Cricket’s golden goose: IPL and franchise valuation spike

IPL's valuation has surged to a staggering $16.4 billion in 2024, reflecting a healthy 6.5% increase year-over-year.

A new report by Houlihan Lokey confirms the Indian Premier League’s (IPL) phenomenal growth trajectory.

The cricket league’s valuation has surged to a staggering $16.4 billion in 2024, reflecting a healthy 6.5% increase year-over-year.

Several key factors fuel this impressive surge:

Lucrative Sponsorship Deals: The IPL continues to attract big-money sponsors. The Tata Group secured the title rights for a further five years, shelling out a significant US$300 million (INR 2,500 crores), a nearly 50% increase compared to the previous deal.

Thriving Ad Market: The IPL has become a haven for advertisers, with T20 matches featuring a strategic placement of 80-100 ad slots during breaks and crucial moments. Similar to the Super Bowl, the IPL is a prime platform for brands to launch new campaigns, attracting a diverse range of advertisers like fantasy sports apps, FMCG companies, FinTech firms, and more.

Rising Franchise Revenue: Franchise revenue has witnessed a steady climb, primarily driven by lucrative television rights deals. Additionally, each team enjoys sponsorship revenue ranging from US$5.0 million to US$12.0 million.

Harsh Talikoti, Senior Vice President, Corporate Valuation Advisory Services at Houlihan Lokey, said, “The IPL has solidified its status as a premier sports league on the global stage, showcasing an exceptional blend of sportsmanship, entertainment, and commercial success. The league’s growth is not just in numbers but also in its innovative approach to engaging fans and leveraging digital platforms. This year’s increase in value underscores the IPL’s strategic initiatives and its robust fan base.

“The eight legacy teams that have been a part of the IPL for a long time are now able to reap substantial profits from both the central pool’s income distribution and their own franchisee revenues from sponsorships, gate receipts, and merchandise sales. For the same reason, private equity investments have become increasingly prevalent in the IPL ecosystem in the recent years with CVC Capital and Redbird Capital acquiring stakes in IPL franchisees.”

The report also dives into the brand value of each IPL franchise:

Chennai Super Kings (CSK): CSK remain the most valuable franchise with a brand value of US$231.0 million, despite missing the 2024 playoffs. Their consistent performance over the years, including 12 playoff appearances and five titles, coupled with the enduring popularity of MS Dhoni, contributes to their top ranking.

Royal Challengers Bengaluru (RCB): Ranked second with US$227.0 million, RCB boast a passionate fanbase and a strong team identity. Virat Kohli‘s presence further strengthens their brand. Their impressive turnaround in IPL 2024, rising from last place to a playoff berth, solidified their position as a top-watched franchise.

Kolkata Knight Riders (KKR): The 2024 champions, KKR, secured the third spot with a brand value of US$216.0 million. Their strong brand association with owner Shah Rukh Khan and star players like Shreyas Iyer, Andre Russell, Sunil Narine, and Rinku Singh plays a significant role in their brand value.

Mumbai Indians (MI): Following closely behind at fourth place is MI, with a brand value of US$204.0 million. The return of Hardik Pandya as captain has solidified their status as one of the most evolving franchisees in IPL history, paving a path to player trades.

Rajasthan Royals (RR): RR’s focus on identifying and nurturing young Indian talent like Yashasvi Jaiswal, Dhruv Jurel, and Riyan Parag, along with established players, Sanju Samson, Yuzvendra Chahal and Ravichandran Ashwin, has paid off. Consistent performances and sponsor renewals have propelled them to the fifth position with a brand value of US$133.0 million.

Mr. Manoj Badale, Lead Owner of Rajasthan Royals, speaking to Houlihan Lokey, said, “The IPL as a product has always been highly investible. Having been inspired by U.S. sports leagues, and particularly the model of the NFL, the IPL was always going to attract institutional investors. A closed league (no relegation) offers long-term security, a ‘hard’ salary cap ensures a level playing field and competitive parity, and an equitable commercial model—in which central income is split equally among franchises—secures contractual revenue for franchises.”

Sunrisers Hyderabad (SRH): Ranked sixth with a brand value of US$132.0 million, SRH’s strategic auction acquisitions and development of a new squad under Pat Cummins‘ leadership contributed to their strong performance.

The Remaining Teams: The return of their star player and captain, Rishabh Pant, bolstered Delhi Capitals‘ (DC) brand value. The team secured the seventh position with a valuation of US$131.0 million. Conversely, Gujarat Titans (GT) suffered a setback. The loss of their captain and injuries to key players, including Mohammed Shami, hampered their performance under Shubman Gill‘s leadership. Consequently, the Titans fell to eighth place with a brand value of US$124.00 million. Rounding out the lower rankings are Punjab Kings (PBKS) at US$101.0 million and Lucknow Super Giants (LSG) at US$91.0 million.

The IPL has established itself as a powerhouse in the sporting world, boasting immense commercial value. Its ever-increasing valuation is a testament to its popularity, strategic marketing, and robust advertising ecosystem. With a growing fanbase and a commitment to innovation, the IPL is poised for continued success in the years to come.

Houlihan Lokey, Inc. is a leading global investment bank with a proven track record in mergers and acquisitions, capital markets, financial restructuring, and financial and valuation advisory services. The entity caters to corporations, institutions, and governments worldwide, with offices strategically located across the Americas, Europe, the Middle East, and the Asia-Pacific region.

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