With talks to take IPL abroad next year. Whose loss is it going to be?


Curious Economist explores how do IPL teams earn and how much of the earnings come from stadium ticket sales.

The revenue of all IPL times can be filed under the following:
1. Sponsorship
2. Media Rights
3. Ticket Sales
4. Stall Rental
5. Prize Money

The logos on the team jerseys, helmets, training kits and, the barricades near boundaries all form part of the sponsorship revenue. More prominent the brand is on display, more money comes into the teams accounts. The sponsorship terms are usually agreed for a year with teams throwing in additional perks in small branded events with the the players, television commercials etc.
The sponsorship revenue forms around 20% of total revenue. This revenue will stay even if the IPL changes location to a different country next year.

Each and every team enters into agreement with the BCCI (BCCI have the rights for organizing the IPL) laying down the structure of revenue distribution among the teams. The BCCI collects the revenue from the broadcaster and shares the revenue with the teams after deducting certain expenses. The percentage is in proportion to the teams standings, just like a weighted average method. The better ranked you are at the end of the tournament the higher is your share of media revenue.
IPL viewership went down the two times it was organized outside India in the past. This loss hit the media rights earnings for all the teams and BCCI itself. This time around, if IPL goes to some other country, BCCI will be hoping the increase in viewership at the organizing country will be enough to offset the loss of viewership in India which is already on a decline.

The sales of ticket in stadiums form a part of revenue for the home team. The denominations of ticket pricing is decided by the owners. A certain (small) portion of tickets are given to sponsors and the BCCI as per the agreement. The pricing of tickets is usually deyermined based on various factors such as seating capacity of the stadium, standard of living of the city etc. The stadium in kolkata (Eden garden) being the largest in India has tickets starting from Rs.300, whereas in Chennai (Chepauk) it is Rs.750. The main factor to be kept in mind, is to ensure the stands are filled in the stadium so that it ensures higher viewership and also better tv viewing experience

The food served to the various spectators is given on a contract basis to a third party who in turn sub contracts it. The term is usually a fixed amount and collected on per stall per match basis.

The prize money goes to the owners and the amount is distributed at their discretion among the players and support staff. (Terms lay down that, at least fifty per cent of the prize money is distributed among the players).

In case IPL goes out of India next year, the only earnings that will change are ticket sales and media rights. With decline in TRP in the season, BCCI is betting on better media earnings and increased viewership at a different country.