The last few days saw a couple of mega deals in the Indian Premier League (IPL). Rajasthan Royals franchise, based in Jaipur, was sold for $1.635 Billion Dollars to a US based consortium led by Arizona-based tech entrepreneur Kal Somani. Meanwhile Royal Challengers Bengaluru (RCB) has been sold to a consortium led by Aditya Birla Group for $1.78 Billion Dollars. These eye watering sums for the IPL franchises has put the spotlight on the rise in valuation of IPL teams, and the entire tournament on the whole.
The rapid rise in value of IPL franchises
IPL is easily the most valuable, and the most successful T20 league in the world. The franchises taking part in it the most valuable T20 teams in the world. These recent deals have shown just how much valuable these teams are now.
Notably, during the auction for the IPL franchises before the league started in 2008, RCB was bought by Vijay Mallya’s United Spirits for $111.6 Million while Rajasthan Royals was bought by Emerging Media consortium for $67 Million. RR was bought for the lowest amount at the time among all franchises.
Now, 18 years later, RR’s value has increased by over 24 times, while RCB’s value has shot up by 16 times. Absolutely staggering numbers, showing how the investment in the league has paid off handsomely for the owners. Of course the franchise owners have made handsome profits during their 18 years journey as well.
The sale of these two franchises has had an effect on the valuations of other IPL franchises as well. The share prices of RPSG group and Sun TV, owners of Lucknow and Hyderabad franchises have shot up after these deals. Investors have realised the value of the IPL franchises these companies hold, and want to get in on the gravy train.
With the growth trajectory IPL is on, the value of these franchises is only going to increase, and shareholders want to get in now to make a windfall if these franchises ever sell in future for Billions of Dollars. Of course, they stand to make plenty of money along the way through these highly profitable franchises.
What is causing the rapid rise in IPL teams’ value
The value of IPL teams, and the valuation of IPL on the whole has seen a rapid rise over the years. The IPL is valued at over $18.5 Billion now, and as we have seen, the franchises are worth Billions.
The tremendous success of the tournament is obviously the biggest driver of this increase. IPL has been the number 1 T20 tournament ever since its inception. Since then, every cricket playing country has come up with their own T20 leagues, and in England’s case ‘The Hundred’ but haven’t been able to replicate it.
IPL gets a huge audience for every match, resulting in mega deals for TV rights and massive advertisement revenue flows in.
The tremendous success of the tournament has also attracted global interest. Along with the interest, came global investors looking to get a piece of the pie. Now with US Billionaires also looking to invest, the valuation of these teams is shooting up. For example, the consortium that bought Rajasthan Royals has owners of 2 US-based NFL teams, Denver Broncos and Detroit Lions.
Till now, it was just Indian business owners who were investing in the IPL, but now with global interest and billionaires from around the world getting interested, the value of these franchises is only going to grow.
BCCI’s heft in cricketing world has played its role
Indian cricket board, BCCI, is the most powerful and influential cricket board in the world and that influence has definitely helped IPL grow, and along with that, the growth of the franchises’ valuations.
In the end, IPL is still about the quality of cricket and the quality of the players performing on the ground. BCCI has ensured that the best players in the world remain available for the tournament. Other nations adjust their schedule, allow their players to go and play in the IPL despite having contracts with their national boards.
This ensures the high level of cricket in the IPL, and thus keeping the tournament’s status as the premier T20 tournament in the world.
Beyond cricket, IPL now among the world’s most valuable sports league
Clearly the number 1 in cricketing world, IPL is now being talked about among the most valuable sports leagues in the world. While the American leagues, NFL, NBA, NHL, MLB are miles ahead of the rest of the world, IPL is catching up with the European football leagues.
IPL already generates more revenue than most of the European football leagues. Keep in mind that these football leagues have been around for much longer, have worldwide audiences, and are based in Football-mad countries. However, IPL is storming past them in terms of both, revenue and valuation.
With the league only growing and the craze for cricket remaining intact in India, fair to say the valuation of IPL, and the franchises, is only going to grow in the future.
