T20 cricket isn’t even 20 years old. Yet the IPL is valued at an estimated $6.7 billion.
But how did they achieve this?
From how the IPL began, how the league and the teams make money, pandemic problems, and the industry as a whole, it’s all here.
Origins
Like a good superhero movie, it’s all about the origin story.
The Board of Control for Cricket in India (BCCI), who own and operate the IPL, started the idea for the league in late 2007.
The IPL was formed to take advantage of 3 major tailwinds:
- National excitement over India’s early success in the growing T20 format,
- The sheer size of the Indian cricket market, and
- Taking advantage of a previously underused time of the year. Scheduling games during April and May, between the conclusion of the Ranji trophy and the onset of the annual monsoon.
In early 2008, an auction was held to decide the owners of the eight franchises. The base price for all eight teams was set at $400 million USD. $723.59 million would end up being spent in total.
$111.9 million alone being spent for the franchise in Mumbai.
Fun fact: Deutsche Bank failed in its bid to own an IPL franchise.
But this style of cricket league was an entirely new concept.
IPL ushered in a new form of cricket management: privately owned, big-money professional clubs.
Commonly in domestic leagues, national cricket bodies run the state teams. Pulling profits from international cricket to fund lower leagues.
But the IPL bucked that trend by allowing private ownership, and now represents a significant proportion of the BCCI’s revenue. Not bad for a two-month tournament!
So how does the IPL make money?
- Sponsorships: Originally this years title sponsor was Vevo, a Chinese technology company. But paused their Rs 440 crore (~$60m USD) per season sponsorship due to India-China tensions.
So Dream11, an Indian startup, (link to my BizCard on them), was able to nab the title sponsorship for nearly a 50% discount at Rs 222 crore (~$30m USD) for this year. - Broadcasting Deals: In 2018 the IPL signed a four year deal with Star India, worth Rs 16,347.50 crore (~$2 billion USD). Overall, the IPL is set to net around $500 million USD a year for the deal.
Just for reference, the NBA has a deal with ABC, ESPN, and TNT worth around $2.66 billion USD, but per year! - Franchises: BCCI has a 20% share in franchisees’ respective revenues. So for every dollar a team makes, BCCI will earn a fifth of it.
As noted in a previous post, TV rights deals for live sports are rising rapidly.
Because nobody watches delayed sport. So live sports broadcasts have ads that can’t be fast-forwarded through. Making live sport like the IPL that much more valuable to advertisers.
But the BCCI doesn’t keep 100% of revenue earned from broadcasting fees and sponsorships.
Revenue sharing (common in sports) allows IPL franchises to receive a portion of the revenue generated by the IPL. Teams do help drive the IPL’s value after all.
Apparently, revenue is split 50:50, but as the BCCI has a 20 per cent share in franchisees respective revenues, it effectively works out to be 60:40 split.
How the Franchises Generates Revenue
- Revenue Sharing – Made up of:
Title Sponsorship: All eight teams receive an equal share of the league sponsorship. Eg Of Dream11’s Rs 222 crore (~$30m USD) title sponsorship, 50% might be allocated to the teams. Which would then equally be split among teams. A relatively fixed revenue source for teams.
Broadcasting Fees: The teams get a portion of the four year Star India broadcasting deal worth ~$2 billion USD.
So there’s about ~$500m USD per year from the broadcast deal. Of which around 40% gets distributed to teams.
But unlike the title sponsorship revenue, this revenue isn’t distributed equally. Reportedly it’s distributed based off viewership numbers, meaning bigger market teams often pocket a larger amount. - Sponsorships and Advertisements: Not only on the uniform but at the stadium itself. Advertisements are everywhere in the IPL. On shirts, pants, helmets, boundary ropes, and all around the ground. Sponsorship on the front of jerseys is reported to cost anywhere from Rs 18-20 crore (~$2.5m USD) a year for the larger market teams, and Rs 12-15 crore for the smaller market teams.
If there’s space, there’s money to be made.
All up, the larger market teams earn around Rs 70-80 (~$10m USD) crore from sponsorships whilst the smaller market teams can expect Rs 30-40 crore (~$5m USD). - Match Day: Ticket sales make up the bulk of matchday revenues. Gate revenue is reportedly on average around Rs 25 crore ($3.4m USD) per year. Food and beverage stalls within the stadium also generate revenue for franchise owners.
- Merchandise: Clothing, caps, jerseys. Any official merchandise purchased by fans is another revenue stream for IPL franchises. I can’t manage to find concrete numbers, but it’s assumed that IPL merchandise revenues aren’t as high (as a percentage of overall revenue) as other sporting leagues around the globe.
Major Costs
The players. They drive the value, and they deserve to be compensated for it.
For the 2020 season, the total salary for each team was Rs 85 crore (~$12m USD) per year.
The process to build a team of players is pretty different from other leagues around the world.
Players sign up for the auction (and set their base price!), and the highest bidding team wins the rights to them.
So player salaries take up the majority (~60%) of franchise costs, whilst operations and management expenses take up most of the rest.
Growth Opportunities?
You only have to look at the sums of money being spent on the title sponsorship and broadcasting deals to see just how fast it has grown.
The original title sponsorship? DLF at Rs 40 crore ($5.5m USD) per year.
Now? Dream11 at Rs 222 crore (~$30m USD) per year.
The original broadcast deal? A ten-year contract worth around US$100 million per year.
Now? A four-year contract worth around US$500 million per year.
So a 5x growth in broadcasting fees. Plus a ~6x growth in title sponsorship (10x growth if using Vivo’s sponsorship!).
Another possible area of growth is making the IPL accessible to more Indians:
While nearly 70% of Indians continue to live in rural areas, not a single team is located in Uttar Pradesh, India’s most populous state, nor is there a team in Bihar, Orissa, or Madhya Pradesh.
A Foreign Field No Longer: India, the IPL, and the Global Business of Cricket by Colin Agur
The states of Uttar Pradesh, Bihar, Odisha, and Madhya Pradesh, which represent over 400 million people, don’t have teams.
A huge opportunity for growth.

But overall cricket, and the IPL specifically, see growth from younger audiences.
The IPL has caused a cultural shift in how the game is played. It’s attracted younger, more casual fans. Test cricket traditionalists might cry and think it’s a joke. But the IPL has grown the game of cricket when it seemed to be dying.
But how can teams improve their business?
It’s certainly a case of a rising tide lifts all boats. So growing the IPL as a whole will create the follow on benefits for teams.
But on-field performance is a key driver of value. If a franchise wins a season, they’ll pocket Rs 20 crore (~$2.7m USD). Finishing top 4 will net the franchise at least Rs 8 crore (~$1m USD). 50% of winnings must be distributed among players.
But still, a decent payday for a franchise.
Not only from prize money, but on-field performance can be a key driver in brand value once a team is established.
Problems and a Pandemic
Like other leagues around the world, the IPL has decided to play with zero crowds for now.
Average crowd size for IPL matches was over 30,000. Good enough to be a top ten sport by average attendance. So money from lost ticket sales is going to be a financial hit.
The loss of the ability to sell match day tickets along with other stadium revenue opportunities is expected to around the mark of a Rs 420 crore (~$57m USD) loss
Not only the pandemic, but India-China tensions have also been problematic. As mentioned Vevo paused their Rs 440 crore (~$60m USD) per season sponsorship after escalating tensions between the two countries.
Thus, Dream11 was able to nab the title sponsorship for nearly a 50% discount at Rs 222 crore (~$30m USD) for this year.
Meaning that not only the IPL’s revenue but part of the revenue sharing for franchises is expected to decrease by around Rs 200 crore.
There’s an expectation that the BCCI is going to absorb some of the costs and losses incurred due to the pandemic. But just how much? That remains to be seen.
Every franchise has been affected but at the time of pandemic, you have to look at the bigger picture. All the franchises are still going to make revenue and profits. Less revenue is still better than no revenue.”
Dheeraj Malhotra, CEO, Delhi Capitals
In Summary?
It’s a strong business model. A significant portion of revenue is locked in prior with sponsorships and broadcasting rights. So whilst no gate revenue is a big hit, it’s not the end of the world for the IPL.
The Indian Express reported that franchises on average make a profit of around Rs 102.6 crore (~$14m USD) each per season. Obviously, pre-COVID numbers, but even with the hit to revenue currently, it’s still feasible that teams sneak in a profit.
Only time will tell how this pans out.
Made it this far?

Further Reading
- IPL: $680M Revenues and not out
- A Foreign Field No Longer: India, the IPL, and the Global Business of Cricket by Colin Agur
Disclaimer: Being only able to jigsaw together all the financial information, some financials and percentages may not be 100% accurate. I’ve tried my best to source the correct numbers where possible, but if I’ve made a mistake please let me know and I’ll update them.