IPL - India's Virtual Casino

In India, the IPL has become one of the most popular event of the year. The Indian Premier League, is a Twenty20 cricket competition initiated by the Board of Control for Cricket in India (BCCI) and supervised by BCCI Vice President Lalit Modi, Chairman & Commissioner for IPL. It presently includes 10 teams "franchises" consisting of players from different countries. IPL also drew positive reactions from the rest of the world also. Also, there was a huge following for Kolkata Knight Riders. The matches also generated interest in Sri Lanka and Bangladesh.

It’s very interesting to know following things about IPL
1) What is its business model?
2) Will this business model sustain?


Business model:

The business model is a description which says who will earn what, how and when. Let us have a brief look at from where the money is coming from and where it is going.

The money comes from the four major sources.
• Media Rights
• Central Revenues
• Money raised by Franchises
• Franchise bid money

Then the total revenues is distributed in the following pattern
• Out of the media rights, 20% goes to BCCI, 72% goes to Franchises and remaining 8% goes to Players
• Out of the central revenues, 40% goes to BCCI, 54% goes to Franchises and remaining 6% goes to Players
• Out of the money raised by franchises, 20% goes to BCCI and 80% goes to Franchises.
• The total of the franchise bid money goes to BCCI

Risk-Return Portfolio

Can IPL Sustain its Boom:

IPL has been a spectacularly successful start-up, but it now has to manage growth in its years of maturity. The IPL business model will be tested once again. The entry of two new teams will increase the number of games every season from 60 to 94, which means that unless the league is split into divisions the number of teams cannot be increased further. A huge increase in the number of teams will dilute the capital value of existing franchises as well, so their existing owners too are unlikely to be happy about too many new teams in the league.

It is likely that IPL may not keep getting new viewers, but existing viewers may be spread across more matches. Since broadcasting revenues are so critical to profitability, this is a risk the IPL management will have to think on.
Lalit Modi predicts that the IPL will become bigger than America’s two most prominent sporting bodies, the National Football League (NFL) and the National Basketball Association (NBA), and soccer’s English Premier League (EPL).
Currently the IPL has shown that its recession proof but to know its future we need to wait and watch.