Last fortnight, the largest entertainment spectacle in cricket and India started off in style, amid empty stadiums due to the lockdown.
A 19th Century Kickoff
In 1888, the British had sent a team of men to play cricket against the English living in India.
However, the British men were soon made privy of the impressive performance of a team of local Indians who had copied the ‘gentleman’s game’ and were now getting impressive at it.
Naturally, the English men decided to challenge the Indians.
What followed was the first cricket defeat suffered by the British on Indian soil, and indeed, their first ‘defeat’ of any kind since they had crushed the War of Independence in 1857.
The game of cricket soon became a voice for the colonised Indian to prove that he was no lesser than his colonisers and there has been no turning back for the game of Indian cricket ever since.
With the Indian economy opening up as an independent country, greater access to television and improved quality of live coverage, the sport entered every Indian household.
Half a billion Indian hearts skipped a beat when Kapil Dev’s men took the last wicket against the Windies and registered a historic victory in the 1983 World Cup.
With the Indian subcontinent emerging as the new “Mecca” of world cricket, India was slowly becoming a cricketing superpower.
However, the game still felt elitist with even the shortest form of cricket taking an entire day and the time of broadcasting not being convenient for the average working class person.
Stuart Robinson, a brilliant marketing manager at the ECB (Wales cricket board), decided to tackle this by proposing a 20 over per innings game intended to deliver fast-paced, exciting cricket accessible to thousands of fans.
With a mixed vote of 11-7 among the county chairmen, the game of T20 was officially born. The British were really good at inventing games.
But Indians would turn out to be really good at playing them, at scale.
Avoiding The ICL’s Offside Trap
The ICC introduced the first T20 World Cup with 12 nations in 2007.
However, the Board of Control for Cricket in India (BCCI) was still not fully convinced about the format and a lot of senior players like Sachin Tendulkar, Sourav Ganguly and Rahul Dravid pulled themselves out citing it wasn’t a format for them.
MS Dhoni was named skipper, and India sent a young and inexperienced side to the tournament.
The players set the game on fire, from Chris Gayle hitting the first T20 century in the opening match to a young Yuvraj Singh hitting England’s Stuart Broad for six consecutive sixes in an over.
India won a thriller of a final against arch-nemesis Pakistan by 5 runs and Dhoni’s young men emphatically lifted the trophy.
The popularity of T20 cricket soon soared in India and none other than the legendary Indian skipper Kapil Dev decided to launch his own Indian Cricket League (ICL) to promote this newest and fastest version of cricket.
Even though it started with a lot of fanfare and fireworks, the ICL did not get approval from BCCI and it was condemned as a ‘revolutionary’ affair, surmounting an eventual demise.
Learning from the mistakes of the ICL, the BCCI wasted no time to create its own version of a T20 league and named it the Indian Premier League (IPL).
The player’s auction for the IPL saw the stars of the corporate world and Bollywood bidding for the cricketing stars and it was a dream combination of entertainment and cricket – the two biggest movers in India.
The first player sold was Shane Warne at $450,000 to Rajasthan Royals, and bidding wars took off with the Indian skipper MS Dhoni being sold at a whopping $1.5MM to Chennai Super Kings.
Some young players like Virat Kohli, Manish Pandey and Ravindra Jadeja would also get a chance to enter the limelight.
With the flamboyant team owners Shah Rukh Khan, Preity Zinta, Mukesh Ambani and Vijay Mallya amongst myriad others attending the games, the stage was set.
India was set for a spectacle that was never seen before.
Scoring Dollars from A Distance
Starting from the game to the franchises’ ownership, IPL was an exciting cocktail of Cricket, Bollywood, and Business tycoons.
The initial broadcasting rights for this sports extravaganza was bagged by Sony Pictures Networks and World Sport Group under a ten-year contract.
It was a mouthwatering US$1.03 billion, signalling the potential for the game.
Not just broadcasting, corporations were betting big money to gain sponsorship rights for IPL too.
The sponsorship bidding war witnessed real estate developer DLF Ltd bagging the title sponsorship by shelling out a whopping $50M while Hero Honda Motors Ltd bagged co-sponsorship after bidding $22.5M. PepsiCo India Holdings Ltd also bid $12.5M to lock the beverage partnership.
Of the total sponsorship revenue, IPL would retain 40 percent of revenue with the balance 60 percent to be shared between the franchises.
While IPL had developed a model to hook viewers it also explored innovative strategies to increase revenue by giving the sponsors a bang for their buck.
The beer and airline conglomerate Kingfisher which bid $26.5M to become the official umpire partner saw the brand on all umpires’ uniforms and also on the giant screens during third umpire decisions.
The television commentators called the sponsors’ names with every boundary and each catch taken. For every six it was a DLF Maximum, for every special moment it was the ‘Citi’ moment of success.
In addition to title sponsors there were individual team sponsors whose revenue would remain wholly with the franchises. The deal gave these sponsors not only branding rights on T-shirts and helmets of the team but also on-ground branding rights at the home stadiums. The franchises sold every nook and corner on players’ jerseys and kits.
Broadcaster Sony Max also signed sponsors like Coca-Cola, Hyundai, Vodafone, Max New York Life, Godrej Group and Citibank who have access to on-air category exclusivity. Additional strategic breaks taken by teams during the games were sold as extra advertisement spots.
IPL’s revenue sharing model ensured a positive sum game for BCCI, the franchises, sponsors and all other investors and drove the development of grassroots talent in Indian cricket.
With its high entertainment quotient, IPL gained popularity in its first edition and was a hit worldwide among cricket fans.
Assisting A Sporting League Renaissance
IPL also appealed to viewers outside the realm of hardcore cricket fanatics.
It created a loyal fanbase in household cricket experts and office-goers who loved to analyze and talk about the sport for hours.
With a hooked audience and money flowing in from all fronts, IPL was set to generate ROI from the first year of its inception.
In the first year of its launch, IPL fattened BCCI coffers with a 440 Cr ($88MM) profit which alone was higher than the BCCI’s entire earning for 2007, 300 Cr ($60MM).
For Sony, the return materialized in terms of its exorbitant pricing for ad-spots.
By 2010, Sony was charging Rs 4.5 lakh per 10 seconds ad-spot, a 200% increase from its 2008 pricing. To put things into perspective, in 2010, top soaps charged Rs 1.5 lakh per 10 seconds for an ad-spot .
Sony’s advertising revenue grew by more than 60% from 450Cr to 700Cr in 2010. Television viewership also touched new heights, with nearly 45% of viewership coming from rural India.
For the next few years, viewers all over the country witnessed IPL growing in stature with each new season.
While IPL was not the first league to start in India, it was the first to make a real mark.
The first league, Premier Hockey League (PHL), sanctioned by Indian Hockey Federation with the television channel ESPN India’s support, was launched in 2005. The PHL eventually failed and was called off in 2008.
On the other hand, what made IPL unique was the meticulously crafted design to mix sports and entertainment and finish it up with a stroke of glamour.
The IPL packaging delivering sport-ainment was flourishing in the Indian context.
With the success of IPL, another attempt at kicking off a Hockey league was made, when in 2013, Hockey India launched Hockey India League. Taking inspiration from the IPL by getting international hockey stars to play and shortening the tournament’s length, India’s third attempt at reviving its national sport gained popularity over the years.
Other leagues like the Indian Super League for Men’s football (2013), Indian Badminton League (2013), and Pro Kabaddi League (2014) were inspired by the IPL.
Non-conventional sports like billiards, poker, and polo also established professional leagues, bringing together India’s best with the promise of hefty sign-up fees and prize money.
With its resounding growth and successful business model leading to the formation of other sporting leagues, IPL reached the zenith of commercialization of sports in the country.
Following its footsteps, outside the country also, Bangladesh Premier League (BPL 2012), Caribbean Premier League (CSL 2013) and Pakistan Super League (PSL 2015) were established to emulate the stature and revenue streams achieved by the IPL.
The IPL became the startup that was the torchbearer for sports entertainment, and the economy.
Profit from The Top Drawer
By 2015, the IPL was contributing INR 1,100 Cr ($200M) to India’s GDP.
At the same time, the startup that was IPL was already a unicorn within 7 years of its inception. The value of IPL surged to INR 20,000 Cr ($3.2B)
Why it was such a lucrative business will be clear if we understand its business model.
The IPL operates as a multi-sided marketplace, at the center of teams, audience and sponsors. It converts engagement to money,
BCCI solely governs this marketplace.
The majority of the revenues for IPL are from broadcasting rights, sponsorships, and merchandise and ticketing. The total revenue share between the BCCI and the franchise is 60:40. This provides the team owners to run it as a potential business.
From 2008 to 2018, Sony and the World Sports Group (WSG) signed broadcasting a deal for INR 6,500 Cr ($1B).
Why Sony and WSG were paying top dollar for a nascent league was the viewership.
With 731 MM unique impressions in 2017 – IPL was growing leaps and bounds. As the broadcasting rights expired, the IPL governing council wasted no time to have a new bid for the next five years.
Media giants like Sony, Facebook and Star had participated in the bid. But the latter won comprehensively with a total bid of INR 16,250 Cr ($2.6B), or 2,200 Cr ($350M) per year.
Double the value for half the length, or 5x the value per year.
With 60 Indian Premier League matches per season, the deal means that Star India will be shelling out a massive INR 55Cr ($8.5M) per match.
For the first time ever, a single Indian Premier League fixture was worth more than a home international for the India men’s team.
For a nascent sports league, that was a watershed moment.
Sponsorships are another source of revenue for the IPL Governing council (GC) and the teams. For the IPL the title sponsors are the prized position
In 2008, DLF had paid INR 30 Cr ($6.5M) to sponsor the first four years of the tournament but by the time Pepsi took over in 2013, the title sponsorship fee had risen to INR 60 Cr (~$10M)
By 2017, it grew almost 450% when Vivo spent almost INR 400 Cr ($60M) annually to sponsor the tournaments from 2017 to 2022
Money was flowing in exponentially to the IPL.
Other sponsorship deals included official partners, associate, telecom, associate partners, and Co-presenting sponsors. Annually this sums up to a total sponsorship of 700 Cr ($100MM) for the IPL.
The IPL as a platform earns 2,900 Cr ($450M).
The teams earn further revenue individually. Game ticket sales bring in 200 Cr ($30MM), while the franchises earn 500 Cr ($80M) from sponsorship revenue, a total of 700 Cr.
The BCCI pockets 50% of the platform revenue (1,450Cr), and 20% of the franchise revenue (140 Cr), making this a 1,600 Cr ($250M) machine for the BCCI. The eight franchises make 2,000 Cr ($310M) or ~250Cr ($40M) per team.
The total revenue to the IPL as a tournament is an astonishing 3,600Cr ($560M).
The net profit for a franchise is ~100Cr ($16M), suggesting each team bears 150 Cr ($24MM) of cost. For the BCCI, the 1,600 Cr is almost pure profit, with it likely making 80% of the revenue. The teams have disproportionately lower earnings.
As we shall see later, it reflects in the massive, $6Bn value associated with the IPL, but less than $500MM of value associated with its 5 top teams.
But as the IPL entered 2017, startups had started to creep into the fray.
Winning the Data Draw
In India, cricket is both religion and entertainment.
As millions of Indians were getting their first smartphone, a good chunk of their screen time was being spent on entertainment.
Indian companies & startups, like their advanced counterparts in Europe (Premier League) and America (Superbowl), knew that the distribution and passion achieved by IPL will make for a potent combination to market their products and services to Indians.
The tenth season of IPL (in 2017) saw a per match ad-inventory of 2,300 seconds, out of which Vivo, the title sponsor for the year, committed to 300 seconds of airtime per match. Other presenting sponsors had committed over 210 seconds each, while all associate sponsors were given 120 seconds.
But one key differentiating factor for the IPL was how it was more digital than all its other leagues, which ended up attracting digital first companies.
The eighth season of the IPL (in 2015) had seen e-commerce majors reign supreme with brands such as Flipkart, Snapdeal, Amazon, CarDekho, Car-Trade, Paytm, Shopclues and Myntra bringing around 23% of the total ad revenues for the broadcaster.
It was followed up by both new and established startups like Amazon, MakeMyTrip, FreeCharge, Ola, Shuttl, Oxigen Wallet, Zomato, Foodpanda, Faasos, Swiggy , CASHurDRIVE, and AskMe cashing in on the cricket season.
In 2018, 603 million viewers watched the IPL on the Star TV network.
Add to that the 202 million viewers who streamed the league on Hotstar, which owns the IPL’s digital rights. Hotstar even set a global record in sports streaming with peak concurrent viewership of 10.7 million.
The OTT platform was targeting a viewership of 300 million from IPL 2019.
According to Inside Sport, 219 million viewers streamed the league on Hotstar within the first three days itself.
Media buyers estimate that Hotstar will rake in revenues of Rs 400 crore this season. Along with broadcast revenues, Star India’s total earnings from IPL 2019 could be north of Rs 2,500 crore. In 2018, it made about Rs 2,000 crore.
Startups could not miss this goldrush.
A Startup Goalfest
Dream11, a little known entity when the IPL started, was going to make a big wave in the IPL.
The fantasy sports platform signed a four-year sponsorship deal with the IPL, beginning 2019. In 2020, they became the title sponsors after paying a whopping Rs 222 Cr per year.
The Flipkart-owned payments service, PhonePe, became an official co-presenting sponsor of IPL 2019. It also roped in Bollywood megastar Aamir Khan as brand ambassador to raise awareness about digital payments in India.
Swiggy was also one of the 11 co-presenting sponsors of IPL 2019. Amazon Pay, MakeMyTrip, Mobile Premier League (MPL), were some of other startups paying top dollar for IPL in 2019.
If 2019 was anything to go by, 2020 would certainly be the year for India’s startups.
As the Covid-19 pandemic ravaged the economy, startups ensured that brand value of IPL remained intact and made significant inroads into a space once dominated by FMCG and auto companies.
The title sponsorship was bagged by Dream11, Byju’s has signed up as the co-presenting partner and also as lead sponsor of the pre and post-match analysis shows on the Star Sports network.
PhonePe, CRED, Dailyhunt, Khatabook, Acko, and WhiteHat Jr. were some of the other startups, which are splashing cash.
One of the biggest beneficiaries from the IPL would obviously be the digital streaming startup, Hotstar.
The IPL raked up a global record of 10.3MM concurrent viewers for Hotstar. Hotstar rolled out an All Sports Subscriptions Pack at Rs 299 per year.
Subscribers could gain access to not only IPL matches, but also other sporting events. The pack gave users the flexibility to pay for only sports content as opposed to shelling out Rs 999 per year for an overall Hotstar subscription.
It was a smart move and it paid off, seeing Hotstar vaulting to number 1 on revenue, along with viewership in India.
But the IPL, though, had some way to go before it could be like the leagues it was inspired from.
Winning in the Champions League of Leagues
IPL’s potential is when you look at other competitive sports leagues across the world.
EPL, NBA and NFL are some of the big names with whom IPL’s number can be compared. As EPL was one of the inspirations for IPL to start, we look at EPL vs IPL data in much deeper details.
Currently, the Premier League’s set of global broadcasting rights is worth £8.4b ($10Bn) over three years, meaning a single match during a Premier League campaign is valued at £7.37 ($9M).
As the data suggests, the Premier League rights are currently much higher.
But if you examine the figures over the duration of the tournament, as the IPL lasts just seven weeks to the EPL’s 42, the figures become much closer, with the IPL worth just $1M less than the EPL per week of their respective seasons.
When we look at players earning, while EPL is the richest football league in the world, with first-team squad players earning £3M a year on average, IPL players earned an average £274,624 (per match) despite only playing 14 matches, surpassing second placed NFL (£138,354) and the Premier League (£78,703) by a huge margin.
In terms of viewership also, IPL seems to be doing exceptionally well. Premier League, cumulative viewing figures were 1.35B across 188 of the world’s 193 countries, averaging out at 3.42m per match – which is considerably lower than the 7.7 million average viewership for an IPL match.
When it comes to crowd sizes, NFL leads the charts with 67.1 K as average attendance per game vis a vis EPL’s 38.1 K and IPL’s 30 K.
But with firing in all these areas, the IPL struggles in the key metric of value creation for its franchises.
The top five IPL teams possess a combined brand value of $321m, whereas the top five teams in the Premier League have a combined brand value of a massive $6.5B.
As we had shown earlier, this is because of the poor profitability, a key metric for determining value, of the IPL franchises.
For the IPL to really stand out, its teams will have to rise as individual entities – which can only be done if the platform shares more revenue with them. The EPL distributes most of its revenue to its teams, while the IPL keeps more than 40%.
While the IPL pushes towards a more global setting, it has revolutionized the grassroots.
Starting Up For A Global Stadium
The IPL put Indian technology and rural indian talent on the global stage.
Cricket commercialization will take place in more geographies like the United States, China and Western European nations. This will be a massive benefit for IPL as it will bring more talent, popularization to the league, and touch more audience.
This will bring in more foreign direct investments to India and also export technology to the world.
At the rate at which technology is being adopted in IPL, it’s showing the way for other leagues around the world. Spidercam, Smart Bails, Data analytics for players’ choice are the technology of yesterday.
In the COVID era, many sports-tech start-ups are forced to innovate. Innovation will start with IPL in India. Technology will marry cricertainment.
Augmented reality and virtual reality will be used extensively for matches from homes, digital twin and holographic technology to be virtually present live in the games, interacting with players, teams and coaches.
As we get more digital, India will build affordable technology for the world leagues by testing it in IPL matches.
IPL also needs to be credited for creating livelihoods.
T.Natarajan, son of a day laborer, now playing for SunRisers Hyderabad, had no money to purchase shoes when Kings XI Punjab bought him in 2017 for 3 Crs. Yashasvi Jaiswal, a boy who used to sell Pani-Puri, was bought by Rajasthan Royals for 2.4 Crs.
These are just a few names; the IPL will continue to inspire many rural Indians to take cricket as a career fearlessly.
In its first decade as a sports entertainment startup, it has more than punched above its weight. It has set the pace for Indian sports entertainment, and created a model that works.
The next decade will involve taking it beyond India’s borders. India is a massive, growing, domestic market, but the real success of the European leagues has been in their global soft power.
In doing so, it will set the path for other Indian startups to follow and sell to the world. No Indian startup has been able to set its mark as a cultural phenomenon. Similarly, no Indian league has been globally successful.
With the IPL, we may just see India’s first global sporting phenomenon that turbocharges Indian sport.
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By: Abhinay, Chetan, Omkar, Rohan, Mitali, Saumya, Shreyans and Aviral
Audio Version: Behind the Scenes with AJVC
As usual, we have done a behind the scenes format with the writers and host Mazin
Tune in below: