IPL 2022 new teams: Explaining the math and numbers behind ₹5000-7000 Crore deals for new IPL teams
The Board of Control for Cricket in India (BCCI) is expected to announce the two new IPL teams and their owners a little later today [October 25th, 2021], with the prospective bidders having arrived at the Taj Hotel in Dubai.
Social media has been abuzz with the figures floating around in the air, with some reports claiming that the ownership could be worth anything close to ₹5000 Cr for the period of 10 years, while others have it penciled down to around ₹3500-4000 Crore.
One thing is for sure though, that the two teams will represent Lucknow and Ahmedabad, with both cities capable of hosting a capacity of approximately 75,000 and 1,10,000 fans respectively.
Big industrialists such as Sanjeev Goenka (RPSG Group) and the Adani Group are in the fray to purchase the new teams, apart from Manchester United's owners - The Glazers Family.
"We have 9-10 genuine bidders who are looking to be one of the two owners. The BCCI wants to have an international bidder in terms of an optic perspective. We expect the new teams to go at around 3800-4000 Crores, and anything more than that or close to 5000 Crore will be a massive loss for the owners," said a source in the BCCI.
Now with the figures in a range, here's a breakdown of how the whole system works between the BCCI and the franchises -
What is the expected sum money for a new IPL team?
It is understood that the new franchises will be purchased for a sum of anywhere close to ₹3500 Crore and that could even go up to ₹5000 Crore - and the sum bid will be to own the team for a period of 10 years.
How does the math work for the two new teams in IPL 2022?
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1] Revenue drawn by each of the 2 new teams in IPL 2022
Point A - Media fee from the BCCI per year [Approx ₹400 Cr]
The media rights valuation is expected to be around ₹40,000 Crore across all the 10 teams.
₹40,000 Crore for 10 years = ₹4000 Crore per team for 10 years = ₹400 Crore per team per year.
Point B - Sponsorships attracted by the team per year [Approx ₹35-50 Cr]
For a new team coming into the IPL, sponsorships might not be as high as a team that is already established - for example the Chennai Super Kings (CSK)/ Mumbai Indians (MI)/ Royal Challengers Bangalore (RCB).
Since the franchises from Lucknow or Ahmedabad will be joining as new teams, they might receive around ₹35-40 Crore per year. For simplicity's sake, consider it as ₹50 Crore.
Point C - Gate receipts per year [₹25 - 30 Cr]
Lucknow can host around 70,000 people and the Ahmedabad stadium can fit 1,10,000 fans. And with 9 home games set to be played this season after the addition of two new IPL teams, the gate receipts could be around ₹30 Crore a year.
A + B + C = ₹460 - 480 Crore earned per year.
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2] Expenditure of each of the new teams in IPL 2022
Point A - Money shelled out to buy players in the auction [₹ 85 Crore]
Franchises will need to pay ₹85 Crore to purchase players in the IPL 2022 auction.
Point B - Team maintanence fee [₹40-45 Crore]
While this seems a large number at first look, this is the expected figure for teams to manage all logistics including hotel stay, flight tickets etc, apart from paying the CEO, staff and other members.
Point C - Franchise fee of ₹400 Crore a year [If bid made for owning the team is ₹4000 Crore in the auction]
Each franchise has to pay a sum of ₹4000 Crore to the BCCI for the 10-year period, which is ₹400 Crore per year.
A + B + C = ₹525 Crore per year
What does all of this mean for the new owners of IPL 2022 teams?
Before we get to that, the numbers mentioned above are only a rough estimate of the funds received and spent, but there isn't a massive shift from the real amount.
The BCCI has set the base price at ₹2000 Crore to buy a team, which means none of the IPL owners can pay a rupee lesser to even show interest in ownership.
Getting back to the numbers,
Revenue - ₹460-480 Crore
Expenditure - ₹500-525 Crore
As it seems, the owners could be in for a loss of around ₹40-50 Crore per year even if they put up a bid of close to ₹4000 Crore for a single team.
While adding an 'ego bid' of around ₹1000 Crore to raise it up to ₹5000 Crore would seem a large sum of money, it would only lead to massive losses to the tune of ₹100 Crore per year.
Putting the math and all the numbers into one sentence -
Bidding upwards of ₹4000 Crore for a team would be detrimental in a financial sence, but in the end, this is the IPL we are talking about.