The Indian Premier League is the most lucrative cricket league in the world. The various franchise teams along with the whole management of the IPL is very grand. The 9th season of the IPL would be soon starting this summer and there are already two new teams in the tournament which have replaced Chennai Super Kings and Rajasthan Royals. The revenue distribution system of the IPL needs to be understood in order to get a clear picture. The initial model was prepared 9 years back and is still followed with some minor changes.
IPL Revenue Distribution: The Indian Premier League is handled by the BCCI which takes care of this tournament’s functioning. In January 2008, the BCCI sold 8 franchises for a total amount of $723.59 million. This franchise deal was sealed for a period of 10 years. But since 2008, there have been several teams which have quit or have been suspended. The main revenue source for the BCCI from the IPL every year is the annual supply of 10% from the total price by every franchise. At present, there are eight teams in the IPL. After the suspension of Chennai Super Kings and Rajasthan Royals, two new teams Gujarat Lions and Rising Pune Supergiants have been included.
IPL Revenue Distribution:
| Teams | Money | Owner |
| Mumbai Indians | $111m | Mukesh Ambani of Reliance Industries |
| Royal Challengers Bangalore | $111m | Vijay Mallya of UP Group |
| Deccan Chargers | $107m | Deccan Chronical Group |
| Chennai Super Kings (Suspended) | $91m | N Srinivasan of India Cement |
| Delhi Daredevils | $84m | GMR Group |
| Kings XI Punjab | $76m | Ness Wadia |
| Kolkata Knight Riders | $75m | Shahrukh Khan and Juhi Chawla of Red Chilli Ent |
| Rajasthan Royals (Suspended) | $67m | Emerging Media |
| Gujarat Lions (new) | Intex | |
| Rising Pune Supergiants (new) | Sanjeev Goenka of New Rising |
Here the Details How IPL and Franchise Make Money?
There are other major sources through which the IPL makes money. The Media rights and sponsorship are included in this segment. The governing body of the IPL and the franchise both make income from these two sources.
TV/Media Rights: Money generated from TV/media rights is distributed into two parts. One is the IPL share and the other, Franchise Share.
A) IPL Share: IPL will receive only 20% of the media rights money in the first 2 years of IPL but this share would reach to 40% by the 5th year.
B) Franchise Share: 80% of total media rights money in the first 2 years that will be divided equally among all teams. But this share would be reduced to 60% from 5th year onwards.
Sponsorship distribution: The sponsorship contracts with the IPL also help in generating a lot of revenue. In the first few seasons, 60% was offered to franchise teams whereas the IPL got 40% share. But since the start of the 7th season, the percentage has been balanced to 50/50.
Ticket and Hospitality Revenue: All the teams in the IPL are offered the control to manage the hospitality along with ticket revenue by 80%. The remaining 20% is offered to the IPL governing the body.
Team Expenses:
- A Franchise has to pay 10% fee to IPL every year.
- Player Costs: $4-6 USD Million every year including manager and coaches costs. Each Team has 18-22 player every year with the 3-year contract.
- $3-4 USD million for promoting the team.
- Stadium Expenses: Franchise has to pay Stadium feed as per BCCI rates. They have to pay the Avergae 2.5 million rupees for a match.
- Other expenses: Administration and event management.
