Can IPL Keep Growing Into More Teams & Cities?

When the Indian Premier League took off in 2008, many experts predicted that it would not be successful in India. Their assumption was that Indians do not have the mindset to support a city or a state as part of a tournament. Well, we all know how that prediction’s bitten the dust. Today, IPL is the world’s indisputable premier cricketing league. Behind the glitz, the sixes and the trophies, its business is also quite spellbinding.How successful has the IPL business been so far? | Industry estimates currently value IPL at between $12-16bn. Its viewership keeps increasing every year. It saw over 600mn viewers in 2024 on Star Sports (TV) and on Jio Cinema (OTT).How does an IPL franchise make money? First there is the money it makes through a share from the central media and sponsorship rights from BCCI, which is around 70% of the total revenue for any team. Then there are team-specific sponsorships and gate revenues.As for how their business has been booming, ET has reported that IPL franchise revenues more than doubled to ₹6,797cr in FY24, thanks to the media and sponsorship deals struck by BCCI.And are the franchises profitable too? Yes, barring Gujarat Titans, all other franchises reported a profit in the last fiscal. For instance, Chennai Super Kings (CSK) reported a profit of ₹229cr (with a revenue of ₹676cr) while Royal Challengers Bangalore (RCB) reported a profit of ₹221cr (with a revenue of ₹650cr).In addition, IPL is estimated to have created more than 1.2mn jobs. Not to mention the fab springboard it has provided for so many players to shine. Every year, IPL throws up heartwarming stories of cricketers rising to glory from humble circumstances. Consider Rinku Singh, Abhishek Sharma or even the rise of the Pandya brothers.Is there headroom to grow further? | Short answer is yes. Cricket is a religion in India and the T20 format is the most lucrative of all formats. It’s byte-sized, entertainment-centric, held at the right time of the year, away from monsoon and winter, and available on every possible viewing medium. The other sporting leagues in India — hockey, badminton or kabaddi — are nowhere as triumphant as IPL.But the comparison with global leagues presents a different picture. The likes of National Football League (NFL), English Premier League (EPL) and Major League Baseball (MLB) are 2-3 times bigger than IPL, which indicates a continued headroom for growth. Yes, the purchasing power difference is real, but it can be made up in viewership numbers. In the American leagues viewership is a fraction of IPL, while NFL viewership is around 20-25mn compared to IPL’s over 600mn.Are there any risks to the IPL model? | The first concern is whether there are too many teams in IPL. But its 10 teams are significantly fewer compared to other global leagues. NFL has 32 teams, National Basketball Association (NBA) has 30 teams, and EPL has 20 teams. So, again, there is significant headroom to grow. India still has numerous cities with distinct cultural identities, where IPL can still expand. Given cricket’s nationwide popularity, it’s unlikely that a saturation point has been reached.A second concern is that to sustain high business value, every franchise needs consistent IPL success and a marquee player — Dhoni for CSK, Kohli for RCB and a plethora of stars for Mumbai Indians (MI).Consider the business value of different IPL teams. A Houlihan Lokey study finds that CSK is #1 in terms of business value at $231mn, RCB is #2 at $227mn and MI #3 at $204mn. However, Lucknow Super Giants (LSG) is #10 in terms of business value at $91mn while Punjab Kings (PK) is #9 at $101mn.CSK and MI are driven by their consistent success of 5 IPL titles each. RCB, despite never winning a trophy, has the #2 business value due to the presence of Kohli and their community of social media fans. But teams like LSG and PK have struggled to get that marquee player and also with their inability to win the trophy. This, then, is the single biggest risk to the IPL business model for any franchise.In conclusion, as you watch the next big season of IPL, enjoy the cricket but also buy your team’s merchandise so that your favourite team’s owners can laugh their way to the bank.