The View From Asia: Cricket and India a commercial match made in heaven
March 30, 2023
On the eve of the 16th edition of the Indian Premier League (IPL), Unmish Parthasarathi traces the origins of cricket’s commercial success in India over four decades.
In his inaugural bimonthly column – ‘The View From Asia’ – for iSportConnect, the Singapore-based Founder & Executive Director of Picture Board Partners details the off-pitch players and off-tube stats in the world’s most populous nation that’s seen more than $10 Billion being committed over the last 12-months.
On January 17th, India became the most populous country in the world, surpassing China. Much like the Middle Kingdom, India has witnessed rapid change through the ubiquity of the smart phone and the resulting change in the economics of attention. However, unlike China, India’s population today is younger and will deliver a demographic dividend into to the middle of the next decade.
India also speaks two dozen languages and it’s common for those Metro inhabitants to be functionally trilingual. I grew up in 1980s Delhi – speaking Hindi to my friends, English at school, and Gujarati at home. This linguistic heterogeneity makes for a rare opportunity and a seemingly bottomless commercial cocktail when combined with the universal love for one Sport.
And that sport is cricket.
The “Gentlemen’s Game” was a colonial hand-me-down until 25th June 1983 when India unexpectedly beat the West Indies to win the World Cup at Lord’s – the Home of Cricket. Two years later, India won the World Championship of Cricket, beating arch rivals Pakistan at the haloed MCG (Melbourne Cricket Ground). Fans began to believe that “1983“ (also the subject of a recent Bollywood movie) was not a flash in the pan. Their faith was not misplaced as India made the semi-finals of the fourth edition of the World Cup in 1987, an event that was played at home and televised nationally.
In 1992, the Indian government faced a foreign exchange crisis. The trade-off for a World Bank bailout was liberalising the economy which allowed the entry of foreign capital – and of foreign content. Satellite television began beaming live cricket into households. Day games on India’s 1996 tour of England attracted prime time viewership on television channels such as ESPN. TWI, the then media division of IMG (aka The Endeavor Group) also organised a five-match Friendship Series in 1997, between India & Pakistan. It was played at the Toronto Racquet & Cricket Club – the local start time of 930am was 530pm India and perfect for six-hours of unadulterated live action!!
Over the next three decades, the value of India as a broadcast media market for Cricket exploded.
- In 2006, ESPN STAR Sports bought global rights to eight-years of events hosted by the International Cricket Council (ICC) for a $1.1bn.
- In 2014, Star Sports renewed at a 80% premium for the following eight year cycle (2016-2023) for $2.1 Billion.
- Last August, Disney Star Sports paid a 3x multiple to renew, committing $3bn for four years (2024-2027).
In two decades, the ICC’s media rights for India have appreciated ~10x. In the same period, the Rupee depreciated 50% against the Greenback. From the PPP (Purchasing Power Parity) perspective of an economist, the break-even on the local currency was 20x on a straight line basis.
But cricket in India is a coin with two sides, and the second also traced its roots back to England.
In 2002, the England and Wales Cricket Board (ECB) launched a new tournament format – the Twenty20, that cut match duration by half, making it time-friendly. By 2006, the tournament’s success prompted the ICC to include this new event format into their deal with ESPN STAR Sports.
In September 2007, two things happened within a fortnight – the Indian Premier League (IPL) was announced and India beat Pakistan in a cliff-hanger final at the inaugural ICC Twenty20 in South Africa. The resulting pay days for the Board for Control of Cricket in India (BCCI) media rights tender have been astounding:
- In 2007, SONY Entertainment Television, ESPN STAR Sport’s main competitor, won the global rights in partnership with World Sports Group (the Asian avatar of, and predecessor to, Sportfive) for $1bn over 10 years (2008-2017).
- In 2017, Star Sports won the IPL media rights for $2.5 Billion (2017-2022). This 5x multiple was justified as premium prime time content to evolve Hotstar, its OTT service, into a paid service.
- In July 2022, the BCCI secured $6bn in a global-first, splitting exclusivity by platform as Disney Star Sports won broadcast rights whilst Viacom Sport (owned by the Reliance Group) won digital.
The latest IPL deal makes it the second-most expensive sports media property in the world, at $15 Million a match, behind the NFL. The one caveat is that an IPL season is 90-matches compared to 380-matches in the English Premier League which aggregates to a larger amount when annualised.
But there has been more gravy to be had on the IPL train in the last 12-months – such as the sale of the ninth and tenth franchise for a total north of $1.65bn, and more recently, the five franchises to the Women’s IPL (WPL) were sold for $572mn.
Cricket is a whole new ball game when it comes to India, a media market unlike any other in the world – it’s the lone BRIC worth building a house in! One notable international benchmark is the $71.3 Billion sale of 21st Century Fox to Disney, the Hotstar-Star Sports combine was reportedly valued at 20% enterprise value or $14bn.