IPL TV Rights Sold For Rs 23,575 Crore, Digital Rights For Rs 20,500 Crore. Is It A Winner's Curse For Broadcasters?
IPL Media Rights Auction: The media rights for 2023-2027 have been sold for a whopping Rs 44,075 crore for 410 matches on Monday
Mumbai: Disney Star is learned to have won the coveted IPL Indian sub-continent televison (TV) media rights for the Indian Premier League (IPL) for a whopping Rs 23,575 crore, while Viacom18 grabbed the digital rights with a bid of Rs 20,500 crore at the media rights auction on Monday.
The media rights for 2023-2027 have been sold for a whopping Rs 44,075 crore for 410 matches on Monday, a premium of 170 per cent or 2.7 times the winning bid of Rs 16,347.50 crore for both TV and digital by Star India in September 2017.
Previously, Sony Pictures Network paid Rs 8,200 crore for the IPL TV media rights for a 10-year term at the tournament's debut.
According to the most recent information, Package A of TV is sold at Rs 57.5 crore per match and Package B of Digital Rights for India is sold at Rs 50 crore per match, with a total value of Rs 107.5 crore, putting the IPL in the top tier of all sports in terms of per-match value, alongside the NFL and the English Premier League. (Refer to the chart below)*
NBA – Highest brand valuation in global leagues
League name Country Brand valuation ($ bn)
National Football League US 13
Major League Baseball US 10
National Basketball Association US 7.4
Indian Premier League India 6.3
English Premier League UK 5.3
National Hockey League US 4.43
*Source: Elara Securities Research
Sony is believed to have paid a premium of 30 per cent over the reserve price as TV medium is largely matured and subject to tepid mid to high single-digit ad growth while Viacom has paid a premium of 70 per cent over the reserve price given it enhances users on any platform and also enables cross-selling of other content and the digital segment has potential to grow at over 30 per cent helped by increased penetration and consumption trends.
However, there is no official confirmation on the winners of Package A and Package B, respectively. Aside from packages A and B, which are television and digital groupings for the Indian broadcast region, there are two other packages in contention: Package C, which has 18-game non-exclusive special matches (base price of Rs 11 crore), and package D, which has rest of the world rights (base price of Rs 3 crore). Both the packages are currently under bidding.
IPL Rights – Winner's Curse For Broadcasters?
A large-ticket property like IPL is critical for any broadcaster's digital strategy. For example, IPL accounted for one-third of Star's income (TV+Digital), confirming its significance. If Star was to get IPL rights, its revenue contribution was likely to increase to 40 per cent as digital growth accelerates. According to estimations, the IPL accounts for 70 per cent of Star India's AVOD revenue, with SVOD revenue following suit.
According to Elara Securities, IPL will result in a significant increase in various metrics for any OTT platform, such as monthly active users (MAU)/daily active users (DAU).
"As IPL content costs a substantial premium (Rs 10,000 crore per year), any broadcaster with such rights may not be able to break even until the fourth year (of the five-year cycle), given the TV segment's limited growth prospects. Nonetheless, IPL's FY18-28E TV/digital viewership CAGR is expected to be 1 per cent/ 14 per cent, respectively. TV gross profit margin will peak at 12 per cent in the fifth year whereas digital gross margin will breach 35 per cent in the fifth year," Karan Taurani, an analyst at Elara Securities told ABP LIVE.
Turani believes that for TV, concerns persist on the subs revenue front which will keep ARPUs under check due to regulatory headwinds while for digital, the premium is a tad lower than our estimate, as many tech giants did not end up bidding for the same and backed out.
On an overall basis, the valuation of the rights at over Rs 44,000 crore is likely to go up to Rs 50,000 crore once the bidding for Package C and Package D for cluster rights and overseas package ends on Tuesday.
On the above basis, TV rights have moved up 2x as compared to the earlier cycle, backed by 40 per cent more number matches and inflationary trends in pricing. Digital rights on the other hand may breach 5.5x (including non-exclusive cluster) versus earlier cycle backed by better viewership growth and penetration opportunity.
The IPL revenue for teams is estimated to grow 2x towards Rs 650-750 crore helped by a jump in media rights and an increased number of matches. PBT margins too are likely to move towards a range of 30-40 per cent, from the current PBT margin of 15-25 per cent, which is likely to impact team valuation positively, and May breach towards Rs 8,000-10,000 crore mark. (Refer to the chart below)*
IPL Team Valuations: Mumbai Indians are most valued
Team ($mn) Valuation Revenue
Mumbai Indians 1,320 33
Chennai Super Kings 1,173 41.2
Kolkata Knight Riders 1,120 41.2
Lucknow Super Giants 945 N/A
Delhi Capitals 1,053 35.4
Royal Challengers Bangalore 1,040 36.4
Rajasthan Royals 1,013 31.7
SunRisers Hyderabad 987 31.8
Punjab Kings 933 31.2
Gujarat Titans 747 N/A
*Source: Forbes Report on IPL
In terms of market cap, the biggest delta market cap is for SUN TV which as the team will contribute almost 40 per cent of market cap post new valuation, whereas, for United Spirits, it will be 18 per cent of market cap contribution; for RIL it will be as low as 0.7 per cent.
The IPL Math
IPL Revenue (100%)
BCCI (50%) Divided between all teams (40%) Divided between top four teams (10%)
Lucknow franchise fetched the highest in bids
Team Amount ($mn) Year Owner
Mumbai Indians 112 2008 Reliance Industries
Royal Challengers Bangalore 112 2008 United Spirits
Deccan Chargers 107 2008 Deccan Chronicles
Chennai Super Kings 91 2008 India Cements
Delhi Capitals 84 2008 GMR & JSW Group
Punjab Kings 76 2008 Mohit Burman, Ness Wadia, PZNZ Media
Kolkata Knight Riders 75 2008 Shah Rukh Khan & Juhi Chawla
Rajasthan Royals 67 2008 Emerging Media Ltd
Pune Warriors India 370 2011 Sahara Group
Kochi Tuskers Kerala 333 2011 Rendezvous Sports World
Sunrisers Hyderabad 72 2013 Sun TV Network
Lucknow Super Giants 945 2021 RP-Sanjiv Goenka Group
Gujarat Titans 749 2021 CVC Capital Partners
*Source: Company data
Note: Deccan Chargers, Pune Warriors India and Kochi Tuskers Kerala were terminated by the BCCI. All the teams were bought for a period of 10 years, except Sunrisers Hyderabad’s five years, which was extended later.
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