The Indian Premier League (IPL) is entering its tenth edition this year, but many of the franchises are still struggling to make money.
The Indian Premier League (IPL) is entering its tenth edition this year, but many of the franchises are still struggling to make money. Kolkata Knight Riders and Kings XI Punjab are among franchises that are profitable. Delhi Daredevils turned in a profit of `7 crore in 2013-14. The 10th edition of the professional Twenty20 cricket league begins on Wednesday. “Typically it takes 8-9 years for a team to make money. KKR is an exception as it was able to leverage the star power of Shah Rukh Khan to win over sponsors,” observed Indraneel Das Blah, co-founder, Kwan Entertainment.
But sponsorships are not easy to come by. A spokesman for Mumbai Indians said the franchise was aiming at a 10-12% increase in sponsorship revenues this time. Last year, it earned `70 crore. In the current crop of teams, Mumbai Indians, it would appear, pays the highest franchise fee of `44.1 crore annually, followed by Royal Challengers Bangalore, which pays `44 crore annually. King XI Punjab kept its costs low and has been prudent while acquiring players. The playing grounds in metros are usually more expensive venues to host matches – teams that play more matches in the metros end up spending more.
Kings XI Punjab earned `26.5 crore from sponsorship revenues in 2016 and hopes to mop up `30 crore from the forthcoming season. “While last year we had 12 sponsors, this year the target is 15-18 sponsors,” Mohit Burman, co-owner, Kings XI Punjab, told FE. More importantly, the Mohali-based franchise expects to earn its revenues largely from gate money. In 2016, with access to only one stadium, the franchise earned just Rs 6 crore from sale of tickets. This year with two stadiums – Mohali and Indore – the team is expected to earn `14 crore from gate money.
GMR-owned Delhi Daredevils is aiming at a 20% increase in sponsorship revenues with two of its existing sponsors having renewed their contracts. Air-conditioner brand Daikin has taken the prime spot on the fronts of jerseys while Mankind will continue to advertise on the back of jerseys. Other sponsors include Mother Dairy, Air India, Kingfisher and PepsiCo India.
Hemant Dua, CEO, Delhi Daredevils, told FE a campaign, Dil Dilli hain, would be rolled out. “There will be a carnival and also some films will be screened online to create buzz around the team,” Dua said. Special merchandise in the price range of `300-`1,000 will also be sold. Sun TV Group-owned Sun Risers Hyderabad has roped in Ultratech, Jio, Astral Bondtite, Canara Bank, Nerolac, Kurl On, Sun Direct, Gillette, Apollo Hospitals, UB, Tyka and Motul Oil and Red FM as its sponsors.
Compared to the popular franchises like Kolkata Knight Riders, Mumbai Indians and Royal Challengers Bangalore, other franchises command lower sponsorship rates. According to industry estimates, in case of teams such as Delhi Daredevils and Kings XI Punjab, the cost of sponsoring the jersey front ranges between `10 crore and `12 crore, while price of advertising at the back is `5-6 crore.
Also the price of grabbing the spot on the right chest is `3-4 crore. Typically, the the cost of sponsoring the fronts of jerseys for teams such as KKR and Mumbai Indians ranges between `8 crore and `22 crore; backs of jerseys are priced at around `10-12 crore. “Overall, franchises are expected to clock a 10-12% increase in sponsorship revenue. However, the challenge resides for the BCCI. If it does not add any new sponsor this season, the board may not see an increase in profit earned from IPL,” said a senior media analyst on condition of anonymity.
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The BCCI reported a whopping 928% jump in the net profit to `1,714.94 crore for the year ended March 31, 2016. This was largely due to a huge increase in income from exceptional items including net earnings from discontinuance of Champions League T20 tournament, which stood at `1,607.58 crore, etc. It should be noted that the standalone profit of the BCCI in 2015-16 actually dropped to `111.83 crore, as against `166.87 crore, minus earnings from exceptional items.
Had it not been for the extraordinary gain, BCCI’s profits would have fallen by 33% to `111.83 crore during the year. In fact, revenues or total income fell 11.85% to `365.35 crore since the board did not receive any income from the rights of the Champions League T20. The sports body earned a profit of `211 crore from IPL. Chinese handset maker Vivo, Vodafone, YES bank, Maruti Suzuki, Future Group’s FBB and CEAT Tyres are the title sponsors of the tournament. In addition to earning from sponsorship, Sony Pictures Networks (SPN), which bagged the media rights for `8,200 crore for 10 years in 2008, pays `820 crore a year to the sports body.