IPL’s Billion-Dollar Boom: From Bold Idea to Sporting Goldmine

 

IPL Trophy. Images :X

In 2007, Lalit Modi was attempting a hard sell, pitching an idea to a few well-known names in the Indian business world. In the absence of anything tangible, all he had to offer was a concept. By trying to pitch cities against one another, he was promoting a cricketing venture called the Indian Premier League (IPL). Teams were acquired for anything between ₹260–450 crore, and some 18 years ago, these were considered astronomical sums.

As the idea prepares to begin its 19th season, Rajasthan Royals have just been sold for 1.63 billion dollars – a 24x increase on its original valuation of $67 million. RCB, too, have now been sold at a staggering valuation of 1.78 billion dollars, or close to ₹16,750 crore – 35 times its original valuation of ₹450 crore.

If analysts are to be believed, these valuations are set to rise further over the next decade. LSG, acquired by the RP Sanjiv Goenka Group for ₹7,000 crore, is now valued at over ₹12,000 crore, in a matter of just four years.

What explains these numbers? And why do we say that $2 billion could double over the next decade?

First, the IPL is unique. There cannot be a second IPL, nor can the BCCI continue adding teams indefinitely. The scope for expansion is finite, making it an exclusive club of franchise owners. It is one of those rare clubs where entry is severely restricted, and hence valuation is driven by high demand and very limited supply.

Second, the IPL is relatively risk-free. Instantly, it connects with a latent audience of 100 crore cricket-mad Indians, and the brand is not dependent on performance in the way that World Cups are. As I have argued elsewhere, in the IPL, India wins every night – and no World Cup can ever compete.

Third, the BCCI cannot keep expanding the IPL window, and hence there is little risk of saturation. The IPL has taken on – and beaten – soaps and serials on prime-time television, and is also a bigger brand than any Bollywood blockbuster. It is an all-encompassing behemoth that pits India’s biggest business tycoons against one another, and this shadow boxing is eagerly consumed by a legion of sports fans.

With the content space opening up like never before, IPL consumption is expected to grow manifold in India going forward. It is a passion that is intensely compelling. While earlier a single feed catered to many consumers, it is now about multiple feeds catering to the individual. Choice is increasing, and the IPL’s content ecosystem is expanding rapidly.

In conclusion, owning an IPL franchise is now akin to winning the biggest trophy in world sport, and the numbers are only going to grow in the coming years. Just last year, Torrent acquired Gujarat Titans for ₹9,000 crore. A year later, RR has been sold for ₹15,300 crore and RCB for ₹16,750 crore. These are real numbers – not merely part of a fantasy board game.

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