The Case Against IPL Valuations

 Blackstone's acquisition of RCB at a valuation of $2B marks a 15-20x growth in a franchise’s valuation since IPL started. The extraordinary valuations are built on two pillars: systemic cost suppression that ensures low player salaries and a growth story that deserves more skepticism than it gets. 

Cost suppression 

To make a great sports league, you necessarily need two things: the best players in that sport and competitive parity between teams. In any sports league in the world, read NBA (Basketball), NFL (American Football), MLB (Baseball), Premier League (Football) - player salaries account for almost half of the money earned by the league. In leagues like the EFL, it is about 67%. Contrast that with IPL - % of money earned by the league that goes to players is about 15%. This is much lower than any other major league in the world. Even compared to other cricket leagues (although they don’t compare anywhere in size). 

This is because Indian cricket is uniquely positioned to have a private society called BCCI that has cornered player resources. For any other sport in the world, there’s no BCCI - the players are not cornered resources in the sense that no such monopsonist body exists. For that matter, the NFL doesn’t keep any profit - it is effectively a trade association of the teams. In contrast, for the IPL, 50% of central pool revenue is taken by the BCCI (45% is distributed to franchises and 5% is the winner's money). To be fair, in other tournaments, the teams also bear the cost of the stadiums (capex) and of developing talents (most teams run spring camps or provide training facilities to recruit best players in their team). Uniquely for the IPL, the BCCI (via its children state cricket organizations) own the stadiums and player contracts are standardized. Also, IPL teams have started investing in talent spotting and development only recently but not meaningfully - largely BCCI assumes that responsibility. 

But here’s the point - in most other leagues, the players have two key safeguards to protect player salaries and participate in the upside of the league: one, a collective agreement negotiated by a players union to receive a guaranteed percentage of the league revenue (eg: 48% in NFL); two, an open competition, where a new league can come up and offer the players with competitive prices, for example, Al-Nassr (Saudi football club) bought off Ronaldo of Manchester United. But uniquely for the IPL - both those safeguards don’t exist. On the former, the only somewhat-players-union a.k.a Indian Cricketers’ Association can only have retired players as members by law and can “not act as a trade union” according to the Supreme Court of India. On the latter, when a new league came up (Indian Cricket League started by Zee/Subhash Chandra), the BCCI announced that any player who joins the ICL will be banned for life from playing for India or even in domestic cricket. The Indian Cricket League shut down shop in 2 years - nobody wants to watch Grade B players in a league afterall. Moreover, the BCCI explicitly bars any active Indian male players to play in any overseas league as well (like the Big Bash in Australia or the Hundred in England). Interestingly, the restriction for international leagues doesn’t apply for women players as of now.

As the IPL has grown about 15x in size (as per the latest valuation of the RCB team), the player salaries as a share of total league revenue has gone from ~30% to ~15%. Due to a structural cornering of a resource (players) by a private monopoly.

Now, one might argue that the players get popular as IPL expands and earn more from endorsements or their personal brands. However, the argument has obvious problems: a) this is true for only top 15-20 players b) the fandom is often more a function of the national team fame than IPL viewership and c) even if I add endorsement incomes, the share of player compensation in the total revenue is still far below any comparable league.

In any case, the entry of institutional money in the IPL (Blackstone in RCB, CVC in Gujarat Titans) only reinforces the power asymmetry. If I were to guess, the structural inequity is not going to self-correct, because the investors have every incentive to keep the revenue sharing arrangement as is, if not worsen. 

Revenue expansion

No doubt, suppressed labour costs and structural monopoly is a PE’s golden goose. But to justify the outsized valuation, that is not enough - it assumes significant upside in the revenue as well.

But about 75% of IPL central pool revenue comes from media rights. Most of the remainder comes from sponsorships. A small bit (less than 5%) comes from ticket sales. IPL is truly a media product. The case in point is when IPL moved to South Africa and the UAE for a few seasons, its topline didn’t see any impact (though bottomline was significantly impacted due to higher stadium fees). 

Thereby, the only obvious levers of revenue growth for IPL are: a) more viewership b) more inventory (i.e. more matches per season and thereby, more money per year) c) expand revenue from tickets, merchandise sale and stadium experiences.

Let’s take the viewership lever first. The media rights contracts are broken and sold in a two-by-two: on one axis is international and domestic rights, on the other is streaming and TV rights. TV viewership is plateauing, if not declining and there’s no case for a growth in TV viewership. On international media rights, the bull case is that cricket gains popularity in the non-cricket-playing nations like the USA and Canada. However, there are serious impediments to cricket popularity translating to growth in IPL viewership because the 12-15 hour timezone lag means IPL matches don’t get North America prime-time slots; not to mention the IPL competes with their own domestic cricket leagues on which the BCCI has no jurisdiction. Similarly, for other cricket-playing nations like the UK and Australia, their own domestic leagues are quite popular. Therefore, expanding domestic streaming viewership is the key to the IPL growth story - the argument is indexed on deepening internet/mobile phone penetration and growing incomes. But it’s worth noting that IPL was viewed by 1 billion+ unique viewers in 2025 - that’s more than 70% of the Indian population. Hence, there’s a ceiling to the upside in domestic viewership.

This leaves IPL with the other two levers - more games per season and higher matchday monetization. When compared to any major sports league of comparable size, an IPL season is significantly small - about 2 months in duration, 74 games and 12 teams. In contrast, each of MLB (Baseball), NBA (Basketball), Premier League (Soccer), NFL (American Football) have 6-9 months long season (3-4x of IPL), have 20-32 teams (2x of IPL) and run between 272 games/season for NFL (4x of IPL) to 2,430 games/season for MLB (32x of IPL!). 

However, season expansion of the IPL is limited by an already packed international cricket calendar. More so, because the BCCI is incentivized to protect the bilateral series and ICC leagues - both of which it monetizes. Also, adding more teams to the IPL comes at the cost of diluting the share of the central revenue pool for each team - which accounts for almost 75% of each team’s revenue.

There are probably two more inorganic/non-obvious levers of revenue expansion for IPL franchises that come to mind. One, the BCCI reduces its 50% cut in the central pool and transfers more money to the franchise. Two, the IPL acquires or starts domestic cricket leagues in other countries - leveraging its exclusive access to Indian players. As per the current BCCI posturing, both of these look unlikely.

The most underpriced risk in any IPL valuation is player dissatisfaction. Historically, every sports league that has grown to this scale has faced a reckoning with its players. Decades of labour wars in the NFL and MLB resulted in guaranteed revenue share for players. The Bosman ruling in European football resulted in player mobility across clubs. It is hard to believe the current IPL structure - 15% revenue share with no free agency, no union and no competing leagues - is a stable equilibrium. 

In fact, the risk isn’t hypothetical anymore. Saudi Arabia is planning to invest $500M in its new T20 league, in line with its strategy to expand into international sports (F1, 2034 FIFA World Cup, LIV Golf). The BCCI (along with the ECB) has already deployed its ICL playbook again - announcing that they’ll not support the league and not give their players NOCs to participate. Except that this time, the league is backed by big, patient money - Saudi’s $1 trillion sovereign fund; and is designed by the World Cricketers’ Association as the first player-led tournament in the cricket calendar, somewhat like the tennis’ ATP. 

Two decades of spectacular growth have a way of making everyone forget they're playing musical chairs, until the music stops.