‘Indian Premier League is a $10-b Business Now’

Value of the Indian Premier League (IPL) ecosystem has touched a staggering $10.9 billion in 2022, thereby making the cash- rich cricket league a ‘decacorn’, according to a report by consulting firm D and P Advisory. A business is called a decacorn when its value crosses $10 billion.

Value of the IPL ecosystem has registered a 75% growth in dollar terms since 2020 when it was valued at $6.2 billion, said the report. In rupee terms, the growth is 90%, D and P Advisory said.

The firm has used discounted cash flow (DCF) method for valuation whereby the value of an asset or business is estimated based on the cash flows that it is expected to generate over its remaining useful life. The report titled ‘Beyond 22 Yards’ noted that the growth in IPL ecosystem’s value is primarily driven by the land- mark $6.2-billion media rights deal inked by the Board of Control for Cricket in India (BCCI) in June and the auction of two new teams Gujarat Titans and Lucknow SuperGiants-for a combined value of $1.6 billion in October last year. Disney Star had bagged the IPL TV rights for 23,575 crore while Viacom18 acquired the digital rights for 23,758 crore. This was the first time the IPL rights got between two different rights holders.

“On a constant currency basis, the value of IPL would have been close to $12 billion. However, the currency depreciation of 10-12% has taken away the value of the IPL media rights in USD terms,” said Santosh N, managing partner of D and P India Advisory Services. IPL would be one of the most profitable new-age startups in the country if it is compared to other unicorns and decacorns in the country, he said.

Other factors that contributed to the rise in IPL’s valuation include the gradual increase in the number of matches from 74 to 94 in the next cycle, newly signed central sponsorship deals, higher ticket sales, and in-stadia revenue.

While IPL has been termed as the second largest sporting league globally on a per match fee basis, the report states that it is not fair to compare IPL with other global leagues based on the per-match fees metric since these leagues have a different structure, format, duration, and size. For the next five-year cycle, IPL’s per match fees works out to $15 million.

D and P Advisory has not done a valuation analysis for individual IPL teams since the Lucknow and Ahmedabad teams were added in IPL 2022 and there were very limited data points to do such an analysis, Santosh said.

According to him, the value of existing individual franchises could be in the range of $400-600 million. “There could be some outliers like certain franchises would be above or be- low, depending on the franchise we are talking about. However, most teams would be sitting in that range,” he said.

Santosh said the ability of the rights owners to pay top dollars for TV and digital rights in future will depend on how well they are able to monetise in the next five-year cycle starting 2023.

“Globally, sports broadcasters earn a big chunk of their revenue from subscriptions but that is not the case in India,” he said. “Advertising has been a big driver of monetisation for Indian sports broad- casters since cricket provides much more advertising inventory to sell than a sport like football.”S-ET

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *