to keep a track of.
It also helps that Bollywood has had a kind of lukewarm relationship with respect to releasing big-budget movies in the Summer. "The IPL matches usually happen between 8-11 PM, so it can affect a film," Shah Rukh Khan had once told reporters in 2012. "I will think about it if I'm a producer. I will think twice specially during the middle of the tournament or at the end."
While majority owners have tended to hold on to IPL teams because of the compounding nature of valuations YoY, there's immense short-term capital gain to be had. A few years after CVC picked up Gujarat for a reported `5625 cr, they have sold 67% stake to Torrent, an Indian giant, for a reported worth of `5000 cr. In under five years, that initial investment of `5625cr has skyrocketed to `7453 cr. In an economic climate where a lot of people have lost a lot of money, IPL teams are economy proof.
Over the last eight months or so, investors have been asked to buy the dip because of the economic downturn. In the IPL, people are continuing to invest in the 10 teams even if the cricket economy, which exists in a bubble, is shooting for the stars. Because, right now, it's bullet proof.
It's why a team can lose all 14 league games in 2025 and still find itself not short of partners in the Summer of 2026.
It's the game, silly.
