SWOT Analysis Indian Premier League (IPL)
Where will you find the Mumbai Indians, the Royal Challengers, the Deccan Chargers, the Channai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata Knight Riders and the Rajesthan Royals? In the Indian Premier League (IPL) – the most exciting sports franchise that the World has seen in recent years, with seemingly endless marketing opportunities (and strengths, weaknesses and threats of course!). This SWOT analysis is about The Indian Premier League.
- Since it has a large potential mass audience, IPL is very attractive as a marketing communications opportunity, especially for advertisers and sponsors.
- The league functions under a number of franchises. Each franchisee is responsible for marketing its team to gain as large a fan-base as possible. The long-term success of all of the franchises lies in the generation of a solid fan-base. The fan-base will generate large TV revenues.
- Different fans will pay different amounts to watch their sport. There will be corporate hospitality, season tickets, away tickets, TV pay-per-view and other ways to segment the market for the IPL.
- There is a huge opportunity for merchandising e.g. sales of shirts, credit cards and other fan memorabilia. Grounds can also sell refreshments and other services during the games.
- Marketers believe that the teenage segments need to be targeted so that they become the long-term fan-base. Their parents and older cricket fans may prefer the longer, more traditional game. The youth market may also impress on their parents that they want them to buy their club’s merchandise on their behalf – as a differentiator or status symbol.
- Franchise fees will remain fixed for the up until 2017-18, which means that the investment is safe against inflation which is traditionally relatively high in India.
- The level of competition that the Board of Control for Cricket in India (BCCI) can generate determines long-term viability of the league. If the level of competition drops, then revenue will fall. For example, if the top names in cricket cannot be attracted to India, the appeal of the game will fall. Often getting hold of the big names is a problem – Australian domestic cricket runs concurrent with the IPL and if players move form Australia to India to follow the money then their domestic game will be hit. This is known as ‘Free Agency.’
- If the franchisee’s fan-base does not generate income then they may not have the cash to pay the salaries of the best players. However, if you invest in the best players and they do not win the trophies, then you may not see a return on your investment. It won’t be a quick return on investment – so owners need to be in it for the long-term.
- Franchises are very expensive. The most expensive franchise – Mumbai Indians – was bought by Mukesh Ambani for $111.9 million, whereas the lowest priced franchise – Rajasthan Royals was picked up by Manoj Badale for a mere $67 million.
- The most highly priced teams may not be those that have the early success. Revenues will come from the most highly supported teams.
The Indian Premier League (also known as the "DLF Indian Premier League" for sponsorship reasons; often abbreviated as IPL), is a Twenty20 cricket competition created by the Board of Control for Cricket in India (BCCI).Read more…
Indian Premier League, Wikipedia, 5th July 2008.
Will cricket’s new czars make money? Shamni Pande and Tejeesh N.S. Behl – Business Today 14th May 2008.
IPL’s economics demystified, Ram Tamara and Michael Maloney – Business Today 14th May 2008.
This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.
- The Indian Premier League (IPL) is based upon the Twenty20 cricket game which should be completed in 2 ½ hours. That means that is fast-paced and exciting, and moreover it can be played on a weekday evening or weekend afternoon. That makes it very appealing as a mass sport, just like American Football, Basketball and Soccer. It is appealing as a spectator sport, as well to TV audiences.
- The IPL has employed economists to structure its lead so that revenue is maximized. The more unified the sport, the more successful it is.
- Twenty20 has been so popular that it could replace other forms of cricket i.e. damage the game that generated it.
- Some fans will also have to pay for travel to the ground. There may be large queues for the most popular games. There may be some distance between where the fan lives and the cricket ground.
- Stakes are very high! Some teams may not weather short-term failures and may be too quick to get rid of key managers and players if things don’t go well quickly. Famously, Royal Challengers Bangalore (RCB) sacked their CEO Charu Sharma for watching his team lose 6 from their first 8 games.
- Some teams have overpriced their advertising/sponsorship in order to gain some short-term returns (e.g. Royal Challengers), and some sponsors and are moving their investment the more reasonably priced teams.