Cricket's financial renaissance: Lakhs of crores invested, but what does the future hold?

In the slog overs of a hard-fought T20 cricket match, batters wanting to take the team to victory often step out of the crease aiming to score a big six. Two things can happen when the batter does this: either he connects well and gets that six, or in the process of hitting the shot is caught at the boundary or stumped by the wicketkeeper. It’s a gamble. Something similar is playing out in the business of cricket in India. Massive amounts of money are being pumped into what has become the country’s favourite sport, with team owners, media firms and advertisers all keen to get a share of the lucrative pie as viewers—both on television and digital—remain hooked to their screens to watch the game in its various formats.

Take a look at some figures. The total amount being invested by media houses like Viacom18 and Disney Star for the digital and TV rights of the hugely popular Indian Premier League (IPL) alone works out to a staggering Rs 48,390 crore. And this is for five years. Add to that the $3 billion that Disney Star forked out for the rights to the ICC tournaments (the TV rights of which it then sold to Zee), and the amounts get even bigger. Cricket body BCCI gets half of the IPL media bid amounts and the entire money from the sale of bilateral rights. Currently, with the growing viewership numbers and the success of the IPL, franchise owners and advertisers are betting big on the sport. The more recent franchise owners have invested much higher amounts than those who came in when the IPL first began in 2008. And advertisers say the focussed and intense engagement that limited-overs cricket, in particular, offers is quite unparalleled. Many are witnessing significant spikes in sales after advertising during the tournaments.

In our cover story, Krishna Gopalan takes a close look at what makes cricket such a huge money machine, and how the economics work out for all concerned. So far, the going has been good. But with the massive amounts of money put in for media rights and franchises, recouping the investments made will be top of mind. If one considers the IPL alone, recovering the amount invested for media rights would mean those holding these rights will need to bring in more than Rs 9,000 crore every year just to get back what they’ve put in. On the other hand, Viacom18 took a big step by streaming the IPL matches free on its JioCinema platform, hoping to generate stickiness. Clearly, those investing have stepped out of the crease. Whether they hit a six remains to be seen.

In this issue, Nidhi Singal also helms a special report on sustainability, a critical element that will define the future of not just corporate India, but the nation as a whole. While many Indian companies are moving ahead on the sustainability agenda, the overall picture continues to be bleak. A recent Deloitte survey has shown that only 27 per cent of Indian businesses are well-prepared to meet ESG requirements, while just 15 per cent of the respondents have suppliers who are ready. A lot of ground remains to be covered.