Ipl Business Model

Topics: Indian Premier League, Board of Control for Cricket in India, Lalit Modi Pages: 3 (877 words) Published: February 23, 2011
The Indian Premier League is a T20 cricket competition promoted by the BCCI and is modelled on the same lines as football’s EPL or basketball’s NBA. It works on franchise system wherein the teams (presently 8; going up to 10 from the next season) representing different cities are auctioned and the highest bidder is awarded the rights to own and run the team for ten years. Over a span of just three years, it has become a business phenomenon, even overshadowing what it stands for, that is cricket, involving leading business groups, bollywood stars and the entire nation alike. IPL as a business model has following major stakeholders:

Unlike its counterparts such as EPL or NBA, the major source of revenue for IPL is not stadium ticket sales but media rights. Other sources of revenue for IPL are title sponsorship, the sale of franchises and licensed merchandise and products. A part of the revenues so raised are retained by the BCCI, a part distributed as prize money and the remaining is divided equally among the franchises based on a pre agreed model. To understand the exact structure of the business model, we can break the cash flow for each of the stakeholders as inflow and outflow as follows: BCCI inflow: The biggest source of revenue for the BCCI so far has been the proceeds from franchise bids amounting to a total of $1.42bn. Another major source of revenue is media rights that were awarded to Sony for $1bn for a period of 10 years and starting from IPL-3, an undisclosed amount for media streaming rights awarded to Youtube. Title sponsorships (DLF, Coca Cola etc.) form another big chunk of the revenues. Finally, proceeds from stadium tickets, merchandise sales etc. complete the list of major sources of revenues for IPL. BCCI outflow: Apart from the revenues generated from the bidding of franchises, almost all other revenues are shared with the franchises in different proportions for different sources of...
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