Cricket Cash – Kane Williamson of Sunrisers Hyderabad, Sanju Samson of Rajasthan Royals, Rohit Sharma of Mumbai Indians… [+] Kane Williamson of Sunrisers Hyderabad, Sanju Samson of Rajasthan Royals, Rohit Sharma of Mumbai Indians and Herschel Gibbs, Andre Russell of Kolkata Knight Riders, and Dhoni of Chennai Super Kings. [-] Mahesh Kumar A./AP, Vishal Bhatnagar/AP, Subhendu Ghosh/Getty, Bikas Das/AP, Robert Cianflon/Getty; Illustration by Stephanie Jones

Franchise values are on the rise in the world’s top cricket league, outpacing growth even in the NFL and NBA.

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Released the league’s first (and only) team valuations, putting the average value of the eight franchises at $67 million. With the league’s recent expansion to ten clubs, the average is now $1.04 billion, an annual growth rate of 24%.

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In contrast, over the past 13 years, the growth rate of NFL team value was 10% (to $3.48 billion) and NBA team value was 16% (to $2.48 billion). And the IPL’s most valuable franchise, the $1.3 billion Mumbai Indians, is now worth more than six MLB teams, 27 NHL teams and every MLS team.

“The IPL is the most important cricket league in the world in terms of sponsorship and media rights,” says Ajimon Francis, CEO of Brand Finance India, a brand valuation and strategy consultancy. “A lot of credit goes to the founders of the IPL who took ideas from the NBA and European football leagues and the good governance of the BCCI to clarify team funding during Covid and ensure the continuity of the tournament.

“IPL is the most important cricket league in the world in terms of sponsorship and media rights. Aziman Franciscus

Transaction prices explain the rise in valuations. Deccan Chargers were kicked out of the IPL in 2012 for not paying their players, but were soon replaced by Sunrisers Hyderabad, a deal in which Sun TV paid more than double what Deccan Chronicle Holdings paid the team in 2008. In 2018, when JSW Group acquired 50% stake in Delhi Daredevils from GMR Group, the cricket team (now Delhi Capitals) was valued at Rs 169 crore. USD, double what GMR paid.

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Private equity has gained attention recently. In June, Redbird Capital, which owns about 11% of Fenway Sports Group, bought a 16% stake in Rajasthan Royals for just over Rs 200 crore.

“There is a lot of enthusiasm among investors who want to invest in the IPL,” says Karan Taurani, senior vice-president at investment bank Elara Capital, which specializes in media and entertainment industry research.

The original values were low because the fees had been paid over several years.) Last October, the IPL sold two expansion teams: CVC Capital paid about $750 million. USD to Gujarat Titans and Sanjeev Goenka bought Lucknow Super Giants for around 950 million. The development fee will be paid over ten years and redistributed equally among the other eight teams.

Firstly, IPL attracts huge viewership and is a must watch in India. Last season, 400 million people watched on television, with another 260 million streaming the games. This is the final year of the IPL’s media deal with Walt Disney subsidiary Star India, which will see the league pay $2.4 billion over five years for television and broadcast rights. The next round of media rights is expected to be worth $6 billion to $7 billion over five years. Taurani explains, “Men make the spending decisions in Indian households and 60% of IPL viewers are men.

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Supergiants ($1.08 billion) and Titans ($850 million) are worth more than their development fees, as the new IPL media deal is worth a maximum of $5 billion. USD when two new teams join.

Second, the financial model of the IPL essentially guarantees that every team is profitable. For example, eight teams in 2021 had an average revenue of $35 million. USD, and operating income (earnings before interest, taxes, depreciation and amortization) was 9 million.

About 80% of the IPL’s regular-year revenue — and about 90% during the pandemic — comes from central revenue negotiated by the Board of Control for Cricket in India, or the sport’s national governing body. That includes the league’s main media rights deal with Bank Star India, which runs through 2021. 440 million paid USD, and the value of its main sponsorship in 2021 was 58 million U. S. D.

According to Elara Capital’s Taurani, in 2021 the BCCI retained 50% of the central revenue, 45% was shared equally among the eight IPL teams and 5% of the core revenue went to the four IPL playoff teams, the champion Chennai Super Kings. Kolkata Knight Riders, Delhi Capitals and Royal Challengers Bangalore – based on their performance. Only 20% of revenue comes from individual team sponsorships, match tickets and merchandise sales. Thus, 82% of the IPL revenue was shared equally among the eight teams. In comparison, the NFL and NBA share roughly 60% and 40% of their revenue, respectively.

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Additionally, the IPL has a salary cap that limits players’ salaries (a little less than half of administrative costs) to no more than 35% of revenue; That’s lower than the NFL (48%) and NBA (51%). This helps explain why each of the eight IPL teams playing in 2021 is profitable, with fans not attending matches and Covid-19 costing clubs between 3-4 million.

Revenue sharing leads to a narrower range of team valuations, and the order of picks is largely determined by market demographics and on-field success. The most valuable team, the $1.3 billion Mumbai Indians, has won the most IPL titles (5) and plays in India’s financial capital, which has the second highest total population (135.7 million) and the first. Its number

Royal Challengers Bangalore is sixth in the list ($1.04 billion). The Royal Challengers play in India’s IT capital and their state has the third highest number of billionaires (22) among IPL teams. However, he has never won an IPL title. “The team has not reached its potential in terms of merchandise and endorsement revenue because of its performance on the pitch,” says Francis of Brand Finance.

IPL team values are expected to appreciate strongly over the next few years due to non-media revenue streams. For example, central sponsorship revenue is expected to exceed $100 million in 2022, and analysts believe that NFT transactions and video game (both as part of central revenue) will further increase sponsorship revenue, as has been done with US teams. There are many opportunities for licensing and sales as the league, consumers and the state get a better handle on piracy.

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1. Mumbai Indians • Value: 1.3 billion. USD • Revenue: 33 million. USD • Operating income: 5.5 million. USD • Owner: Reliance Industries

2. Chennai Super Kings • Value: 1.15 billion. USD • Revenue: 41.2 million. USD • Operating income: 14.8 million. USD • Owner: India Cements

3. Kolkata Knight Riders • Value: 1.1 billion USD • Revenue: 41.2 million. USD • Operating income: 14.1 million. USD • Owner: Shah Rukh Khan

4. Lucknow Super Giants • Value: 1.075 billion. USD • Revenue: N/A • Operating Income: N/A • Owner: RP-Sanjeev Goenka Group

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5. Delhi Capitals • Value: 1.035 billion. USD • Revenue: 35.4 million. USD • Operating income: 8.3 million. USD • Owners: GMR Group, JSW Group

6. Royal Challengers Bangalore • Value: 1.025 billion. USD • Revenue: 36.4 million. USD • Operating income: 9.7 million. USD • Owner: United Breweries

7. Rajasthan Royals • Worth: 1 Billion. USD • Revenue: 31.7 million. USD • Operating income: 6.6 million. USD • Owner: Emerging Media Limited.

8. Sun Risers Hyderabad • Value: Rs 970 crore. USD • Revenue: 31.8 million. USD • Operating income: 3.2 million. USD • Owner: Sun TV Network

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9. Punjab Kings • Worth: 925 million. USD • Revenue: 31.2 million. USD • Operating income: 9.8 million. USD • Owners: Mohit Burman, Ness Wadia, PZNZ Media

10. Gujarat Titans • Value: 850 Crores. USD • Revenue: N/A • Operating Income: N/A • Owner: CVC Capital Partners

Revenue and operating income (earnings before interest, taxes, depreciation and amortization) are projected for 2021. for the season and converted to US Dollars at the average exchange rate of that season (1 INR = 0.0135 USD). Company values (equity and net debt) are based on historical transaction prices, earnings outlook and market demographics and are calculated using 2022. April 12 exchange rate (1 INR = 0.0131 USD). The numbers are based on team records and interviews with team owners, analysts and sports bankers.

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