IPL: A burgeoning brand!

The growing value of the IPL ecosystem, which we estimated at $6.3 billion after IPL 11, is a testament to its success.

The IPL, over the years, has been a major money-spinner. The franchisees, from last year, have also started receiving a large portion of the television revenue. As IPL 12 is upon us, we take a look at the championship’s brand value, compared to other world leagues and also the brand value of individual franchisees. What makes these teams so popular?

On September 12, 2007, the cricketing world entered a new paradigm with the launch of the Indian Premier League (IPL). The IPL was conceptualised to leverage on the massive interest in T20 cricket amongst Indian audiences due to the Indian cricket team’s triumph in the then just concluded inaugural ICC T20 World Cup.

However, even the founders of the IPL would not have expected it to achieve the stratospheric success that it has done.

Over the last decade, we have witnessed a cricketing carnival in the form of the IPL. The exhilarating, edge-of-the-seat action of the T20 format, allied with the glamour of Bollywood celebrities, global cricketing talent, interest of business tycoons and the resulting fan-frenzy have made IPL one of the most successful sporting leagues in the world.

The IPL continues to see spectacular growth and has given fabulous return on investment to all its stakeholders even considering its short-term nature when pitted against global leagues which are played almost throughout the year.

The growing value of the IPL ecosystem, which we estimated at $6.3 billion after IPL 11, is a testament to its success and this success has trickled down to impact the lives of the people associated with it. Strugglers have become stars, and stars have become superstars!

There are fresh faces like Mohammed Siraj, whose humble beginnings originate from his autorickshaw driving father, Rashid Khan, a teenage survivor from the warzone of Afghanistan, and Sandeep Lamichhane, who has become the most visible Nepalese face overnight, at one end of the spectrum and superstars like M. S. Dhoni, Virat Kohli and A. B. de Villiers at the other end.

No one predicted that the IPL would become such a huge hit when it was first conceptualised in 2007. No other sporting league in the world has seen such a remarkable rise in such a short duration. Even global money-spinning leagues struggled to stay afloat during their formative years. A prime example is the now popular National Basketball Association (NBA). During its formative years in the 1950s, the tournament was a major flop with very low viewership interests. The tournament struggled to stay afloat till the 1970s and only some tweaks in the rules of the game enabled the tournament to gain acceptance from audiences. Currently, NBA is one of the most watched events in the world.

Meanwhile, the IPL, which is only getting into its second decade, continues to receive unprecedented response from advertisers, broadcasters, sponsors and the viewing public year after year, leading it to be the most keenly awaited event in the campaign calendar for advertisers in India.

Unsurprisingly, television broadcasting rights have been the single largest contributor to the IPL’s revenue — at a stunning 65% of the total revenue in 2018. The keenness of various broadcasters to fight for IPL broadcast rights in 2017, which Star India eventually won for a whopping $2.55 billion for a five-year period, was validation of how big the IPL has become. In 2016, Duff & Phelps had predicted the broadcast rights to be renewed at close to $2.5 billion, and we were spot-on in our assessment!

The price of the IPL broadcast rights has seen an increasing trend since the championship’s inception in 2008. On an annual fee basis, the compounded annual growth rate (CAGR) works out to 18.9 percent.

It is not just the broadcast rights, the IPL continues to see high sponsorship fees and the willingness of various brands to be associated with it, the more recent one being Tata Harrier. The IPL title sponsorship has also grown at a massive 800% since its inception (when DLF was the title sponsor), to its current partnership with VIVO. As per GroupM, the IPL as a whole made $1 billion in sponsorship money in 2017 when compared to the $892 million made by Major League Baseball. This is quite an achievement considering that the IPL season is shorter than the MLB season and given that sports is a major part of the US culture and economy whereas the economics of sports is just beginning to take root in India.

This buzz isn’t limited just to broadcast rights and sponsorship. Social media and OTT platforms such as Facebook, Twitter and Hotstar are feeding off and fuelling the growth in IPL, making it one of the fastest growing sports leagues on Twitter with 4.9 million followers and adding over 1.8 million fans on Facebook during the most recent season. The number of tweets pertaining to IPL is also growing and has crossed 8.5 million. It is also worth noting that the 2018 IPL finale recorded 211 million views and had a viewership greater than Superbowl. IPL 11’s final also set a world record of OTT viewership with 10.7 million concurrent viewers on the Hotstar platform beating the 2012 record of 8 million viewers set by YouTube for Felix Baumgartner’s space jump.

The overall brand value of the IPL almost doubled from $3.2 billion in 2014, when Duff & Phelps first valued it, to $6.3 billion in our 2018 IPL Brand Valuation study. It is safe to say that the IPL is on a par with the major leagues of the world such as EPL, NFL, etc. Since the league and the individual franchisees’ destiny is intertwined, the success of IPL and the monetary benefits have trickled down to the franchisees. Much in line with the league, individual franchisees see a continuous rise in their value, aided by the new revenue sharing agreement between the IPL Governing Council and the franchisees (effective from IPL 11) and directly benefiting from the renewed broadcasting rights deal. The Mumbai Indians brand was valued at $113 million in 2018; Similarly, Royal Challengers Bangalore saw a 11 percent jump, while Sunrisers Hyderabad’s brand value increased by 25 percent, the highest increase in brand value in 2018. IPL franchisees have a great opportunity to convert the national fan-base into city affiliated loyalty, which in turn will drive merchandising revenues for the franchisees and can further increase their brand value in the future.

Eleven years of IPL has provided us with a glimpse of what to expect in the next 25 years. Needless to say, much of cricket’s future depends on ensuring the game is of high quality to continue attracting viewers, sponsors and broadcasters, the last mentioned of which have become so vital for the game’s financial health. In the near future, however, it is safe to say that April and May will stay demarcated as IPL territory, where nothing else sells — not even Bollywood!

Santosh N. is managing director and Harsh Talikoti is vice-president, Duff & Phelps.