IPL economy: What the cash-rich league adds to India’s GDP

IPL 2018: According to the data provided by BCCI, the Indian Premier League (IPL) contributed Rs 11.5 billion ($182 million) to India’s Gross Domestic Product (GDP) in 2015.

IPL economy: What the cash-rich league adds to India’s GDP
Rajasthan Royals after winning the 1st season of Indian Premier League. (Source: IPL/Twitter)

Huge investments, consistent ratings, unparallel consumer satisfaction, massive brand imagery and never-seen-before returns, these are just a few traits of the Indian Premier League that drew its comparisons with the NBA in the United States and the Premier League in the United Kingdom. Already a rich sport in India, cricket is about to get richer this year with Star India set to reimagine IPL 2018 by engaging more fans across the country. The league will be broadcast live in six different languages targeting an unprecedented reach of 700 million fans across TV and Digital. One of the richest sports events across the globe, IPL has gone through its fair share of ups and downs. It has witnessed match-fixing scandals and off-field controversies aplenty. But, IPL has managed to keep itself going through thick and thin and yet get a huge amount of money, turning BCCI into a superpower in world cricket.

The league has undoubtedly provided a major platform to domestic as well as international cricketers who are sold and bought for millions of dollars in the IPL auction. With broadcast rights, central and team sponsorships, gate receipts and merchandise sales, IPL has taken Indian cricket’s financial health to the best position it can be and more is set to come over the years. But, its contribution to the nation is more than what has been acknowledged so far.

According to the data provided by BCCI, the Indian Premier League (IPL) contributed Rs 11.5 billion ($182 million) to India’s Gross Domestic Product (GDP) in 2015. In that season, a total of 60 matches were played between 8 franchises over 44 days in 13 host venues in 12 cities across the country. The data was compiled by KPMG Sports Advisory Group through an economic survey which revealed that the economic output associated with IPL in India stood at Rs 26.5 billion ($418 million).

“This is the aggregate value of all transactions that took place as a direct, indirect or induced effect of the economic activity of the 2015 matches. Hosting an IPL match also adds value and revenue to the economy of the state,” BCCI had said.

In 2014, when the first 20 matches of the season were played in UAE due to the general elections in India, the Indian Premier League had contributed a whopping Dhs275 million boost to the UAE economy, another research by KPMG had revealed. Another country that benefitted from a similar move was South Africa in 2009. Back then, a total of 22,000 rooms were booked in the country with Southern Sun Hotels, 10,000 domestic flight bookings were made and millions were spent on ticket, food and beverage, transport and merchandise sales. Add to this, the tourism that South Africa got and we are looking at a staggering figure.

So, it is clear that IPL’s contribution to the country’s economy goes way beyond the ticket sales. The key benefits and opportunities that arise are employment generation across sectors, tourism development, support of tier two cities providing key media exposure and development of cricket and sports participation across the country.

It isn’t just the administrators or the players that are benefitted from the tournament. IPL was the perfect property, a lot of brands were looking for. This was one of the major reasons why Rupert Murdoch’s Star India was ready to pay $2.55 billion to buy the five-year global media rights of the Indian Premier League (IPL). Interestingly, Facebook was willing to spend $600 million just for the digital rights of the tournament for 2018-2022, compared with the $45 million the rights were sold for less than three years ago to Hotstar.

The excitement around this league can be really understood by the fact that even the IPL 2018 player retention event attracted 8.1 million viewers and quickly became the most talked about topic on social media.

Controversies have done the least to affect IPL’s image. After Pepsi pulled out as the title sponsor of the IPL in 2015 due to match-fixing scandals, it took BCCI just days to find a new sponsor. Chinese phone manufacturer Vivo took up the role and recently renewed its contract at an increased rate of 554 percent over the previous deal which will cost it about $340 million for a period of five years between 2018 and 2022.

How do IPL teams make money?

For all we know, the teams have to annually dish out 10% of the final bid amount that they had placed in the inaugural season to the BCCI. They also spend money to buy players and spend on the salaries of the team support staff including the coaches. Apart from this, there are expenditures like booking the flight tickets and hotels for the players and support staff, running the administrative offices for meeting logistics of the team and marketing before and during the tournament. They also have to pay a certain amount to the cricket associations in order to host their home games. So, where exactly do they earn their money from?

The biggest source of income remains sponsorship. BCCI distributes a certain percentage of the income that the tournament generates from its sponsors (around 60%) equally among the franchises. The second major source of income is broadcasting rights. Again, the board distributes this amount among the franchises.

Then, the teams have their own set of dedicated sponsors which include jersey sponsors, sleeve sponsors and others. A large amount of money is generated from ticket sales which the franchises have to share with the cricket associations hosting the tournament. It goes without saying that a huge part also comes from the prize money which is pretty humongous.

What to expect from IPL 2018?

BCCI believes that there still is a lot of scope for growth. “Over the last decade, the BCCI has transformed the Indian Premier League from a radical new idea into India’s biggest sporting phenomenon and despite the scale of its success, the sky remains the limit for the VIVO IPL 2018,” Rahul Johri, CEO, BCCI said.

The IPL 2018 player auction will take place on January 27 and 28 in Bengaluru while the main tournament starts on April 4, 2018. Stay tuned!

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First published on: 22-01-2018 at 03:35:35 pm