The Indian Premier League, has recently signed a new television deal with British broadcaster Sky Sports, having been with free-to-air channel ITV, since 2010. For a major world sports broadcaster, such as Sky Sports, to come and bid to take the television rights from another channel, shows that there must be demand for the product worldwide.
The terms of the deal, have not been released but it’s sure to add more cash to the coffers of the Indian Premier League. However, how much money does the IPL actually generate for all those involved and where does it sit in the big money world of modern sports?
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The IPL Explained
The first Indian Premier League tournament was completed in 2008 and will always be remembered for a final that went down to the last ball, with Rajasthan Royals defeating Chennai Super Kings .
Rajasthan Royals became the first team to win the Indian Premier League, in a match that was to prove to be a backdrop for the drama that was to come in the future, both on and off the pitch.
In 2007, the Indian national cricket team won the Twenty20 World Cup and following the hysteria of their achievement, the Indian Premier League saw this as an opportunity and one that could be worth a substantial amount of money.
The tournament was devised by the then CCI vice-president, Lalit Modi. However, Modi was forced to leave his position in 2010 due to claims of misconduct and indiscipline. Modi denies any wrong-doing and has recently been linked with the Scottish football club, Glasgow Rangers.
The Indian Premier League is a franchise based tournament, similar to that of the NFL in the United States of America. The crux being, that each franchise is made available for auction and the highest bidder then becomes the owner of the rights for that team. Each team represents a city.
In terms of players, there are various ways that a team can acquire their squad for each season. Prior to the start of each tournament, there is an auction and teams can also sign domestic players, uncapped players, trade players and sign replacement players .
The tournament itself, involves 8 teams, who play each other twice, with four knockout matches to decide the winner .
The Money Involved in the IPL
In 2014, the total IPL prize fund was Rs 40 crore, with the winners, Kolkata Knight Riders receiving Rs 15 crore. Therefore, over a seven year period, the prize fund has increased by Rs 28 crore, an average of Rs 4 crore per tournament.
In comparison, the 2013/14 English Premier League football season had a total prize fund of £252 million, roughly the equivalent of Rs 2400 crore and is clearly well ahead of the Indian Premier League.
However, even though leagues such as the EPL and the NFL in America, have a larger prize fund than the IPL, these tournaments have a much longer length and consist of more teams, which means more games and more opportunities to generate money.
So, how about a tournament of comparable or less duration, such as the FIFA World Cup?
The total prize find for the 2014 FIFA World Cup was Rs 3580 crore, again substantially more than the 2014 IPL prize fund but the FIFA World Cup that takes place once every four years, as opposed to annually.
Therefore, it’s important to remember, when comparing these competitions, that there are individual factors that differ within each. The length of time the competition has been running, the worldwide popularity of the competition, how often the competition takes place, the length of the competition and the amount teams involved all combine, to make meaningful comparisons, almost impossible.
There is no legal gambling on the IPL while there is in horse racing across India, the new revenue inflow a gambling tax could produce could become another liquid source of income as Indians have proven to be betting forward in sports, atleast online. In the present many Indians bet on the IPL through foreign sportbooks that accept Indian players.
Money Paid by the IPL Teams
In the same way as any other professional sports league, each team in the IPL has to pay it’s players. Many casual observers, especially having read the information above, may be surprised by the amount of money that each IPL team is actually paying. or ease of use, comparisons will be made in American Dollars.
In 2014, the top paying sports team in the world was Manchester City Football Club, who paid out just over $8,000,000 to it’s players . Not far behind were Major League Baseball team, New York Yankees, who also paid out just over $8,000,000 to it’s players.
There are a number of football, baseball and basketball teams in the top 20 but coming in at 24 are the Mumbai Indians, who paid out $4,964,375 to it’s team in 2014.
Drop another 15 places in the list and all of a sudden, a selection of IPL teams appear, including Kolkata Knight Riders, Royal Challengers Bangalore, Delhi Daredevils and Chennai Superkings. Between them, these four teams paid out more than $16,000,000 in 2014.
This places these teams well above many English, Spanish, German and Italian football teams plus American Football, baseball and basketball teams. What this clearly shows, is that the IPL and it’s teams, are competing with the world’s top leagues and teams, when it comes to spending money on their players.
Revenue Generated by the IPL
With so much money being spent by IPL franchises on players, they must be generating enough income to pay them but how are they doing this?
There are four main income generators, which are prize money, as discussed above, ticket sales, sponsorships and television broadcast money. In 2014, 80% of all ticket sales went to the franchises themselves, with 20% going to the IPL governing bodies.
The IPL attracts many high profile sponsors, such as Pepsi in 2014 and a large proportion of this revenue goes to the franchises. In addition to this, franchises can also negotiate their own sponsorship deals and this generates further revenue.
Also, 80% of television revenue is shared equally between the franchises, with the current broadcast rights deal worth something in the region of $1 billion.
Profitability and Sustainability
Many of the franchise owners, are big corporations and they can afford to absorb any losses that come their way directly from their IPL investments .
However, the bottom line, is that franchises are not making profit and teams such as Delhi Daredevils and Mumbai Indians, have been making a loss since the first match of the tournament was played.
There are teams who claim to be making a profit, however, these figures have never been officially released and remain doubtful.
The amount of cricket being played and shown on television, has saturated the market, plus, the recent scandals that have hit the IPL, such as spot fixing , have not helped the tournament to grow.
In fact, since the problems first arose, interest in the IPL has reduced and this, in turn, decreases the value of the brand. Less people watching the event, in the stadium but especially on television, means less interest in sponsorship. Add the high cost of players, plus the franchise fees and it appears that the IPL is following a model that is not financially stable for the long term success of the tournament.
There is little doubt that the IPL is one of the most entertaining forms of cricket on the planet. The best players in the world, loud music and cheerleaders, all combine to make each match a great spectacle. Looking at the figures, the majority of IPL teams are spending big money on players and managers, so much so, they are ranking alongside some of the biggest names in world sport, such as Liverpool FC, AC Milan and the LA Lakers.
However, the franchises themselves are struggling to make any profit, partly due to the amount of money being spent on players but also, because of the high fees required to play in the IPL .
The current financial structure seems to be failing, but the Indian Premier League has proven to be a very good product. The organization simply needs to ensure it is profitable for all parties in order to create incentive for it to continue to enjoy success.
Nonetheless, with cricket being a national sensation many fans have found in cricket betting a way of live or atleast a source of extra income, learning the Do ´s and Dont ´s of cricket betting is key to follow this path.
Sources and References:
 wikipedia.org, Indian Premier League Titles and Performance, 2015
 iplt20.com, IPL Player Auction, 2015
 wikipedia.org, Indian Premier League 2015, 2015
 theguardian.com, Manchester City Best Paid Team Global Salary Survey, 2014
 espncricinfo.com, When Cricket Goes Corporate, 2013
 wikipedia.org, Indian Premier League Spot Fixing, 2015
 livemint.com, Profit Elude Some IPL Teams, 2013