The Economics of IPL

Historically, India has been the epicenter of cricket. Constituting more than 90% of all cricket fans, the Indian sub-continent is inundated with cricket fanatics. Replica cricket jerseys and cricket souvenirs form one of the strongest street businesses. India and cricket have had a linearly developing relationship: the viewer base continues to get stronger and more passionate with every passing day. Every child in the average Indian household dreams of becoming a cricket player and such dreams were fulfilled by Board of Control for Cricket India through the introduction of the Indian Premier League. By capitalizing on their on the growing demand for televised cricket, the BCCI initiated a domestic cricket league. Soon after its inception in 2008, IPL became the primary source of income for the BCCI.

A macro study revealed that IPL contributes significantly to India’s GDP. The league’s remarkable impact on the tourism industry has also been highlighted by several firms. During the IPL season, a swarm of international visitors enter India to be involved with the competition. Prominent cricketers from cricket loving nations travel to India to play for different clubs. As a result, fans also migrate to the sub-continent to see their favorite players. Prior to the formation of IPL, the revenue generated by Sports Tourism was negligible. However, the introduction of such a league not only increased employment but also supported the emergence of Sports Tourism in India. An event as large as the IPL requires an equally large organizing committee. The huge demand for staff members promotes a vast number of employment opportunities across various sectors.

In India, metropolises have always been at the heart of media’s attention. Barely any recognition is given to Tier-2 cities. Thus, Tier-2 cities often remain underdeveloped due to lack of incentive. As cricket grounds in India are scattered across many cities, a number of Tier-2 cities were incentivized to carry out infrastructural development. Contemporaneously, these cities saw a rise in tourist related activities which generated even greater revenues for the cities.

A large chunk of the IPL’s revenue is deposited into the BCCI’s wallet. According to basic economics, a larger income results in larger tax contributions. The government revenue obtained from BCCI has been substantial and shows no sign of decreasing in the following year. According to statistics, the BCCI has paid around Rs 3,500 crore as tax since 2008. The Tax Department has declared IPL as a commercial activity and has received Rs 350 as tax, annually.

IPL is known for its lucrative sponsorship deals. The league generates immense wealth through sponsorship, ticket sales, advertisement, and broadcasting rights. Star India bought IPL’s broadcasting and digital rights for $2.55 billion, with a $50 million annual fee. Each game has a cost of $8.5 million. Though this deal may sound obscene at first, the large viewership makes up the costs for Star India. Besides the viewership, the company is able to accumulate decent profits through its advertisement contracts. T20 has become the most popular format of cricket. Other formats like one day and test matches aren’t convenient to watch for the average working man in India. However, with most of the matches being broadcasted after the conventional working hours, IPL is comfortably viewed by millions of people.

Since its inception, IPL has been strongly connected with breweries. The majority of the viewers fall in the category of the middle class with high disposable income, and of the legal drinking age. Thus, alcohols are heavily advertised during the IPL. Any sport remains incomplete without die-hard fans.

In recent years, Dream 11 has become the primary sponsor for IPL because Vivo backed out due to Indo-Chinese tensions. New official partners like Cred, Unacademy and Tata motors pooled in a total of Rs 1.2 billion for the tournament. Other key players like Jio continue to contribute huge sums of money to the franchise. After all the money has been collected, the BCCI distributes the money among all teams.

Another major source of income is the sale of tickets. Each team is entitled to a minimum of 7 home matches. The team owners decide the ticket prices. A small fraction of the revenue generated by tickets is offered to the sponsors and the BCCI, while the remaining money goes straight into the pockets of the team. IPL has witnessed growing offline viewership in recent years. As ticket prices have become more affordable, the number of viewers has significantly increased.

To sum it all up, the Indian Premier League helps BCCI to put a structure in place for the development of Indian Cricket and its cricketers along with a smooth conduct of its operations in the coming future. IPL also has an impact on the Indian economy as it produces numerous employment opportunities, from gatekeeper to the player on the field and is the biggest sports event in India.

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