IPL Media Rights Auction May Fetch Over Rs 50,000 Crore: Elara Capital
India's cricket board is likely to garner more than Rs 50,000 crore from the sale of IPL's media rights for the next five years amid aggressive contest for digital broadcasting, according to Elara Capital.
Indian Premier League media rights for the next cycle (2023E-2028E) is expected to grow in 3-4x range (25% growth due to more matches) to Rs 50,000-60,000 crore, led by the “sharpest growth in digital media”, the research house said in a report.
“Expect digital to see premiums of 100% over the current base [price], while TV premiums of 40%," it said. "Based on these premiums, the share of digital might rise to 50% in IPL media rights. We anticipate 6% and 35% revenue CAGR in FY23E-28E for TV and digital, respectively."
The Board of Control for Cricket in India has set a base price of Rs 32,890 crore for the media rights of one of the world's biggest sports leagues, double than the 2018-22 cycle. It had sold IPL media rights to Star India for Rs 16,348 crore in the previous cycle.
The number of teams at this year's IPL season increased by two, totaling 10, and played 74 matches.
Digital Viewership To Spike
Even though the total viewership of IPL is increasing year-on-year, the TV viewership has been dwindling, the report said.
TV viewership numbers, it said, are expected to grow a meager 3-4% in the future. In contrast, the digital viewership has been increasing and may grow to 72.2 crore in the future. The overall smartphone user base in India is expected to grow to 130 crore in 2028. “Thus, the digital viewership penetration may grow at a faster clip compared with TV viewership.”
Sports, according to Elara Capital, have turned into a point of high interest for the OTT platforms. “As such, it is very important for these OTT platforms to have sports as a property to ensure robust performance and future scale-up.”
IPL Vs Global Leagues
While cricket rules the Indian market with a 94% share in media rights, it's a mere 3% globally, Elara said.
Baseball (62.4%), U.S. College Sports (35.9%) and golf (32.4%) accounted for the biggest year-on-year revenue rise, of the top-10 most valuable sports as they bounced back robustly after the pandemic, the report said.
While cricket's share in global media rights is insignificant, Elara expects a spike due to its growing popularity and increasing adoption by non-playing nations.
But IPL media rights' revenue CAGR at 10.4% is much higher than other global leagues' such as English Premier League, National Football League and National Basketball Association—that have grown at 8% CAGR since their inception.
“Cricket, especially IPL, is approximating a trailblazer innings in India.”
Also, while the revenue of some of the global teams like Manchester United, Juventus and Borussia Dortmund grew at an annualised rate of 1.1%, 4.7% and 4.0%, respectively in the past seven years, with a trailing 12-month price to-sales of 2.4x, 1.7x and 1.1x, the IPL teams' revenue CAGR has been more than 10% during the period, the report said.
“(IPL is) commanding a much higher valuation than football counterparts, mainly due to higher revenue growth and stellar viewership.”
IPL's Appeal
A large-ticket property such as IPL is very important for any broadcaster to drive its digital strategy.
According to Elara, one-third of Star's revenue is IPL-led (TV + digital). “If Star wins IPL rights, this revenue contribution will augment to 40% as digital growth will accelerate. As per our estimates, 70% of Star India's advertising-based video on demand revenue is IPL-led, with subscription video on demand revenue largely following suit.”
It also expects IPL to lead to a surge in monthly active users or daily active users for any OTT platform.
But as IPL's content cost will remain at a huge premium (Rs 10,000 crore annually), Elara said any broadcaster with such rights might not break even until the fourth year (of the five-year cycle), given the TV segment's muted growth prospects.
“Expect IPL's FY18-28E TV/digital viewership CAGR at 1%/14%.”
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