IPL brand value rises 80% to $3 bn

Mumbai The stand-alone brand value of the IPL is now $3.2 billion, up by 80 per cent from $1.8 billion in 2022. The business enterprise value of the IPL stands at $15.4 billion, up 80 per cent from $8.5 billion in 2022, mainly due to the impact of the 2023–2027 media rights deal with Viacom18 and Disney Star after a fiercely contested auction, says a report by Houlihan Lokey, the global investment bank.

The IPL’s media rights have grown at a phenomenal CAGR of 18 per cent from 2008 to 2023, while the growth in absolute terms between the 2017 and 2023 cycles is 196 per cent. When the IPL’s broadcasting fee is compared with other professional leagues in the world on a per-match basis, the IPL fares well above the likes of the National Basketball Association (NBA), the English Premier League (EPL) and the Bundesliga and are second only to the National Football League (NFL).

Talking to Bizz Buzz, N Chandramouli, CEO, Brand Trust Report, says, “IPL has become the world’s second most valuable league and while this growth is likely to continue for the next few years, it will plateau, unless newer audiences are added.”

This is, however, not an easy task as each nation has a favourite sport, which is difficult to break into. A comparable example of this is rugby in India, he said. With a brand value of $212 million, growing year-on-year at 45.2 per cent, Chennai Super Kings is ranked No 1 in both brand ranking and business enterprise value ranking. Royal Challengers Bangalore ranks second in terms of brand value at $195 million. Rajasthan Royals saw the highest incremental brand value rise in percentage terms year-on-year of 103 per cent.

“Created on the American style of franchise-based systems of hiring players, the IPL has established itself as a hugely lucrative sports league, along similar lines as the NFL and the NBA,” commented Harsh Talikoti, Senior Vice President, Corporate Valuation Advisory Services at Houlihan Lokey.

Meanwhile, a report by Kotak says that IPL 2023 saw record viewership on TV/Digital platforms. Yet, overall ad revenue declined 15 per cent (TV down 35-40 per cent, Digital up 75-80 per cent), largely due to a decline in A&P spending by new-age companies, TV: Digital ad revenue share shifted to 55:45 from 80:20 in IPL 2022, monetization was much weaker (especially for TV) than what was envisaged at the time of the IPL media rights auction. Star/Jio would likely incur an EBITDA loss of Rs18-20/30-33 bn. Sun’s IPL team’s EBITDA would treble to about Rs2.7 bn. The weaker-than-estimated monetization and an accelerated TV-to-Digital shift of ad spends in IPL 2023 are negative for Zee, which holds TV rights for ICC events.

IPL 2023 saw a surge in viewership and set new viewership records. JioCinema registered 32 mn concurrent viewers in the finals (previous high was Hotstar’s 25.3 mn during the ICC 2019 WC semi-final). Further, it clocked 15 bn+ views and 120 mn+ unique viewers this season. Disney Star witnessed 496 mn viewers, 40.9 bn minutes of TV consumption, and about 60.1 mn concurrent TV viewers until the finals. It reported 44% yoy growth in viewership for playoffs, surpassing the 2020 peak.

IPL ad revenues (TV + digital) declined by about 15 per cent yoy to Rs36 bn from Rs42 bn, primarily due to a sharp decline in ad spends from new-age companies, Disney Star collected TV ad revenues of Rs20 bn (down 40 per cent yoy), whereas JioCinema garnered digital ad revenues of Rs16 bn (up 75 per cent versus Hotstar IPL 2022). Digital ad revenue share was 55:45 in IPL 2023 versus 80:20 in IPL 2022, indicating an accelerated TV-to-digital ad revenue shift. On the subscription front, JioCinema’s free subscription model weighed on Disney Star’s monetization.

Media rights for IPL seasons 2023-27 fetched Rs483.9 bn, 3X that of IPL 2018-22 (5-yr CAGR of 24.2 per cent (overall) and 16.7 per cent on a per-match basis). Monetization expectation at the time of the auction was based on IPL’s ad yields, pricing power and overwhelming advertising by new-age companies (contributed 35-40 per cent to IPL ad revenues). The sharp cut in ad spend by new-age companies has impacted Star/Jio’s monetization. As per our back-of-the-envelope calculation, Star/Jio would likely incur an EBITDA loss of Rs18-20/30-33 bn (IPL 2023).

Sun’s IPL team to report revenues of Rs4.75-5 bn (versus FY2022/23 average Rs2.75 bn). Given the player fee cap of Rs900-950 mn and unchanged franchise fees (20% of revenues), EBITDA would treble to Rs2.7 bn (versus the FY2022/23 average of Rs900 mn). Read through for Zee: A sharp and shocking decline in TV ad revenues in IPL 2023 does not augur well for Zee (which holds TV rights for ICC events; expect sports losses to drag earnings starting FY2025).