The Indian Premier League (IPL) ecosystem grew by 3.3% from $10.9 billion last year to $11.2 billion in 2023, according to a report by consulting and valuation services firm D & P India Advisory.
Approximately 60-65% of this valuation accrues to the BCCI, with the remaining 35-40% accruing to the IPL teams. The report, titled ‘Beyond 22 Yards’, examine’s India’s dynamic cricket landscape. It had, last year, noted that the IPL had become a decacorn, having recorded a staggering 75% growth over 2020. While last year’s valuation saw a surge on account of the media rights renewal for the 2023-27 cycle, this year’s IPL ecosystem value demonstrates only a modest increment because the actual cash flows closely mirror D & P’s prior projections, and since significant leaps were already accounted for in the preceding assessment.
The report also notes that the inaugural season of the Women’s Premier League (WPL) has provided an impetus to the country’s most-followed sport. After its debut this year, the WPL’s enterprise value stands at $150 million. While a comparison between IPL and WPL is natural, it is important to recognise the distinction in structural nuances around both properties, which directly impact their ecosystem valuations. IPL’s debut season featured eight teams and 59 matches, while WPL started with just five teams and 22 matches. The report observes that a league’s value is intrinsically linked with the number of matches, thereby explaining the disparity in scale.
Santosh N, managing partner of D & P Advisory, explains that the two valuations must be viewed with an INR perspective rather than a USD one because of the change in the dollar-rupee exchange rate since 2008. The WPL stands at Rs 1,250 crore as compared with the inaugural season of IPL in 2008 that was valued at Rs 4,700 crore.
“Despite the fact that women’s cricket doesn’t have a following anywhere close to men’s cricket, WPL is currently 25-30% of what IPL was back when it debuted, which is a reasonable start. If you look at the metrics on a per match basis like broadcasting fee and title sponsorship fees, it is largely in line with what we saw for IPL,” says Santosh, adding that if the number of teams and matches increase before the next media rights renewal cycle, the WPL ecosystem value could see a significant rise.
The report also suggests that the average intrinsic business valuation for each franchise falls in the ballpark of $390-450 million, translating to an aggregate business value of around $3.9 to 4.5 billion for all ten teams combined. The reason most team valuations do not dramatically differ from each other is because the central pool (which includes media rights, title sponsorship and central or official sponsorships) constitutes 70-75% of any individual franchise’s overall revenue. The franchise-specific revenues come from team sponsorships, gate receipts and merchandise revenues. The central pool is also the dominant contributor, accounting for 80-85% of the total ecosystem revenues, largely buoyed by the substantial influx from media rights. Santosh notes that merchandising revenues have been below expectations, unlike global sports events (such as American and European leagues) that see around 30% of franchise revenues coming from merchandise.
“When it comes to IPL, these revenues are not even at the estimated or projected 8-10% mark. We don’t expect these to be significant in the foreseeable future on account of challenges such as counterfeit merchandise and the reluctance of the Indian middle class to spend on merchandise,” observes Santosh, noting that a solid merchandising strategy could play an important part in growing team revenues. Of all the teams, Mumbai Indians emerged as the most valued IPL franchise in 2023 with an intrinsic business value of $410-450 million. It is followed by Chennai Super Kings, Royal Challengers Bangalore, Kolkata Knight Riders and Delhi Capitals in that order. This ranking is based on certain parameters such as projected cash flows these teams could generate, growth trajectory of these cash flows and risks that may affect these projections. Additionally, the ranking also takes into account certain qualitative aspects like social media presence and marquee players on the team.