Friday, December 15, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

Indian IPL Teams Now Worth More than English Premier League Clubs

Op/Ed Commentary: Chris Devonshire-Ellis

Photo: Associated Press

Mar. 23 – With news that the two new franchise owners of the Pune and Kochi India Premier League (IPL) cricket teams acquired the rights to the teams for US$370 million and US$320 million, respectively, the time is right to look at India as an advertising market and examine its inherent wealth.

To put the two deals into perspective, the IPL was formed three years ago and is currently comprised of eight regional teams from Mumbai, Bangalore, Hyderabad, Chennai, Delhi, Kolkata, Rajasthan and Punjab. When the league was first set up and teams were established, the Rajasthan franchise cost the least at US$57 million, while the Mumbai franchise cost the most at US$100 million.

Rajasthan won the first IPL series, which was watched by over 88 million Indians and attracted TV advertising revenues nearing US$65 million. The 2009 series attracted an average audience of 22 million each day, meaning the TV audience multiplied by a factor of six in 12 months, while TV ad revenues doubled. That series was won by the Deccan Chargers.

The 2010 series, which is currently underway, is expected to generate record revenues and has seen every match packed to capacity. Clearly, the concept of the IPL has taken off and has become entrenched as a valuable national asset. It’s also one that is increasingly attracting huge sums of investment. To compare with the Pune and Kochi teams, take a look at the English Premiership clubs acquired in recent years:

Chelsea (2003 takeover): US$190 million
Manchester United (2005 takeover): US$1.4 billion
Liverpool (2007 takeover): US$340 million
Manchester City (2008 takeover): US$300 million

It should be recognized that when buying into the English Premiership clubs, the owners acquired existing brands with tangible value, as well as an established cash flow and fan base. The investors in the IPL – and especially the new teams of Pune and Kochin – have had to develop their own brand identity, build up a supporter base, and acquire rights to use (and in many case redevelop) entire stadiums.

It’s also worth considering that neither of the new Pune or Kochin teams actually exist at present except as a franchise concept. There is not even a website for either of them. Building up those two brands is going to be fascinating to watch since they will be taking part in a little less than 12 months from now.

Clearly, the IPL has become a massive money-making exercise capable of reaching out to Indians on a truly national basis. As a means to effectively and efficiently reach out to all middle class Indians, the IPL is delivering an audience that no other platform has been able to reach before. Looking forward, it seems likely the IPL will further expand. Bids are being considered from the 2012 season, possibly bringing in an additional two teams from Nagpur, Ahmadabad, Kanpur, Dharamshala, Indore, Cuttack, Gwalior and Visakhapatnam. Lucknow and Goa have also been mentioned as wanting to be represented. It’s also attracting investment from overseas with Britain’s premiere cricket club, the MCC, having been on fact-finding missions. The IPL itself is also slated to launch on the Bombay Stock Exchange within the next two years.

While massively popular in India, it remains to be seen if it can be exported and developed overseas in the same manner the English Premiership has. It may well do so, at least in Asia. Games are more exciting, and the 20-20 format means results are often not known until late in the game thus leading to dramatic finales. The English Premierships hold on global sports coverage may be under some threat here – or lifestyles may change. In packed bars on weekends in India, both the IPL and Premiership games are screened live and simultaneously, but it is the cricket that gets the commentary. With the amount of value coming into the IPL, it will continue to play an active role in where advertising dollars are spent in India and how multinational organizations reach out to the domestic market.

Chris Devonshire-Ellis is the principal and founding partner of Dezan Shira & Associates, establishing the firm’s China practice in 1992 and the India practice in 2007. The firm now has ten offices in China and five in India. For advice over China-India strategy, trade, investment, legal and tax matters please contact the firm at [email protected]. The firm’s brochure may be downloaded here. Chris also contributes to Asia Briefing’s other titles, India Briefing, China Briefing and Vietnam Briefing.

This entry was posted in Business. Bookmark the permalink.

17 Responses to Indian IPL Teams Now Worth More than English Premier League Clubs

  1. Eashwar says:

    hey – thought deccan chargers were the champions in IPL 2 ! and anyways the sums being talked about is the fee payable equally over the next 10 years – not the value of the company/team. Valuation of the teams will be a function of the cash flows , profits net of fees and potential future growth streams – the last deal made valued Rajastan royals at Rs.630 crores and Kings XI Punjab is said to be on the lookout for a selloff – [email protected] $200 million about Rs 900 crores !

  2. Chris Devonshire-Ellis says:

    Yes, Eashwar, Deccan Chargers were the 2009 Champions. Apologies to Hyderabad. Our Delhi office has been sentenced to overtime for sneaking that in…

  3. Amjad says:

    IPL is noting in front of football stop spreading lies and twisting figures.

    Real madrid and Man United make 1/2billion dollars a year revenue! Compare this with IPL teams. They make about 10million dollars a year!! there is simply no comparison!

    Regarding buying a team. IPL figures are spread out over 10years. If the PUNE team cost 370million dollars that is 37million a year. Buying a football team is paying upfront cash. The revenues from football are simply mind-boggling.

    Real Madrid make 560million dollars a year. This is more than the entire revenue of IPL teams and multiplied by 10.

  4. Sunny says:

    Football is huge and cool.. biggest sport in the world, Cricket is regional at best.. its big in India but International football isn’t far behind.. Check the bars in the metros, they are packed with footy fans.. Stop throwing the numbers around and making IPL bigger then EPL and football in general..

  5. kassew says:

    I love all players

  6. Abbas says:

    @Amjad,I agree that English premier League is still ahead of IPL. But what you will see is explosion of Indian power over next 2-3 years. IPL will trounce English Premier inspite of football being more popular than cricket. Thats the power of INDIA!!!!!!!Accept it and live.

  7. Chris Devonshire-Ellis says:

    @Amjad, the figures speak for themselves, and at a time when one EPL club has gone into administration and Manchester United and Liverpool look hopelessly in debt.
    @Sunny, likewise; although soccer is more universal there seems to be more money flowing into the IPL than anywhere else at this moment;
    @Abbas, we’ll have to see if the IPL can break out of India and attract a global audience. Thats still to be proven.
    @All – I want to buy the Goa franchise. Any of our readers want to help raise USD400million and join a consortium to do so?
    Thanks for your comments – Chris

  8. rajesh.k.c says:

    Coming years will prove the power of indian economy on the basis of IPL .This is true, defenitly you all are going to compare

  9. Chris Devonshire-Ellis says:

    Well it’s Mumbai Indians vs. Chennai Super Kings in the final of the IPL, to be played this Sunday. Some expectations of the highest ever TV viewing audience in India. Let’s see what happens. Dezan Shira & Associates have offices in both Mumbai and Chennai so we have some inter-offcie rivalry going on at present.

  10. rahul says:

    ipl is getting bigger than epl but pakistanis are getting jealous because they were snubbed in ipl was nothing but ipl has given a new image.

  11. Carlos says:

    On a recent holiday in the US, I was on a Cosmos Tour which included several Englishmen and Australians. Quite a number of them followed IPL fervently. They knew much more about the players (like Pollard and Morgan) than I did (I am from Bombay).

  12. Chris Devonshire-Ellis says:

    The IPL format with limited overs is almost guaranted to make most matches reach a thrilling finale, obviously the concept suits a TV audience very well. the last season saw matches played just after the English Premiership soccer matches had been played, meaning guys were speaning the full half day in the pub with mates, watching Premiership on the TV first, then IPL directly after. Alomost a double header. Its certainly a great way to boost ad revenues, no wonder the IPL is rolling in money. However no all are happy; most of our Indian employees are keen cricketers and regard the IPL as a kids version – if you want REAL cricket, they suggest, it still doesn’t get any better than a test match stretched out over five days….but for sure the TV version of IPL is here to stay. – Thanks Chris

  13. Carlos says:

    I agree that Test cricket is the “real thing”.

    20/20 however seems to be bringing in the crowds and also apparently a lot of mullah 🙂


  14. harshit says:

    one thing to be noted is that ipl has started just 2-3 years back whereas various football clubs and entities are present for so long. ipl will grow with time and indian economy and audience has enough strength to challenge any world based league or sport single-handedly…

  15. Jagrati says:

    EPL is running from 1888 and IPL is just 2-3 years old…..EPL is much better, IPL is nothing in front of it and also EPL is more famous around the world and is played by almost every country

  16. arnav says:

    Youre figures about the premier league clubs are wrong and misleading. Firstly, chelsea was bought for 190 million usd in 2003, u cannot compare those to the 2011 figures of the ipl teams. Also if u check the valuation of the clubs they are almost double then most ipl team, if not more. And the liverpool sale had a background story which you have not mentioned. Forbes had valued it at 822 million usd at that time, it was taken over at that price due to different circumstances.

    If you wanted to publish facts these would have been your figures:

    Here’s how Forbes values some of the top EPL teams currently (US$ Millions):

    Manchester United – $ 1800 m
    Arsenal – $ 1200 m
    Liverpool – $ 1050 m
    Chelsea – $ 764 m

    While, just the brand valuations of the current IPL franchises looks as follows (US$ Millions):

    Kolkata Knight Riders – 42.1
    Mumbai Indians – 41.6
    Rajasthan Royals – 39.5
    Chennai Super Kings – 39.4
    Delhi Daredevils – 39.2
    Royal Challengers Bangalore – 37.4
    Kings XI Punjab – 36.3
    Deccan Chargers – 34.8

    I know where your coming from but this manipulation of figures to prove a point is not the way to go about it.

  17. Chris Devonshire-Ellis says:

    @Arnav, thanks for those figures, fascinating reading. However we don’t manipulate the amounts, and you’ve included only the top four most successful English teams. I may add that EPL teams also have a proven long term fan base, which IPL teams have yet to develop. Whichever way you look at it, the financial value of IPL teams has grown tremendously in a very short period. – Chris

Comments are closed.

Dezan Shira & Associates provide a range of services for companies looking to undertake foreign direct investment into Asia, These include corporate establishment, accounting, tax, payroll, audit and due diligence. To learn more about the firm, please contact one of our specialists at [email protected], download our corporate brochure or visit at us

Dezan Shira & Associates, Twenty years of Excellence

The Asia Briefing Bookstore

Our best selling legal, financial, tax and regional guides to Asia business, industry reports and more…
Click here to view all titles now

China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store China Briefing Book Store