English Premier League V/s Indian Premier League Myths & Realities: Shea Fernandes

The English Premier League and the Indian Premier League are two of the most widely watched sports leagues that have a huge fan base of football and cricket lovers all over the world respectively. In the 2019-2022 cycle of the EPL, the cost for rights to broadcasting rose by approximately 8% from the previous cycle to $12 billion for three seasons of the EPL.

In 2022 the television rights for IPL are secured by Walt Disney Company and the media rights are secured by Viacom18 for $3 billion & $3.2 billion respectively, totaling $6.2 billion. This is approximately a 143% increase compared to 2017’s $2.55 billion. This is where the rubber hits the road. An EPL season has a total of 380 matches. The value of a single EPL match is approximately $11 million, making EPL the third most expensive league in the world on the basis of per-game value. 

Similarly, an IPL season has a total of 74 matches, and the per-game cost is approximately $13.48 million, making it the second most expensive sport, based on per-game price, after the NFL (National Football League) which costs $17 million per game. The per-game price should not be taken at face value. An assessment of valuations of top clubs in both leagues shows a different picture. 

Though on paper, the price per game looks better for IPL teams, it is important to keep in mind that an EPL season has 3807 games whereas the IPL season tentatively has 749 games. Given that the EPL has more games per season, the per-game price is lower than the IPL.

It may also be a little too early to analyze based on the source valuations of the teams since the IPL media rights have just been auctioned and the valuation of the rights has not yet been absorbed by the team valuations. The current net profit of the IPL teams is in-between $12.7-15.8 million, and it is expected to increase on average by $34.2-38 million each year in the 2023-27 cycle. The average revenue for the top 20 football teams was $441 million for the 2019-20 season.

IPL teams are also slowly but surely getting more involved in the sale of team merchandise. Going forward this will lower the dependence on revenue from media rights and lead to greater diversification of income. In fact, in the coming years, the sale of team jerseys and sports gear is expected to grow by 100% for some of the IPL teams. 

A number of upcoming companies like Souled Store and Dreams Sports- Inc are tying up with teams to sell official jerseys on their websites, within a price range of $3.8-12.6. Other revenue streams are overlooked by the Indian media. The global merchandise market for sports goods has been valued at $29.9 billion in 2021. It is set to increase with a CAGR of the compound annual growth rate of 4.9% from 2022-27 and reach a value of $39.8 billion by 2027.

Though there is a revenue increase that has been recorded, it is also important to know that a part of it is lost due to broadcasting piracy. A report by Digital TV stated that the loss of revenue for broadcasters and channels in India on account of piracy is expected to hit $3.08 billion by 2022.

In the near future, the valuation of IPL teams expects to surpass even the recent media rights auction, given the aforementioned multiple reasons, such as the recent media rights auction, increase in the sale of merchandise, and increase in net profits. The macro factors are in place i.e.- increases consumption across, television and OTT apps. 

All these factors will bolster the valuations of IPL as a tournament and also the teams, but it is only when we reach a subscription ecosystem driven by free-market economics can the IPL aspire to have valuations like those of the NFL ($62.6 billion) and the EPL ($9.35 billion). TV and OTT subscriptions to view NFL is $5.9917 per month on CBS all access specs and $9918 per season on NFL pay pass, and EPL is $0.4919 per month on Start Sports 1, 2 & 3 and $0.6220 per month on Disney + Hotstar respectively, compared to IPL’s $0.4919 per month (Start Sports 1, 2 & 3) & $0.6220 per month on Disney + Hotstar. TV subscription revenue is it for EPL or NFL is the high-octane fuel that propels these two leagues to heady valuations. We need a non-regulated TV subscription ecosystem in India for IPL to reach these valuations.