London-headquartered investment bank Elara Capital anticipates that cumulative bids for broadcast rights of IPL could top 500 billion to 600 billion rupees for the 2023-2027 period.

This translates into 1.35 billion rupees per match, ahead of the current rates for the English Premier League (EPL), Germany’s Bundesliga, and in North America, Major League Baseball (MLB) and the National Hockey League (NHL).

At US$6.3 billion, Elara Capital values IPL higher than the EPL’s US$5.3 billion and NHL’s US$4.43 billion.

The Indian cricket board has doubled the floor price for the two-day auction for the broadcasting rights, set to begin tomorrow, to 329 billion rupees.

The 163.47 billion rupees paid by the current rights holder Disney Star five years ago was about double the 82 billion rupees forked out by Japan’s Sony for the telecast rights for the first decade of the tournament, between 2008 and 2017.

In the fray to shell out top bucks at tomorrow’s bidding are Reliance Industries subsidiary Viacom 18, the Walt Disney Company’s Disney Star, local group Times Internet and South African broadcaster Super Sports.

Sony Pictures Network India and Zee, which announced a merger in January, will bid separately.

Amazon, Apple, Google and Indian fantasy sports start-up Dream11 had also bought the bid documents but are unlikely to bid.

Jay Shah, secretary of the Indian cricket board and the son of Indian home minister Amit Shah, had said last year that the tournament will become “bigger and even better” from 2022.

Shah’s assertion has come true.

The euphoria around IPL was visible at the bidding war for two new franchises that joined the tournament in the recently concluded 2022 season, expanding it to a 10-team affair.

Sanjiv Goenka, the billionaire chairman of Kolkata-headquartered utilities and retailing company RPSG Group, snapped up the Lucknow franchise for 71 billion rupees while CVC Capital Partners, a European private equity firm, bought the Ahmedabad team for 56 billion rupees.

They outbid Indian billionaires Gautam Adani and Uday Kotak, apart from Avram Alvarez, a stakeholder in football club Manchester United.

The tournament featured 74 matches in its 2022 edition, as against 60 matches earlier.

An elongated schedule, which is going to be the norm going forward, along with the tournament’s massive brand recall, makes it hard to ignore.

It may even prod broadcasters to go out of their way and place outsized bids to bag the telecast rights.

“From a platform point of view, IPL is one of the major bumps in the calendar for any brand,” said Karthik Srinivasan, an independent brand consultant.

“Any brand that is trying to target a pan-Indian audience, or even a specific region, can’t ignore IPL because the teams, associated with states, have a strong regional following.”

Industry observers believe that the fresh bidding will be a closely contested fight between Viacom 18 and Disney Star, with both of them banking on cricket to cement their foothold among Indian viewers.

Securing the broadcast rights to the biggest tournament for the country’s most-viewed sport will likely provide a good way for whichever group wins it to gain an edge over their competition.

IPL is crucial to the media ambitions of Reliance Industries chairman Mukesh Ambani, who also owns the Mumbai Indians franchise in the tournament.

In 2020, his telecom venture Jio went on a fundraising blitz, raising about US$20 billion from Google, Facebook, General Atlantic and Silver Lake among others.

While it’s still a clear leader in the telecom segment, comfortably ahead of Bharti Airtel, Jio’s growth has been slowing down of late.

According to India’s telecom regulator, Airtel added 4.5 million new users between January and March, while Jio saw a dip in its user base in January and February, before adding 1.26 million subscribers in March.

The IPL rights would help Ambani bolster Jio’s user base.

It would also give a much-awaited boost to Viacom 18, which trails Disney Star and the combined Sony-Zee entity.

Viacom 18 even launched a dedicated sports channel in April.

Such is the urgency to get back on the growth path that Viacom 18, a 51:49 joint venture between Reliance Industries’ TV18 and Paramount Global, recently shored up its war chest with a 135 billion rupee infusion from Bodhi Tree Systems, an investment firm backed by businessman James Murdoch and Uday Shankar, the former Star India head.

For Disney Star, retaining the broadcast rights is all about protecting its turf and leadership in streaming.

With 51 million users – largely drawn in by IPL – its over-the-top platform Hotstar was estimated to be the largest in India, estimates research firm Media Partners Asia.

Amazon Prime had 22 million users and Netflix 6.1 million.

While bidders may appear ready to splash the cash, recouping their investments may be a challenge.

Analysts believe that advertisements, a major revenue stream for advertisers, may slow down in the near term amid a broader slowdown in consumption, which could turn potential advertisers cautious.

According to local media reports, Disney Star recently sold off a 10-second advertisement slot for television broadcast for about 1.7 million rupees.

According to Elara Capital, endorsements, sponsorship and media spending on Indian sporting events topped 95.3 billion rupees in 2021, as against 91.90 billion rupees in 2019, before Covid-19 struck.

Cricket accounted for 88% of the spending last year, compared with 80% in 2020.

However, start-ups, which are some of the biggest endorsers of IPL, are going through a cash crunch as venture capital and private equity firms have turned selective about their bets on new ventures.

With most of them still in the red, cutting down on ad spending could end up being the easiest way to cut costs.

“Such (ad-related) challenges are near term in nature,” said Karan Taurani, senior vice-president at Elara Capital.

“IPL is a very compelling property where advertisers do a lot of mass campaigns and product launches. Even in the current environment, advertisers will probably cut spending on other properties, but for IPL, the level of compromise will be very low.”