IPL crosses $10 billion valuation to become a decacorn: D and P Advisory

A business is called a decacorn when its value crosses $10 billion.

The value of the IPL ecosystem has registered a 75% growth in dollar terms since 2020 when it was valued at $6.2 billion, said the report.

The growth in the value of the IPL ecosystem in INR terms is 90%.

The firm has used the Discounted Cash Flow (DCF) Method for valuation.

The DCF Method is a valuation technique that provides an estimate of the value of an asset, or a business based on the cash flows that the asset or business is expected to generate over its remaining useful life.

The report titled ‘Beyond 22 Yards’ noted that the growth in IPL ecosystem’s value is primarily driven by the landmark $6.2 billion media rights deal inked by the Board of Control for Cricket in India (BCCI) in June and the auction of two new teams – Gujarat Titans and Lucknow SuperGiants – for a combined value of $1.6 billion in October last year.
Disney Star had bagged the IPL TV rights for Rs 23,575 crore while Viacom18 acquired the digital rights for a whopping Rs 23,758 crore.

This is the first time the IPL media rights got split between two different rights holders.

“On a constant currency basis, the value of IPL would have been close to $12 billion. However, the currency depreciation of 10-12% has taken away the value of the IPL media rights in USD terms,” noted Santosh N Managing Partner at D and P India Advisory Services while adding that the IPL would be one of the most profitable new-age start-ups in the country if it is compared to other unicorns and decacorns in the country.

Other factors that contributed to the rise in IPL’s valuation is the gradual increase in the number of matches from 74 to 94 in the the next cycle, newly signed central sponsorship deals, higher ticket sales and in-stadia revenue.

While the IPL has been termed as the second largest sporting league globally on a per match fee basis, the report states that it is not fair to compare IPL with other global leagues based on the per-match fees metric since these leagues have a different structure, format, duration, and size. For the next five year cycle, IPL’s per match fees works out to $15 million.

D and P Advisory has not a valuation analysis for individual IPL teams since the Lucknow and Ahmedabad teams were added in IPL 2022 and there were very limited data points to do such an analysis, said Santosh.

According to Santosh, the valuation of existing individual IPL franchises could be in the range of $400 to 600 million.

“There could be some outliers like certain franchises would be above or below depending on the franchise we are talking about. However, most teams would be sitting in that range,” he said.

He also stated that the ability of the rights owners to pay top dollars for the TV and digital rights in future will depend on how well they are able to monetise in the next five year cycle starting 2023.

“Globally, sports broadcasters earn a big chunk of their revenue from subscriptions but that is not the case in India. Advertising has been a big driver of monetisation for Indian sports broadcasters since cricket provides much more advertising inventory to sell than a sport like football,” he stated.

While IPL is the costliest media property in India, its ad rates are still lower compared to other global sporting leagues. “There is a huge headroom for ad rates to go up over a period of time as the Indian economy grows and the ad-to-GDP ratio improves,” he pointed out.

As per the report, a 10-second slot for an ad during IPL 2022 costs nearly USD 20,000. Comparably, the ad rates for the same time slots at National Football League, English Premier League, and Major League Baseball were over USD 1,00,000.