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Jul 22, 2022

Impact of ipl and the two new teams on indian economy

Impact of ipl and the two new teams on indian economy

Cricket in India is not just a sport, it is followed and practiced like a religion and every major tournament celebrated like a festival. And one of the biggest festival of cricket takes place in India during the summers, called the Indian Premier League (IPL) since 2008. For those unknown, IPL is a professional Twenty20 cricket league organised by the Board of Cricket Control in India (BCCI) on the lines NBA and the English Premier League.

And it is about to get bigger in 2022, with two more teams added to the fray, making the league more competitive, and more rich. How? Earlier in October 2021, the auction for two new teams were held, which saw entrepreneur Sanjiv Goenka-led RPSG Group buy the rights for the Lucknow city team for a whopping Rs.7090 crores, while the second team from Ahmedabad was bought by Luxembourg-based CVC Capital Partners for Rs.5625 crores.

Impact of ipl and the two new teams on indian economy

Just to put into perspective, the massive growth in value of the IPL, the Mumbai team was sold to billionaire Mukesh Ambani for just Rs. 450 crores in 2008 and it was the costliest team in the league back then. Which is Rs. 6640 crores less than what the costliest team in the fray paid now. Let’s look at how the IPL with its new teams are going to contribute to the Indian economy in the next year.

Significant Rise In GDP

In 2015, the BCCI appointed KPMG (Klynveld Peat Marwick Goerdeler) sports advisory group to conduct a survey on the contribution of the sports league to the Gross Domestic Product (GDP) of India. It reported that the 60-day IPL then contributed Rs. 1,150 crore to the economy. Now, in 2022, this will become a 74-day jamboree and it will only jack up the valuation and money invested in the games. Which means, more income for the board and the country.

Tax Contribution

Before the IPL began, BCCI was considered as a ‘charitable organisation’ and it didn’t have to pay any taxes. But with the IPL raking thousands of crores worth of income for the board, the Income Tax department decided to declare the league as a commercial activity and hence, tax the BCCI for every penny it earned through the IPL. Ever since, the board has been shelling out over Rs.350 crores in taxes every year and this number is about to rise in 2022. Because more teams mean more matches, and more income from ticket sales, broadcaster rights, advertisers, etc.

Boost In Tourism

An overseas cricketer arriving in India for IPL An overseas cricketer arriving in India for IPL

Think about it, there are over 40 international cricketers and coaches, an equal number or more in support staff for the franchises they play in, close to hundred international sports journalists and media personnel, friends and family of these athletes, oh and of course the international fans of the players and the sport; the IPL is not a just any cricket league,

but a great jamboree that brings in a great influx of international travellers from all over the world to India. Travel company Cox & Kings had recently reported that the IPL has led to a whopping 30% increase in their travel revenue from India. Right from flights, hotel stays, hospitality, training facilities, dining to non-sporting excursions, everything brings in great revenue to the host cities and the entities involved in it.

Generation Of New Jobs

The IPL employees thousands of people, from local gardeners to work on the cricket grounds to top data science engineers to crunch the numbers in real time during the matches. And the great thing about IPL has been that it always put India first in all aspects. A majority of the employees and contractors hired by the league are experts based out of India or people or Indian origin. And it’s not just jobs with the IPL, the employers include companies that own the teams, their stakeholders, sports personalities, emerging athletes, etc. Even the various businesses that fulfill the demand of sporting equipment, gadgets, catering, transportation and security, have benefitted from the league, increasing its market size by Rs. 40 billion.

Advertising Boom

Advertising Boom

IPL Viewership figures. Source: Business Standard

According to data collected by the Indian financial daily Economic Times, the T20 tournament in 2019 smashed all previous records in terms of viewership, with 338 billion minutes of watch time registered in the 12th edition. This has led to the cricket league receiving sponsorship from a number of well-known brands from around the world, including Chinese mobile company Vivo, soft drink giant Coca-Cola, Indian automobile manufacturer Maruti Suzuki, digital payments solutions company PhonePe, tyre giant MRF, and many others.

Non-Economic Benefits

Cultural Diversity

IPL is a melting pot of different people from varying backgrounds, countries and culture coming together to celebrate their love for the sport, cricket. A look into the lineup of every team playing the tournament, there are at least 10 international players from countries like Australia, England, Sri Lanka, South Africa, New Zealand, etc. While the teams might be named after their host city, e.g. Kolkata Knight Riders, the athletes include players from Karnataka, Delhi, Mumbai and even Jammu & Kashmir. They mingle, pick up skills from each other, learn about each other’s culture, and even engage in an exchange of rich traditions that bring these people and their experiences together.

Players From Grassroots Will Have More Opportunities

Diversify Across Asset Classes

In India, almost every kid has dreamed of playing for the Indian cricket team while growing up. And many continue to work on their dreams by playing local tournaments in and around their cities, waiting for their break. IPL will help the many first-class cricketers in India,

who are the top scorers and wicket-takers in domestic events but don’t always have the chance to play in international games.

It’s also wonderful for the fan base, as Gujarat and Uttar Pradesh are big cricket-loving states. The two new franchises can also help Indian cricket team to identify talented players from their home cities as well as the ones playing in the domestic leagues like Ranji Trophy, Duleep Trophy and Syed Mushtaq Ali Cup.

Inspiring Other Sports To Follow The Professional League Formats

Post the grand success of the IPL and its ability to get bigger, better and richer with every season, other sporting disciplines have begun planning and strategizing professional leagues of their own. Apart from the the IPL, there are currently other leagues like Pro Kabaddi League, Indian Super League (Football), Premier Badminton League, Super Boxing League, etc. These leagues have brought the limelight back on many sports which were in dire need of funding and support.

We are looking forward to the next season of IPL, and as financial advisors and experts from India, we are further excited to see how it will harness a great financial push to the economy. Stay tuned with this space for this and many such detailed analysis and opinions from a financial point of view on things happening around the world.

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