Brand IPL valuation up by 26% to Rs 34,000 crore: Duff & Phelps

Brand IPL valuation up by 26% to Rs 34,000 crore: Duff & Phelps- InsideSport
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Brand IPL’s valuation has registered a 26% growth to reach up to Rs 34,000 crore ($5.3 billion).

Duff & Phelps, a valuation and corporate finance firm, in its annual study on brand IPL, has also estimated BCCI to fetch approximately Rs 11,500 crore ($1.8 billion) from IPL television broadcast rights and another Rs 1,345 crore ($210 million) from internet and mobile rights for the next five-year cycle from 2018 to 2022.

The Duff & Phelps’ annual study of the IPL franchisee brand values indicate that the overall value of IPL as a business has increased to $5.3 billion. The study last year had evaluated the league at $4.2 billion. This represents a three-year CAGR of 13.9% and an annual growth of 26%. Vivo’s astronomical Rs 2,199 crore commitment for the league title, coupled with a highly successful, controversy free 10th edition and an expected has resulted in this unprecedented surge in valuation.

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“This IPL season has garnered attention for all the right reasons. Namely, a relatively controversy-free tournament, increase in social media engagement, strategic and highly successful marketing initiatives, and compelling on-field performances; all of which affirmed the IPL’s standing as the most valuable cricketing league in the world,” says Varun Gupta, Duff & Phelps MD, leader of the firm’s operations in India, South Asia and Japan. “What IPL has achieved is phenomenal. Not just in India, but at international level as well.”

IPL has retained its brand value to be higher than its franchisee clubs, unlike in the Premier League football where some of the clubs enjoy better evaluations than the EPL. “I have been intrigued to watch how the IPL has marketed and protected its own brand value separate from the clubs. I have worked with some of the biggest clubs in the English Premier League (EPL.) Most of the EPL clubs are bigger brands than the EPL brand itself, whereas in the IPL, it seems that brand IPL is more powerful than the individual franchisees,” said Duff & Phelps Managing Director Trevor Birch, who has been a former Chief Executive of Chelsea FC.

However, teams too have registered significant gains in their brand values. The collective brand value of the IPL clubs have registered an escalation of 34% over 2016 numbers. Mumbai Indians, the most precious IPL club, has registered a growth of $ 28 million @ 36% over its last years value of $ 78 million to reach $ 106 million, Sun Risers Hyderabad is the club to have the best growth rate to reach $56 million from $41 million with a 37% escalation. The report did not evaluate Rising Pune Supergiant and Gujarat Lions as the two clubs are out of the IPL race now. Chennai Super Kings and Rajasthan Royals, who will return to the IPL scene after two-year suspension, too are not considered for the report.

Brand IPL valuation up by 26% to Rs 34,000 crore: Duff & Phelps- InsideSport

The rights fee for the IPL, report suggests, is set to more than double in value. “In our analysis, we have assumed the renewed television rights to be around $1.8 billion for a five-year period and the renewed internet and mobile broadcasting rights to be around $210 million. Given the popularity of the tournament as well as the increase in the number of bidders, it would not be a surprise if the broadcasting rights are renewed at a much higher rate than what we have estimated,” says Duff and Phelps MD Santosh N.

“For brand valuation we chose ‘Relief from Royalty’ method. The fact that the francishee owners have rights to operate in IPL as a brand, what is the royalty they are saving? By having the assets, they are saving the royalty. So we used this method to come up with the brand valuation,” Santosh said in a conversation with insidesport.co.

“The value created by IPL as a business has been valued using a variant of the Income Approach known as the Discounted Cash Flow (“DCF”) Method. Then, we carried out the whole valuation of the IPL as an ecosystem,” he added.

He also went on to talk about the achievements of the IPL as a brand and how it is comparable to the most lucrative league in the world, English Premier League. He was of the opinion that the IPL broadcast rights and sponsorship values though being just a fraction of that in EPL, are comparable considering the fact that EPL is a much older and longer league.

The evaluators have taken into consideration the interest coming in from multiple parties for the forthcoming IPL rights bid, the global growth in EPL rights value and a Vivo’s commitment for the IPL title sponsorship. More than 20 companies have bought the IPL bid documents. The bid will open on September 1, Friday.

“The new broadcasting rights auction will be one of the keenly watched developments over the next couple of months. The BCCI is clearly set for a huge windfall. We could be looking at a television broadcasting deal of record proportions in India. This deal may follow the precedent set by some of the big-ticket broadcasting deals across the world,” Santosh said.

The report highlights the evolution of the IPL since its inception in 2008 and its steadily expanding foothold on the global sporting scene.

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