How Does IPL Franchises Like CSK Make Money?

The Indian Premier League, the biggest cricket event in the world, is one of the rare businesses in India that will remain untouched by the impact of rising inflation, interest rates, or the global pandemic. The Board Control for Cricket in India (BCCI) collected ₹ 48,390 crores after the IPL auction concluded on December 23, 2022. India’s biggest sporting event saw a three-times increase in its revenue compared to its previous cycle. Disney Hotstar paid ₹ 23,575 crore to retain television broadcasting rights for IPL, while Mukesh Ambani’s Viacom18 grabbed digital and non-exclusive digital broadcasting rights for ₹ 23,750 crore.

Let’s discuss some of the other ways through which IPL franchises earn.

Media Rights

BCCI collects significant revenue by selling media rights to broadcasters and OTT (Over The Top) platforms. A big chunk of revenue that BCCI generates through the IPL is shared with the IPL franchises. The revenue share for highly popular franchises like Chennai Super Kings, Mumbai Indians, and Delhi Capitals is more than other franchises since they hold better earnings potential. As per the prediction of Elara Capitals, Chennai Super Kings’ revenue will increase by 124.9%, while Mumbai Indians' revenue will jump by 109.1%. Listed companies behind different IPL franchises, Reliance Industries, Sun TV Network, and United Spirit, will see a surge in their market capitalisation since their IPL franchise’s value will improve.

Ticket Sales

The global pandemic impacted India’s biggest cricket events in 2020 and 2021. However, the Indian Premier League returned with a bang in 2022 and is ready for the 2023 edition. Stadiums are jam-packed again, and tickets are sold out days before the matches. A small portion of ticket sales is offered to BCCI and sponsors; the rest goes to the franchise’s pocket. The price of IPL tickets is based on the number of seats available in the stadium, the excitement around the event, and the living standard of the host city. Revenue generated through ticket sales accounts for 10% of the overall revenue generated by an IPL franchise.

Merchandising

As per a report by Research and Market, the Indian sports equipment and apparel market value is estimated at $28 billion in 2022 and is expected to reach $40.6 billion by 2027. Each IPL franchise sells merchandise, including jerseys, caps, wrist watches, wristbands, and so on, through association with retail store chains and gets a share of revenue collected through the consumers.

Selling Stake

IPL teams make big returns by selling stakes at the right time. For Instance, Jindal South West purchased 50% of stakes in Delhi Capitals, previously known as Delhi Daredevils, for ₹ 550 crore from GMR group. This way, GMR has doubled its investment in Delhi Capitals within a decade. Additionally, there are rumours that the owners of Rajasthan Royals are also willing to go through the same route and might sell 50% of its stakes.

Sponsorship

IPL teams generate a significant part of their revenue through brand sponsorships. Franchises collaborate with brands to offer them enhanced brand visibility by putting their logo on their jerseys, sports gear, and team kit. The more area a logo covers on the team’s jersey, the more money the brand has to pay to the franchise. Teams also generate revenue from other marketing activities related to the tournament. Sponsorship revenue accounts for around 20-30% of the overall revenue generated by an IPL team.

Brand Value

Brand value adds a lot to the IPL franchise. If a franchise has star players like Mahendra Singh Dhoni, AB de Villiers, Virat Kohli, or Chris Gayle on its team, it has increased chances to attract top brands and investors. When an IPL franchise wins the title or even qualifies for the payoffs, its brand value increases by manifolds. When it comes to brand value, teams who have won the IPL title, including CSK, MI, and KKR, top the table.

Unlisted Shares

However, offering unlisted shares and securities would be new to Indian sports franchises, but many European football franchises offer their pre-IPO stocks. In the Indian scenario, Chennai Super Kings is one such sports franchise whose unlisted shares can be traded. The franchises generate an ample amount of capital through their pre-IPO stocks.

Performance Of CSK Unlisted Shares

Founded in 2007, MS Dhoni-led Chennai Super Kings has won four IPL titles and has the best winning percentage among other IPL franchises. This year, CSK is taking part in the IPL as a status of a unicorn. The brand value of CSK is $73.6 million, and its market value is around ₹ 7,600 crores. With the inclusion of two new teams in the tournament, including Gujarat Titans and Lucknow SuperGiants, CSK share price has risen considerably. Additionally, the acquisition of the Wanderers Johannesburg franchise in the South African League has improved CSK’s valuation and created positive sentiments among investors.

Investing in CSK unlisted shares is a great opportunity for investors since its PE (price-earning) ratio is far better compared to other international sports franchises. In 2018, CSK started its pre-IPO stock journey, and at that time, CSK unlisted share price was ₹ 20 per equity share. Over the last five years, CSK has delivered 108% returns to its investors, and currently, CSK unlisted shares are traded at ₹ 170 to 180 per equity share. Currently, the market cap of CSK is higher than its parent company, India Cements.

It is now easier and more convenient than ever to buy CSK unlisted shares with the assistance of Stockify. From analysing the financial statements and other vital reports to keeping track of CSK unlisted share price, our experts will provide you with everything you need to make an informed and profitable decision to invest in CSK pre-IPO stocks.