September 18, 2020

Economics of IPL and this 13th season

After being postponed by the BCCI due to Covid-19 the 13th season of IPL is beginning on 19th of this month, the first match being played between the former champion Chennai Super Kings and Mumbai Indians in Dubai. The Indian sub-continent alone constitutes more than 90 percent of over a billion fans globally the cricket has, reports the market research conducted by the International Cricket Council (ICC).To target and engage this large and passionate viewer base , the BCCI launched the Indian Premier League (IPL) in 2008. Within few years after its inception, it became the most lucrative annual sporting event of BCCI. BCCI has earned around Rs 12,000 crore from this popular league till date.
Contribution to Indian Economy: As reported by Financial Express “the data provided by BCCI, the Indian Premier League (IPL) contributed Rs 11.5 billion ($182 million) to India’s Gross Domestic Product (GDP) in 2015(0.1% of the total GDP that year). In that season, a total of 60 matches were played between 8 franchises over 44 days in 13 host venues in 12 cities across the country. The data was compiled by KPMG Sports Advisory Group through an economic survey which revealed that the economic output associated with IPL in India stood at Rs 26.5 billion ($418 million)”. “In 2014, when the first 20 matches of the season were played in UAE due to the general elections in India, the Indian Premier League had contributed a whopping Dhs275 million boost to the UAE economy, another research by KPMG had revealed. Another country that benefitted from a similar move was South Africa in 2009. Back then, a total of 22,000 rooms were booked in the country with Southern Sun Hotels, 10,000 domestic flight bookings were made and millions were spent on ticket, food and beverage, transport and merchandise sales. Add to this, the tourism that South Africa got and we are looking at a staggering figure.” “Earlier, BCCI would get a tax exemption since it was considered a charitable organisation. However, after IPL began, the I-T department has changed its tune, saying IPL is a commercial activity. In the last ten years, the BCCI Has paid tax to the tune of Rs 3,500 crore, or almost Rs 350 crore a year”, reported The Times of India. IPL also provides temporary and permanent employment to thousands of skilled coaches, managers, physiotherapists, umpires, commentators, match referees, analysts , grounds men etc every year. Hundreds of transport tickets and thousands of hotel rooms are booked. The fast food market also gets boomed.
Value of IPL from 2014 to 2019(in billion U.S. dollars):

As can be clearly seen from the above chat the value of IPL increased from 3.2 $ billion in 2014 to 6.8 $ billion in 2019.
This season; Covid-19: In 2016, IPL as a whole, generated nearly 160 crore rupees through just ticket sales. As this year’s IPL is set to be played without spectators this whole revenue will not be there. The spectators other expenses will not also add up e.g. the hotel expenses, the food expenses. Estimating this amount in 2016s IPL if every ticket bought was priced on an average 1000 rupees , the total tickets would have been 16 lakhs. On an average if these, the hotel expenses and the food expenses per person would be only 1000 rupees the another 160 crores got lost .The inflation from 2016 will add also an amount to this season. Concluding almost revenue of 400 to 500 crores will get lost by Covid-19 in this seasons IPL.
Vivo’s exit as title sponsor: Chinese Smartphone maker Vivo Communication Technology Co’s Indian arm Vivo India withdrew as title sponsors of IPL due to facing backlash after Galwan clashes between Indian and China. Vivo acquired the IPL title sponsorship for Rs 2,199 crore in a five-year deal in 2017. Calculating, the company was paying the BCCI Rs 439.80 crore annually. Dream11 has been awarded the title sponsorship for Rs 222 crore, which means that the BCCI would be getting Rs 217.80 crore less from the IPL’s title sponsorship this year.
( The author is presently pursuing Masters in Financial Economics at Madras School of Economics, Chennai, Tamil Nadu. Views are his own) [email protected]

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