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IPL's brand value grows by 37% to $5.3 billion; CSK most valuable brand

ANALYST
News
5.46K   //    19 Jun 2018, 18:52 IST

Rajasthan Royals v Chennai Super Kings - IPL T20
Champions on the field; champions off it as well

What's the story

The tenure of Chennai Super Kings(CSK) at the pinnacle of IPL team listings have extended to beyond the grounds and beyond their performances in the recently concluded edition of the tournament, as they have now taken over from Kolkata Knight Riders(KKR) as the most valuable brand among the eight IPL franchises, according to most recent reports. The study was conducted by Brand Finance, a leading brand valuation company.

The details

The M.S.Dhoni-led side has been valued at USD65 million, just a USD3 million more than the now-second KKR. The third place is held by Sunrisers Hyderabad (SRH) at USD54 million., as they made a 16% progress from last year's brand value to retain their position from last year. Former-champions and record-sharers with CSK in terms of titles won, the Mumbai Indians (MI) have not been able to replicate their relative success in terms of brand value. They were in the second position last year, but have presently slipped to the fourth spot with a value of $53 million. A poor season on the pitch had definitely reflected their value off it as well.

Overall, the ranking is as follows: (read as Rank-Team-Value in USD)

  1. Chennai Super Kings (CSK): 65m
  2. Kolkata Knight Riders (KKR): 62m
  3. Sunrisers Hyderabad (SRH): 54m
  4. Mumbai Indians (MI): 53m
  5. Royal Challengers Bangalore (RCB): 49m
  6. Delhi Daredevils (DD): 44m
  7. Rajasthan Royals (RR): 43m
  8. Kings XI Punjab (KXIP): 40m

The Indian Premier League (IPL), is worth $5.3 billion, as per the brand validation conducted on the recently-concluded edition of the tournament, which was also the latest. Over the past 11 years that IPL had been in existence, it has seen 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 while speaking to Gulf News.

“Now in its 11th season, the Indian Premier League is here to stay. It has delivered financially for the players, franchisees, sponsors, and India as a whole, prompting a strong desire among a range of stakeholders to appropriately value it. To ensure continued development, management and team owners will have to explore innovative ways of engaging fans, clubs, and sponsors," he further added.

In case you didn't know...

This is the third year when Chennai, which boasts of the highest fan base, topped the valuation after previously leading the rankings in 2010 and 2013. Despite a mid-season change of home ground when they were forced to play their home matches in Pune, Chennai qualified for the playoff rounds yet again as the top team and went to win the title.

The market value of the cash-rich league has often remained an enigma, given the slew of controversies which has swept the IPL off and on — the worst phase being the betting and match-fixing scandal of 2013. “Yes, bad press of the League has affected the brand value of the teams in the past. During the past controversies of the IPL, its business value declined significantly and this impacted the IPL teams too from 2012 to 2014. Positive associations that helped build brand strength over time can go away very quickly and affect the other stakeholders," accounts Savio.

The CSK brand value has always been a subject of note. Their brand value has been boosted by the franchise creating a fan-base beyond Chennai, despite being forced to endure a two-year ban from the league. While other teams haven't grown so much, all of them have recorded at least a 10% growth in valuation since the last year. Viewership on Television and other digital media spiked voluminously, as the values boosted in tandem.

What's next?

While the business value of IPL as a whole has indeed grown and the franchises are all profiting well, 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," Savio pointed out.

An important question is what the IPL franchises need to do to be as highly valued as some of the English Premier League (EPL) teams, often seen as the best in the business. 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, and if the administration of the world's biggest cricket league can make amends on these factors in the coming years, it would be very flourishing times for the event in future.

While the IPL has succeeded 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.

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