IPL's ecosystem thrives with 6.3% growth amid Disney Star vs. JioCinema dual broadcasting clash

D & P India Advisory launched ‘Beyond 22 Yards – IPL’s Evolution meets WPL’s Aspiration’- an Indian Premier League (IPL) and Women's Indian Premier League (WPL) Valuation Report. As per the report, the ecosystem value of the IPL has risen from INR 87,000 crore in 2022 to 92,500 crore in 2023. Marking an increase of around 6.3%.In USD terms, this translates to a growth from $10.9 billion to $11.2 billion, representing an increase of approximately 3.3%.

The 2023 IPL is also considered one of a kind considering the broadcasting rights were bifurcated between two different entities for linear and digital.  The television and digital rights were split between the incumbent Disney Star and Reliance-backed Viacom18. As per Santosh N, Managing Partner, D&P Advisory, Disney Star (Disney+Hotstar) and  Viacom18 (JioCinema), both paid around Rs 25,000 crores each for a period of five years thereby increasing the tournament’s overall value.

Speaking about the future predictions for the tournament, Santosh adds that IPL’s growth in the upcoming years will not be mammoth until there are contract renewals which are scheduled in 2027. 

However, there are a couple of developments that could impact the overall value of the tournament “There is a lot of talk in the media about Disney+Hotstar looking to exit India, if something like that happens, obviously that would create some issues and would mean the potential premiums that broadcasters were paying for the property subdue.”

Ad revenues for broadcasters decline?

The battle between Disney Star and JioCinema reached a fever pitch in the run-up to the 2023 IPL. The players aggressively tried to capture not only eyeballs but also advertisers. However, Santosh suggests that the competition has led to lower ad rates in 2023 for both the broadcasters, despite JioCinema's strategic move to air the tournament absolutely free.

In 2022 the ad rates for 10-second spots ranged between INR 15-20 Lakh. In 2023, the rates for individual broadcasters were way lower.

“The advertiser in 2022 had access to the whole cricket viewing audience. Their ads would have been watched by everyone who watches cricket, be it on OTT or television. However, in 2023, if you were going with either of the broadcasters, you’re catering to only half the population. Hence, the brand’s ability to pay for 10 seconds would be 60-70% of that in 2022,” explains Santosh. 

WPL

WPL’s inaugural edition stands at a remarkable valuation of INR 1,250 crore primarily driven by the substantial media and title rights deals. Viacom 18 acquired WPL’s media rights for a notable sum of INR 951 crore spanning five years. This is the world’s second most valuable broadcast agreement for a women’s sports league.

Furthermore, the Tata group also secured the title sponsorship of WPL with an investment of INR 165 crore. Santosh, predicts a healthy growth for WPL in upcoming years until the sponsorship and media rights are renewed in 2027. 

“The next significant change in value for WPL will happen when the next renewal cycle comes up in 2027 or if the BCCI increases the number of teams. We are predicting a double-digit growth for WPL as opposed to single-digit growth for the IPL,” adds Santosh. 

As per the report, while it might be intuitive for some to equate the WPL directly with the IPL, the importance of recognizing their distinct structural nuances directly impacts their ecosystem valuations. The IPL's inaugural season commenced with a larger framework, featuring 8 teams and a total of 59 matches. In contrast, the WPL started on a more modest scale, with 5 teams playing 22 matches. Given that the league's value is intrinsically linked to the number of matches, this disparity in scale is a significant factor in the valuation differences between the two leagues. This distinction underscores the established market presence and demand that IPL has enjoyed from its inception.

“The team’s branding efforts, fan engagement strategies, and ESA initiatives have all contributed to its enduring success and popularity. Moreover, the WPL serves as a platform for infrastructure development and grassroots-level talent, bridging the gap between domestic and international cricket and is slated to reach greater heights in the next two or three years,” adds Santosh.

Central pool revenue vs franchise revenue

The IPL ecosystem’s revenue streams bifurcate into two primary categories: the central pool- which comprises media rights, title sponsorships, and other centrally contracted sponsorships, and the franchise-specific revenues- which encompass team sponsorships, gate receipts, and merchandise revenues.

“The central pool is the dominant contributor, accounting for 80-85% of the total ecosystem revenues, largely buoyed by the substantial influx from media rights,” the report says.

The BCCI, as per established agreements, gets 50% of the central pool, while the remaining half is allocated to the franchises. Additionally, the BCCI receives a 20% profit share from the franchises’ total revenues.

As a result, 52% of the ecosystem’s revenues are channelled to the BCCI, while the franchises receive around 48%.

As per Santosh, the BCCI does not differentiate between the teams in terms of their performance or brand value. The central pool in fact constitutes a substantial portion—about 70-75% of any individual franchise’s overall revenue.

Hence the difference between the revenues of top-performing and established teams vs the newer teams is hardly 15%, says Santosh. 

Franchise and Merchandising revenue

As per Santosh, merchandising has historically not been a strong suit for IPL teams. “In international sports, merchandising is a very big deal and almost 30% of their revenues come from merchandising. However, in India, it is not even in single digits. That may or not be because 80% of the revenues are coming from the central pool itself.”