IPL Media Rights 2023-27: Riding the Money Train
The After-effects of IPL Media Rights Purchase
Hey guys! Back after a forced break.
What a time to be back! As we speak, the most talked-about subject in Indian sports today, the IPL media Rights auction for 2023-27 period, is underway
It’s probably going to stretch for a couple of days to know the winner but the period if going be etched in Indian Cricket history which changed the course of Indian Premier League. A lot has been written about the interested broadcasters in the fray and so on.
I’d like to evaluate how things will change after that for all the stakeholders
The Recap
First, a quick recap. IPL existing media rights with Star India was for the period of 2018 - 2022. As it was up for re-negotiations, IPL decided to carry out e-auction for the first time. Starting on 11:00 AM IST on Sunday, 12thJune, the process may extend to several days as there is no end date. It will get over when the bids are exhausted
There are four packages:
Package A: Consisting solely of TV rights for the Indian subcontinent only and has been valued at INR 49 crore / approx. $6.3 million per match
Package B: Catering to digital rights only and exclusively for the Indian subcontinent. It has been pegged at INR 33 crore / approx.$4.2 million per match
Package C contains digital rights for a special bouquet of matches, including the playoffs, for the Indian subcontinent only and valued at INR 11 crore / approx. $1.4 million per match
Package D, which comprises rights for the Rest of the World for both TV and digital, is divided into two sub-categories: combined ROW or five individual regions at a combined value of INR 3 crore / approx. $385k per match
The base value is calculated on the basis of 74 matches per year which makes the total base price to be INR 32,890 crore / approx. $4.2 billion for the entire 5 year period
Interesting thing to note here is that the number of matches might change from the third year onwards
Which takes the total to 410 matches and going by the base value calculations, it could very well be revised to INR 36,446 crore / approx. $4.66 billion giving a windfall of approx. $922 million per year to BCCI.
If the analysts are to be believed, it might well extend to more than $1 billion per year. That could be a massive 120% jump!
We all know there are four big broadcasting names (given to understand Amazon pulled out of the race) in the fray and jury’s out on who will bag the rights.
Disney Star
Viacom-Reliance
Sony
Zee
All of them have very deep pockets and each will go all out to win. We probably will come to know about it in a day’s time or so
The Morning After
How will this increased financial windfall change things? Well, I would expect three things to happen. Let’s take this one at a time
Increased payout to teams:
This one will definitely happen. Broadcasting rights and central sponsorships constitute the revenue pool of which 50% is equally shared with the teams. Any increase in this revenue will be proportionately transferred to the teams equally. A very back of the envelope calculations show an increase of roughly 50%-60% to each team. To give a clearer picture, one can expect each IPL team would have earned about INR 200-INR 250 crore / approx. $25m-$30m in 2022. Assuming the rights value is INR 50,000 crore / $6.4 bn over five years, then each team’s share can reach out to approx. $60+m per year, a whopping 100+% jump!
Now of course, this is dependent on various factors. But nevertheless, teams will get to earn a handsome share every year
Increase in Player Salaries:
This should happen ideal but can’t say for now. On a normal year, the purse for player spends for each team is fixed and it has been increasing every year since IPL inception
But in 2023, should a player auction happen, expecting each team’s purse to substantially increase leading to a higher value per player. And in my opinion, their pay should increase. After all, IPL is dependent on the player’s quality, no?
Increase in ad rates
This is a touchy topic :)
With an investment of over $1b per year, broadcasting media will look to get a stronger ROI. Collecting last 5 year’s data from various sources, analyzing the investment versus revenue for Star Sports, it can be seen that revenues weren’t even near break-even till the fourth year.
Not that it matters for a deep-pocketed media giant, but it matters definitely for the advertising brands. There has been a consistent increase in 10-sec ad rates over the last 5 years
It will be expected that rates will further increase in 2023 and onwards. Given that 2022 viewership was down by approx. 30%, will that be a concern for the brands? I would expect so.
It’s much more complicated than mentioned here. What if two or three separate entities win each of the packages. Then the advertiser will have to choose the right media and cost will vary accordingly. If a single entity wins all the packages, then it could be a bundle based offer
Both Media & advertisers would have to jointly work out a suitable and sustainable approach
The Next Level
Business or otherwise, we can expect a whole new level of IPL from 2023 onwards. Innovations in both broadcasting as well as presentation, digital, fan engagements, everything possible to get the viewing excitement back. Especially, after 2022
Looking forward to it!
PS: The second day for auction has begun. End of first day saw the rights packages A & B gallop crossing INR 40,000 crore / $840 mn mark for 5 years.
Now it’s reported that bidding for packages A & B are over and they have been bought by separate entities. Winner of Package A can still bid for Package B. Lots more action expected…
Here’s an interesting bit of info. On considering per match rights value, IPL is way up and only behind NFL so far.
Hope this gets the tone for the week! Have a great one and see you soon!