IPL teams commanding higher valuations than global football counterparts

Right from traditional companies (DLF, Pepsi), modern day smartphone (Vivo) players and gaming fantasy companies (Dream 11) to large Indian conglomerates (TATA group), the IPL Title has had a varied sponsorship run. Clearly, IPL's muscle in the Indian sports ecosystem and its ability to generate viewership/revenues are peerless, the report said.

Revenue CAGRs of Manchester United (MANU), Juventus and Borussia Dortmund have been at 1.1 per cent, 4.7 per cent and 4.0 per cent, in the past seven years, with a TTM price-to-sales of 2.4x, 1.7x and 1.1x, respectively. Conversely, IPL teams' revenue CAGR has been more than 10 per cent in the past seven years, commanding a much higher valuation than football counterparts, mainly due to higher revenue growth and stellar viewership, Elara Securities said in a report.

IPL's title sponsorship is currently held by the Tata Group and has posted a 19.3 per cent CAGR in the past 15 years to reach Rs 5.62 bn per year. Historically, IPL sponsors have been companies from different verticals, bidding for the much-coveted sporting league. Right from traditional companies (DLF, Pepsi), modern day smartphone (Vivo) players and gaming fantasy companies (Dream 11) to large Indian conglomerates (TATA group), the IPL Title has had a varied sponsorship run. Clearly, IPL's muscle in the Indian sports ecosystem and its ability to generate viewership/revenues are peerless, the report said.

Advertisement

Mumbai Indians, Royal Challengers Bangalore and Sunrisers Hyderabad posted revenue CAGRs within 11-14 per cent in the past seven years, much higher than global peers. Such revenues should grow further due to value increment in media rights. As per an analysis of revenue/operating expense break-down of Mumbai Indians, Chennai Super Kings and Royal Challengers Bangalore, media rights revenue comprises a huge chunk of overall revenues and plus 40 per cent of the operating expenses emanate from team players/staff remuneration.

Also read | WATCH | Rashid Khan plays the 'helicopter' with a golf club in UAE; video goes viral

IPL media rights' revenue growth is much higher than other global leagues

On pricing, IPL per match is poised at a 70 per cent discount to global averages, which may converge to 20-30 per cent, led by IPL renewal in 2023-2027. Also, IPL media rights revenue CAGR at 10.4 per cent is much higher than other global leagues' (EPL, NFL, NBA) 8 per cent CAGR since their inception, Elara Securities said in a report.

Advertisement

Thus, cricket, especially IPL, is approximating a trailblazer innings in India, Elara Securities said in a report.

The Global Sports industry has emerged as a mega-growth opportunity, with US sports' media rights revenue CAGR at 8.2 per cent through CY12-21, accounting 45.2 per cent of 2021 global media rights revenue.

Advertisement

Of this impressive pie, soccer commands a lion's share of 39 per cent.

However, of all the sports, cricket rules the Indian market, with a stupendous 94 per cent share in media rights vis-a-vis a mere 3 per cent, globally.

Advertisement

Cricket may continue to enjoy such sheer dominance in India, medium term, propped by large-lucrative properties such as IPL. Thus, expect IPL renewal to underpin media rights growth in India, medium term.

Also read | World Test Championship final likely to be played at Lord's in 2023

Advertisement

The report said digital segment, is the big delta for IPL. IPL teams' (average of four teams) revenue CAGR is 14 per cent historically.

Expect a 16 per cent CAGR through FY22-28E. Further, media rights revenue forms 70 per cent of total revenues and should sharply spike on rights renewal. Media rights in earlier cycle (2008-17) had grown 4x to Rs 163.47 billion (2018-22).

Advertisement

Expect IPL media rights for the next cycle (2023E-2028E) to grow in 3-4x range (25 per cent growth due to more matches) to Rs 500-600 billion, led by the sharpest growth in digital media, the report said.

Advertisement