REVENUE OF IPL FRANCHISEES

The revenue of all IPL teams come from five sources:

1. Media rights
2. Sponsorship 
3.Ticket sales 
4. Stall rental
5. Prize money

1. Media rights- Each and every team enter into agreement with the BCCI (BCCI have the rights for
organizing the IPL) laying down the structure of revenue distribution among the teams. The BCCI collects
the revenue from the broadcaster and shares the revenue with the 8 teams after deducting certain
expenses.
The percentage is in proportion to your standings, just like a weighted average method. The better
ranked you are at the end of the tournament the higher is your share of media revenue.

The media rights form about 60 to 70 percent of all types of revenue earned by an IPL team. This income
is referred to as Central rights income.

2. Sponsorship - The logos on the players jerseys, helmets, teams training kits and the barricades near
the boundaries all form part of sponsorship revenue. The more prominent the sponsors want their name
displayed, the more the money. Usually the names written on the chest in bold and behind the players
are the highest revenue generating sponsors for a team, as they are prominently visible to the television
audience. The terms agreed are generally for a year. The sponsors also get certain added perks like
organizing certain events with the team players and promoting their brand as part of the sponsorship
deal and also get a certain number of free hospitality tickets. The sponsorship revenue forms about 20
to 30 per cent of revenue for an IPL team.

3. Ticket sales: The sales of ticket in stadiums form a part of revenue for the home team. The
denominations of ticket pricing is decided by the owners. A certain (small) portion of tickets are given to
sponsors and the BCCI as per the agreement. The pricing of tickets is usually deyermined based on
various factors such as seating capacity of the stadium, standard of living of the city etc. The stadium in
kolkata (Eden garden) being the largest in India has tickets starting from Rs.300, whereas in Chennai
(Chepauk) it is Rs.750. The main factor to be kept in mind, is to ensure the stands are filled in the
stadium so that it ensures higher viewership and also better tv viewing experience (sponsors are also
happy).

The team management outsource the booking and collection of revenue to third parties like "big tree
entertainment (book my show)". These guys charge a commision of the total revenue from ticket sales,
usually between 1 to 5 per cent. The ticket revenue forms around 10 per cent of revenue of the IPL
teams.
4. Stall rental: The food served to the various spectators is given on a contract basis to a third party who
in turn sub contracts it. The term is usually a fixed amount and collected on per stall per match basis. 
5. Prize money:
The prize money goes to the owners and the amount is distributed at their discretion among the players
and support staff. (Terms lay down that, at least fifty per cent of the prize money is distributed among
the players).
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As for the sources of revenue are concerned, the ones you have mentioned are the ones in
addition to a share of television rights which the BCCI distributes to the franchises. This is
the biggest source of revenue which is around $10m per year per franchise.
The expenses include payment to BCCI for owning the franchise (bought at the initial
auction), salary to players, staff and other operating expenses such as traveling. This would
amount to around $25m per year per franchise.
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Running a franchise in the Indian Premier League is no easy job, considering the amount of
money required to sustain themselves in the cash-rich league. Winning a title is important,
but that isn’t all the franchises are focused on.
How the IPL franchisees earn money?
Revenue Streams
Brand Sponsorships: The IPL franchises generate a chunk of revenue through
sponsorships. Top brands tie-up with the franchises in a quest to provide a much needed
visibility to their brand with the public by endorsing the names and logos of their brand on
team kits and jerseys. The amount varies significantly as the size or the visibility increases
and decreases. Right from the title sponsors to the ethnic wear partners, teams sign a wide
array of deals to keep the cash flowing.
Revenue through the BCCI Central Pool: The IPL, as a brand generates its own share
of revenues through the official sponsorships (such as Pepsi), partnerships (such as
Vodafone, McDowell’s No.01, Yes Bank, CEAT) and also by selling the broadcast (currently
to Sony Max) and streaming rights (currently to Hotstar). A share of the total revenue is
added to the BCCI central pool which is distributed among the franchisees based on several
factors including their position in the league table.
Merchandise Sales: According to the report by The Times of India dated November 11,
2014, the sports gear business market growth in the country is 100% annually and the value
is projected to be approximately $30million. The franchises sell merchandise that include
stuff like Tee-shirts, Caps, Wrist watches and generate a revenue tapping the fan base.
Prize Money: According to a report published in The Bangalore Mirror, the IPL Prize
money has raised 300% from 9.8 Crores INR in 2008 to 40 Crores in 2015. The Champions
get a major portion of that with the runners up and other teams which make it to the
playoffs getting a lesser share.
Ticket Sales: Ticket Sales form an integral and important part of the income of each of the
IPL franchisees, given the immense popularity of the tournament and the large crowds that
flock the stadiums in every single game. It is reported that each IPL franchise gets to sell
80% of the tickets for its home games with the rest being reserved for special people.
In ground Ads: The in-ground advertising banners that are captured on the screen and off
it, by the spectators in the stadiums add a part to the income of the franchisees.
Player Trading: Before the IPL Auction each season, a transfer window is opened for a
certain period of time during which teams can exchange the players between them. It has
been observed that good players are often exchanged with average players with a sum of
money as a compensation.
Champions League T20: Champions League T20 was introduced by the BCCI where the
top T20 teams around the globe gather to compete for glory. The latest edition of CLT20
tournament had a prize money of $6 million at stake. In other terms, the tournament
awarded the winner with $2.5 million (15 Crores INR), the runner with $1.3 million, the
losing semifinalists with USD 500,000 each and the rest of the participating teams with
USD 200,000 each.

Expenses
Franchise Fee: The IPL franchisees are bought by the owners for a certain amount and 10% of the sum
must be paid to the IPL by the respective owners before the start of every season. To put things in an
easier perspective:Mumbai Indians franchise was bought by Reliance for a 111.9 crores, they have to
pay 11.1 crores each season in the form of franchise fee while Rajasthan Royals pay the least (6.7 crores)
among all franchises.
Payment to the local cricket club:While the IPL franchisees generate revenue through the ticket sales at
their respective venues, they must pay the local cricket association for using the ground facilities.
Player fee: With an eye on their performance and another eye on their brand value, IPL franchisees
hand pick players who go under the hammer. The IPL franchise pay the players for the amount that they
were bought. In certain cases, where a player is retained by a franchise, a salary is negotiated and
agreed upon before the retention.
Marketing and Running Cost: Right from the day to day operations of the franchise during the
tournament to the marketing costs has to be taken care off by the team management.

How BCCI generates revenue ?

The BCCI’s revenue structure is much safer than the ones followed by teams as the BCCI
generates revenue regardless of the fact how the individual teams fare. The following table
shows the revenue and expense streams of the BCCI. 
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