The Indian Premier League (IPL), as per the latest edition of the brand valuation report of the London-headquartered valuation company, Brand Finance, is worth $5.3 billion. The tournament, which is in its 11th season, has undergone a 37% jump in valuation. The brand valuation company had valued IPL as a $3 billion entity in the initial years, which eroded significantly in the later years. "When we conducted our study during the earlier editions of the IPL, one of the key risks was that of discipline, governance, and transparency. This risk held back growth or even eroded value in the past. This has primarily been overcome by the strict action of the governing council of the IPL in conjunction with the COA of the BCCI, for example by taking action against erring franchise owners," points out Savio D'Souza, Director, Brand Finance.
With a brand value of $65 million and winning the 2018 season title, Chennai Super Kings (CSK) have been ranked as the most valuable IPL franchise brand. CSK has topped the Brand Finance IPL league table for the third time, after leading the rankings in 2010 and 2013. "Their brand value has been boosted by CSK creating a fan-base beyond Chennai, despite being forced to endure a two-year ban from the league," points out D'Souza. Last year's most valuable brand, Kolkata Knight Riders (KKR) come second in the Brand Finance IPL 2018 ranking, with a brand value of $62 million, up 5% from 2017. Sun Risers Hyderabad (SRH) retained their third position with a 17% brand value growth ($54 million). Mumbai Indians (MI) were ranked fourth with a brand value of $53 million. Up 11% to $49 million, Royal Challengers Bangalore (RCB) are at number four. Valued at $44 million Delhi Daredevils, Rajasthan Royals ($43 million), and Kings XI Punjab ($40 million) are in the bottom of the valuation table. Despite being at the bottom of the table, all these teams have seen a 10% growth in valuation.
One of the major boosts for IPL this year, as per the Brand Finance report, was not just television viewership which grew by 11%, but also the fact that over 200 million people watched the tournament on digital platforms such as Hotstar. "Cricket enthusiasts who did not get tickets to see the games live, could watch the competition in especially designated Fan Parks in 36 cities across the country. Family-friendly and free to attend for all, Fan Parks offered music, entertainment, and a range of merchandise stalls, bringing stadium atmosphere to city centres on a scale larger than ever," points out the Brand Finance report.
While the business value of IPL as a whole has indeed grown and the franchises are out of the red, the valuation growth of the individual franchises has been modest and they need do to a lot more in order to be highly valued businesses on their own merit. "The growth has been more modest for franchise brand values as there is still much to do in fan engagement, merchandising, licensing, trademark protection etc," points out D'Souza.
So, what do the IPL franchises need to do to be as highly valued as some of the English Premier League (EPL) teams? The market cap of Manchester United for instance, is $3.60 billion. EPL's main revenue line is broadcasting (60%) but an increasing share comes from other lines such as commercial use of stadiums, and merchandising and licensing in particular. IPL clearly lags behind on these counts. "Our research indicates that the EPL has an awareness level of 69% outside the UK, which is very high. The IPL probably matches this result in some countries but still has work to do to increase this across the major cricketing countries, let alone frontier markets such as the USA," points out D'souza, who also cites the example of NFL. The NFL, he says, has been considering launching a London franchise for its league. "The popularity of IPL is certainly high enough to attract similar international city franchises to its league; it just comes down to whether the current governance system and business models are strong enough for such a shift," he adds.
However, the need of the hour is for the individual franchises to focus a lot more consistently on building their fan base across various touch points such as in stadiums, online stores and physical stores, for which they have to strengthen their merchandise strategy. Almost 30%-40% of an EPL team's revenue comes through merchandise sales. "Fan engagement is getting better with RCB, CSK, MI, and SRH leading the way but there is a lot to learn and adapt from La Liga and EPL. There is a big opportunity for franchise brands to build up their businesses via the licensing route," says D'Souza.While the IPL has succeed in eliminating a large number of discrepancies and controversies that had plagued it in the past, compared to other international sport leagues, governance and transparency are still lacking within the IPL system as well as the cricket system as a whole, which could be storing problems for the future if not tackled straight away, says D'Souza.