How IPL franchise earn money and is it Tax-Free?

How IPL franchise earn money? Revenue streams & tax insights

The Indian Premier League comes with a thrilling atmosphere, talented players, and loyal supporters, and that alone makes this cricket tournament more enthusiastic. But beyond the popularity IPL holds lies a business model that fuels the financial stream of this sports competition. This implores the question: how IPL franchise earn money, and is IPL tax-free? In this exploration, we will delve into the different revenue streams that keep IPL afloat and uncover the truth if there is a tax involvement in their earnings.

How IPL Franchise Earn Money?

IPL franchise earns money in different ways. In this section, we aim to give some ways they do it. If you are aiming to know how IPL franchise earn money, then this part is a must-read. We will be giving some streams of revenue that IPL is using to generate revenue, so here are the following modes of income.

Sponsorships Contracts

This is the first mode of revenue stream of how IPL franchise earn money. Sponsorship deals in IPL franchises come from different brands of businesses. These deals pay IPL franchises a lot of money to promote their company brands by utilizing IPL’s team’s image and influence. All IPL teams have sponsors for almost everything, which contributes to every IPL franchise’s overall revenue. It only proves that sponsorships are a great source of revenue for it.

Merchandise Selling

Merchandise selling gives a source of income to the IPL franchise. With the IPL franchises selling their jerseys, caps, hats, and other goods. The sales from it provide a substantial source of money for every IPL franchise. It only means that the IPL fame helps their franchises to monetize their brand by selling their own produced products.

Broadcasting Rights

The IPL has its revenue-sharing scheme to make sure all the franchises give an equal amount of the league’s financial income. One example of this shared income is through broadcasting rights. These existing broadcasting rights hold a significant portion of the IPL’s income. The Board of Control for Cricket (BCCI) sells these rights to selected broadcasters, and the revenue from it is shared between the BCCI and the IPL franchises. Based on this, the IPL gets something in return, and the income has a substantial figure.

Ticket Sales of Matches

The tickets for all IPL matches do generate revenue based on their selling price. Therefore, this is one way of how IPL franchise earn money and it is one great method to use. Each IPL franchise gets a share of the total ticket sales. Through this way, they earn money through ticket sales. Therefore, like any sports competition, the IPL franchise also depends on ticket sales from their supportive fans. Therefore, that alone gives a great source of income to them.

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Name Rights

The IPL franchise can sell their name rights to a sponsor. That alone can give a substantial income source to any IPL team. Through selling their name rights, IPL franchises can earn money that will be primarily for player’s fees, other expenses, and many more. To give an example, the Delhi Daredevils altered their name to Delhi Capitals after signing a deal with a specific sponsor company.

IPL Prize Money

The prize money is one of the IPL franchise’s main sources of revenue. Therefore, whoever wins the IPL tournament gets the biggest share of the total prize money. It would be distributed accordingly to the team’s players and of course the owners of the said winning franchise. In the end, the IPL prize still gives the winning franchise the best source of income.

How Much Revenue Does IPL Generate?

In India’s sports industry, it has seen an 11% growth as of 2023. Thus, reaching a total revenue of Rs 15,766 crore (approximately $1.9 billion), in comparison to the previous year of 2022. This total revenue comes majority from cricket sport. Speaking of cricket, the IPL tournament has reached a whopping Rs 9,978 crore in 2023, with 130 crore per match. From these figures, we can see that since 2008, the IPL has increased the revenue it receives over the years, and it is not stopping. Few reports suggest the BCCI would receive a total of Rs 48,390 crore from the IPL media rights e-auction starting from 2023 up until 2027. 

Even though the exact IPL yearly revenue is elusive for most of us today. However, from the mentioned figures we have highlighted in this section, we hope it gives you a great idea of the range of the revenue that the IPL is receiving in approximate.

Is IPL Tax-Free?

To answer that question – Is IPL tax-free, let us go back to some of the circumstances that question the IPL in terms of tax liability. In 2021, the BCCI had an appeal with the Income Tax Appellate Tribunal (ITAT) concerning its tax matters. This appeal explains why the tax exemption that IPL experience under Section 12 A of the Income Tax Act should not be subject to an end. In that response, the ITAT supported its claim and said that the IPL’s objective is to promote cricket sport.

It only means that its purpose remains intact, and hence IPL’s earning income should be exempted from the following tax liabilities. Therefore, the IPL in general, inclusive of its sports governing body is not liable for any tax imposed on them. From the mentioned explanations, this only proves and applies that IPL will never shoulder any forms of tax as imposed by the Income Tax Appellate Tribunal (ITAT) and that decisions are implemented accordingly.

Conclusion:

The IPL’s financial strength will continue to surpass its past revenues. Fueled by an ever-growing popularity, expanding fan base, global reach, and increasing generated sources of revenues. From these resources, we can see that the IPL tournament will remain intact and will continue to strive for the best. It will continue to attract great talents of players and shall contribute to the overall growth of cricket in India. While the exact IPL revenue figures remain hidden, the IPL’s financial power is still undeniable. Thus, making it a true platform in the world of cricket.

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