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Summary
Industry estimates suggest IPL media rights are likely to stay flat in the upcoming cycle. Yet investors are buying up stakes in IPL teams at sky high valuations. Why?
MUMBAI: Earlier in May, the Lakshmi Mittal family and vaccine-maker Adar Poonawalla successfully bid for Indian Premier League team Rajasthan Royals at a valuation of $1.65 billion, or over ₹15,600 crore. In March, the Birla family, along with Blackstone PE, Bolt Ventures and The Times of India Group, acquired rival IPL team Royal Challengers Bengaluru for a $1.78 billion valuation, or more than ₹16,000 crore.
At these valuations, cricket teams are selling for 30x their last reported annual revenue from operations. However, industry forecasts suggest the IPL is losing its sky-high value as the league is expected to fetch stagnant revenue for media rights. What explains the divergence in IPL’s value and that of its individual teams? Mint explains.
What are experts saying about IPL’s future valuation?
The estimates aren’t rosy. In a report in March, media consulting firm Media Partners Asia predicted that IPL media rights will fetch about $5.4 billion in the next bidding cycle (2028 to 2032), roughly the same as in the previous cycle. However, as per MPA, these rights must sell for at least $6.3 billion for the cricket league to break even. If the MPA’s estimates hold true, this would be the first time that media rights won’t increase sharply since the IPL was launched.
In October, valuation firm D&P Advisory estimated that the value of the IPL ‘ecosystem’ – all businesses directly associated with the IPL – fell for two consecutive years. As per D&P Advisory, the IPL’s value fell from a high of $11.2 billion in 2023 to $8.8 billion last year.
Why is this happening?
The biggest reason is that fewer broadcasters and streaming platforms are ready to acquire IPL rights at all costs. Pre-pandemic, major networks Star and Sony fought hard to win these media rights, driving up bids. Then, post-pandemic, the Board of Control for Cricket in India (BCCI) auctioned TV rights and streaming rights separately, creating more competition among rivals Reliance-backed Viacom and Disney-owned Star.
Since then, India’s media business has consolidated. Reliance bought rival Star, becoming India’s biggest broadcaster. Sony and Zee began cutting costs as talks for their merger fell through. For now, Big Tech rivals YouTube, Amazon and Netflix have not shown an inclination to place very high bids for IPL media rights.
Besides, after the government banned real money gaming last year, IPL and other cricket tournaments lost a big chunk of advertising revenue.
Why should this math matter to IPL team owners?
Media rights are the biggest chunk of a team’s revenue. Latest filings show that a little over 80% of the Rajasthan Royals’ FY25 revenue from operations came from its share in central rights, which include BCCI’s earnings from the auction of IPL’s media rights. If revenue from media rights stagnates, it will impact the financials of IPL teams.
According to Prasanth Shanthakumaran, partner at KPMG and head of the sports sector, 90% of the total “central rights” including media rights is shared equally between teams. The rest is awarded to teams based on their success in the league.
These central rights can account for up to three-fourths of an IPL team’s total revenue, according to MPA. Although non-media revenue from ticketing, merchandise and international franchise income has grown since the pandemic, they remain relatively small.
“They are not scaling fast enough to reduce structural dependence on the central pool,” MPA said in its report. “Any correction in rights values flows directly to franchise P&Ls with no automatic offset.”
Why hasn’t this stagnation affected bids for IPL teams?
There are a few reasons.
One, cricket is fast turning into a global sport, opening up potential for international revenue. IPL teams including the Royal Challengers Bengaluru and Rajasthan Royals own international franchises. Cricket will be part of the Olympics starting 2028 and there are leagues in the US already, including the Major League Cricket, whose partners include Satyan Gajwani, who is now a co-owner of the Rajasthan Royals.
“When something becomes an Olympic sport, the US takes it very seriously and so, you will see more American investors interested in the IPL,” Jatin Paranjape, former cricketer, CEO and founder of sports aggregator KheloMore, and a member of the BCCI’s cricket advisory committee, told Mint. Besides, he added, as the league expands, there is potential for additional seasons and editions of the IPL, opening up more lines of revenue for team owners.
Second, experts said, influential business families are unlikely to see their stake in an IPL team solely as an investment offering an attractive exit in a few years.
“These valuations for these teams are not just because of their profitability alone,” Shanthakumaran told Mint. “It is also about the eyeballs you get as a team owner. Corporates like Reliance and JSW have already done it, and now you see team owners like Ananya Birla going to watch an RCB match. These matches are a phenomenal opportunity to build a corporate and personal brand.”
Foreign investors, including PE firms, are also likely looking at these IPL teams as long-term investments that will benefit from growth in Indian sports and the consumer economy, he said.
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