IPL: The ultimate multibagger? How team ownership delivers explosive returns
Summary
More than operating financials, IPL team ownership is about valuations. And the original teams from 2008 are sitting on unrealized capital appreciation of multi-bagger levels. Find out more.
New Delhi: For the Torrent Group, the resumption of the Indian Premier League (IPL) on 17 May, after it was suspended due to armed hostilities between India and Pakistan, would be small relief. Gujarat Titans, the IPL team acquired by them barely two months ago, sits atop the points table. It’s a strong contender to go all the way, the financial reward for which is ₹20 crore. Yet, in the larger scheme of sports ownership, that ₹20 crore financial upside is small change.
For owners of sports teams, like the Torrent Group, it’s not so much about the team as a running enterprise, and the profits they generate. As a business, there is only so much that a sports franchise can grow.
What sports ownership brings is visibility. It also brings capital appreciation in its novel way. Much as sporting and operating performance matter, more than those two aspects, sports ownership is about owning an asset that is finite in quantity—there are only 10 IPL teams. In the case of IPL teams, this asset has continuously appreciated in value, one reason for which is its finite nature.
The Torrent Group, for example, has bought 67% from erstwhile owners CVC Capital Partners, a private equity firm, at a reported valuation of about ₹7,500 crore. Back in 2008, when the IPL was launched with eight franchises, the average purchase price of a franchise was $90.4 million, or about ₹350 crore at the exchange rate then. At a simplistic base level, that’s a compounded annual return of 20%, more than double the BSE Sensex return of about 9% over the same period.
A similar appreciation in value would be one of the objectives for the four IPL team owners, and a bunch of high-profile tech CEOs of Indian origin, who have invested millions in a repackaged short-format cricketing league in England. The Hundred, which gets underway in August, is the latest commercial brainchild of the English cricket board to respond to the changing tone and tenor of cricket.
Be it the IPL, The Hundred, American sports leagues or European football leagues, the fundamental business model does not pivot around making profits. From a sports owner’s perspective, while making profits on a running basis is good, it’s alright if that doesn’t happen all the time. What matters more is staying in the game, being visible, connecting with their fanbase and having a story to tell.
Ask the Sunrisers Hyderabad, whose run to the IPL finals last year was defined by batting blitzkriegs that endeared them to fans and made people tune in. According to Brand Finance, a brand valuation consultancy, the team from Hyderabad posted the largest jump among IPL teams in brand value in 2024 – 76% over 2023. Or, ask the tortured faithful of Manchester United, who have stumbled in great anguish through 10 managers since Alex Ferguson called it a day in 2013, but remain among the most-valued football clubs in the world.
Risk-Free Business
The Torrent Group would look to create a similar kind of identity with the Gujarat Titans. Only in their fourth season, they are already one of the most successful sides in the IPL in this period. They are based in Ahmedabad, which has the world’s-largest cricket stadium. But its population catchment is similar to a Hyderabad, and not as big as the main metros. Ahmedabad also does not have the cricketing ethos of, say, a Mumbai, Chennai or Bengaluru.
Still, the financial side of things might not be a worry for this new sports owner. That’s because the IPL business model is defined and predictable. A baseline of revenue, and cost heads that are either capped or tailored to revenue, make it virtually risk-free. The IPL is operated by the Board of Control for Cricket in India (BCCI), and driven by the money the board makes by selling broadcasting rights.
On the revenue side, IPL franchises have four major revenue streams: share of the BCCI ‘central pool’, sponsorships, ticket sales and prize money.
The share of the BCCI central pool accounts for nearly three-fourths of a franchise’s revenue. The central pool is where all the receipts from the broadcast deal and umbrella sponsorships struck by the BCCI are accumulated. The BCCI retains half of this. The remaining 50% is distributed between the franchises, equally.
The sale of broadcast rights—TV, Internet, radio—is the main piece in the central pool. Each time the broadcast deal expands, more money flows down to the franchises. The current five-year broadcast deal was struck in 2023, and saw the per-year value shoot up from ₹3,270 crore in the previous five-year cycle to ₹9,678 crore. This trebling provided a bump to franchise revenue.
On the expense side, there are two main expenses for an IPL team. The first is the annual franchise fee. This is linked to a franchise’s revenue—specifically, 20% share of its own sponsorship revenue, ticketing revenue, and central pool revenue. The second is what it pays its players, which is currently capped at ₹120 crore.
In the earlier years, IPL franchises made low profits. But since the 2018 broadcasting deal, they have done better, as growth in revenue has outstripped growth in costs (see chart).
Low or no profits is not endemic to the IPL. It’s a feature of most sporting leagues. Take Major League Baseball (MLB) in the US. It’s a sport that pivots around city-based franchises with private ownership, and is played for eight months a year. For the 2024 MLB season (April to November), the 30 teams earned combined revenue of $12.3 billion, according to Forbes. Yet, after providing for redistribution of revenue to financially-weaker teams and servicing debt related to building or renovation of stadiums, the 30 MLB teams were left with a combined surplus of a mere $60 million. As many as 11 teams were in the red and only seven teams posted an operating margin of above 10%.
Asset Play
When they started off, IPL teams were recording similar margins. Now, they are better off. The possibility of IPL team ownership rewarding themselves with dividends has only emerged in the last five years or so—after the previous broadcasting deal was struck in 2018 and after the scale-down effects of the covid-19 pandemic were absorbed.
Even when their revenue was crawling, one thing that was rising was the tournament’s popularity—and with it, valuations of IPL teams. According to Brand Finance, the cumulative brand value of the IPL increased from $2 billion in 2009 to $4.7 billion in 2021. In 2022, the BCCI added two more teams, taking the count to 10. That, along with more matches and the increasing popularity of the IPL, have sent that value soaring to $12 billion (see chart).
IPL team valuations have followed suit, as secondary transactions show. In March 2018, the Delhi franchise was reportedly valued at ₹1,100 crore in a stake sale. In 2021, the two new franchises drew winning bids of ₹5,600 crore (Gujarat Titans) and about ₹7,000 crore (Lucknow Super Giants). The latest transaction for Gujarat Titans is at ₹7,500 crore, or about $880 million at the current exchange rate.
In the Forbes list of the world’s most valuable football clubs, released in May 2024, only 20 football clubs had an enterprise value exceeding $880 million, though an asset tends to yield more in an actual transaction, especially private ones, than when it is only being valued on paper. The 10 most-valued football clubs were valued between $2.6 billion (Arsenal) and $6.6 billion (Real Madrid). In the second spot was Manchester United, at $6.55 billion, despite flailing on the field.
Similarly, the March 2025 valuation of MLB teams by Forbes shows the valuation range of the 30 clubs to be between $1.05 billion and $8.2 billion, beating average US stock index returns in secondary transactions.
Most IPL teams still retain their original ownership. The original teams from 2008 are sitting on unrealized capital appreciation of multi-bagger levels. As the IPL business model has solidified, IPL teams have extended themselves in their space.
They have adopted a string of pearls strategy, buying teams in T20 leagues outside India. Thus, for example, the company that owns the Kolkata Knight Riders (KKR) team also owns T20 teams in the West Indies, UAE and the US. Similarly, all six teams in the South African T20 league, SA20, are owned by IPL teams.
Enter, The Hundred
The Hundred, in England, is the latest foray of IPL team owners in short-format cricket. Of the eight franchises in The Hundred, four have ownership in the form of owners of IPL teams: Mukesh Ambani (who owns Mumbai Indians), Sanjiv Goenka (Lucknow Super Giants), Sun Group (Hyderabad Sunrisers) and GMR Group (Delhi Capitals).
Another team in The Hundred is owned by a grouping of 11 high net-worth individuals, which includes global tech CEOs of Indian origin, notably Nikesh Arora of Palo Alto Networks, Satya Nadella of Microsoft, Sundar Pichai of Google and Shantanu Narayen of Adobe.
These multitude of Indian connections, especially in the form of IPL team owners, have the potential to initiate bigger, and more fundamental, changes in how T20 franchise cricket is organized. Right now, the IPL is the centre of that universe.
Financially, it’s the most successful. The BCCI has also used its outsized leverage in world cricket and the IPL’s financial power to draw other countries to be part of the IPL, without extending the same in return. Thus, Indian players cannot play in foreign T20 leagues until they retire from international cricket and the IPL.
Officials of The Hundred have said publicly that they are going ahead with the tournament this year without expecting the BCCI to change this stance. But the increasing crossovers in ownership could, at some point, lead to a revaluation of these positions. Radical suggestions have been floated.
For example, the England and Wales Cricket Board (ECB) offering a stake in The Hundred to the BCCI. Or, an exhibition match in the UK before The Hundred between IPL teams whose owners have bought stakes in the English tournament.
Cricket is under flux, with the country versus club debate at the forefront. Historically, cricket revolved around countries and the test-match format. But IPL disrupted that framework, and clubs and the t20 format have taken centrestage.
On the one hand, the historical threads of test cricket, based around countries, are seeing a gradual loosening, the latest being the retirement from the format of an icon like Virat Kohli.
There are many moving parts in play, and convergence itself would be a form of disruption.
“If you take a very long-term worldview, maybe, at some point, it wouldn’t be crazy to see some kind of roll-up of these teams and a combination of these tournaments," James Sheridan, who chairs Manchester Originals, owned by Sanjiv Goenka, said in ESPNCricinfo.com. “That would need tectonic plates to shift quite a lot. But it wouldn't surprise me if, in 10 years’ time, we are looking at something like that."
IPL franchises have a seat on that table—and a move like that will, in all likelihood, raise their valuations further.
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