The 15th edition of the Indian Premier League (IPL) recently ended with the final taking place between Gujrat Titans and Rajasthan Royals in Ahmedabad. Playing their first-ever season, the Titans thrashed the Royals by 7 wickets to lift the title.
And ever since the IPL ended, the prize money of the tournament has become a major talking point. The winners of the tournament received Rs 20 crore as prize money while the beaten finalists pocketed Rs 13 crore.
The third and fourth placed teams earned Rs 7 crore and Rs 6.5 crore respectively. The remaining six teams earned even less than that as prize money. The prize money has left many utterly surprised.
The prize money for the winning team is just a handful of crores more than what the franchises paid to most of their big players for the season. For example, Lucknow Super Giants signed up KL Rahul for a whooping amount of Rs 17 crore.
In the auction, the franchises combined to spend more than Rs 550 crores to build their teams. When compared to the amount spent to buy the players, the amount received as prize money is very meagre. Unsurprisingly, the fans are shocked with the prize money amount.
But most of the fans might not know that prize money is not the major source of income for the franchises. In fact, it can be said that the prize money has very less impact on the overall earning of a franchise.
Earning sources of IPL franchises:
So how exactly do the franchises earn and what are the monetary benefits of winning the tournament or making it to the playoffs? Well there are various ways for the franchises to earn and the prize money is just a small part of it. The richest cricket league in the world, the IPL is fast becoming one of the most lucrative leagues across all the sports.
According to Forbes, average revenue for the eight teams was $35 million (approx Rs 270 crore) in 2021. The figure makes it pretty clear that prize money does not play a very big role in a franchise’s earning.
Coming to the source of income, the IPL franchises generate revenues through four major sources: grant of central rights, sponsorships, ticket sales, and prize money.
Grant of Central Rights:
This is one of the biggest source of incomes for the IPL franchises. The BCCI sells media and digital rights for the IPL to broadcasters. These broadcasters in turn sell ad-space to brands. According to Business Insider, around 60-70 percent of all revenue earned by IPL teams is generated through media rights.
As per a report in Forbes, close to 80% of the IPL’s revenue in a typical year—and about 90% during the pandemic—is derived from central revenues negotiated by the BCCI.
In 2021, 45% of the central revenue was shared equally among the IPL’s eight teams in 2021. Not only that, the teams making it to the playoffs were rewarded more as they received additional 5% of the central revenue.
Sponsorships:
The second biggest source of income for the franchises are sponsorship deals. With IPL being the most lucrative cricket tournament in the world, finding sponsors is not at all a big issue for the franchises.
For example, Gujarat Titans made their debut in IPL this year and even they managed to attract a host of sponsors. The Gujarat-based outfit signed deals with more than a dozen sponsors which included Ather Energy (Principal Partner), Capri Global, BKT Tires (as associate partners), pipe manufacturers Astral, Jio, ACKO, Dream11, audio wearable manufacturer boAt, Kotak Cards and Amul.
Ticket Sales:
Another source of income for the franchises are ticket sales although this source contributes a very small share to the revenue. This also explains why the IPL teams that played in 2021 were profitable even as matches had no fans in attendance.
Before the pandemic struck, top teams like Mumbai Indians, Chennai Super Kings and Delhi Capitals earned in the range of Rs 20-25 crore each from the seven home games.