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Business Value of Indian Premier League Hits US$5 Billion Mark

 

·         IPL’s business value hits all-time high of US$5.3 billion, according to latest report by Brand Finance

·         Chennai Super Kings crowned most valuable IPL brand, valued at US$65 million

·         2017’s most valuable IPL franchise brand Kolkata Knight Riders drop to second place with US$62 million brand value

·         Growing faster than any other IPL franchise brand, Sunrisers Hyderabad retain third place in rankings with 16% brand value increase to US$54 million

                                                                View the full Brand Finance IPL 2018 report here

The latest season of the Indian Premier League, a 48-day annual cricket tournament that showcases top international talent, has seen its business value grow by 37% to an all-time high of US$5.3 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.

Surpassing a US$5 billion mark for the first time, the IPL is a boon for the Indian sports business. Its commercial growth can be attributed to the stakeholders’ renewed confidence in the IPL management, a number of innovations in fan experience, and pure cricketing excellence, all driving up the overall interest and participation in the tournament.

Savio D’Souza, Director of Brand Finance, commented:

“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 amongst 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.”

Brand Finance has calculated the brand value of the Indian Premier League (IPL) and each of its teams annually since 2009. For the purposes of the valuation, the IPL has been treated as a single commercial entity, encompassing business values of all its parts. The income that the Board of Control for Cricket in India (BCCI) and the franchises will achieve and the expenditure that each will incur was aggregated. All cross-charged income and expenditure has been ignored. In addition, the Brand Finance IPL 2018 report ranks the most valuable IPL franchise brands. This year, Chennai Super Kings and Rajasthan Royals returned to the rankings after being banned from competition for both the 2016 and 2017 seasons.

Chennai Super Kings crowned most valuable IPL brand
With a brand value of US$65 million and winning the 2018 season title, Chennai Super Kings (CSK) have been ranked as the most valuable IPL franchise brand. This year, CSK top the Brand Finance IPL league table for the third time, after previously leading the rankings in 2010 and 2013. Despite a mid-season change of home ground, CSK managed to qualify for the playoff rounds yet again. Their brand value has been boosted by creating a fan-base beyond Chennai, despite being forced to endure a two-year ban from the league.

Kolkata Knight Riders slip to second
Last year’s most valuable brand, Kolkata Knight Riders (KKR) come second in the Brand Finance IPL 2018 ranking, with a brand value of US$62 million, up 5% from 2017. KKR lived up to its potential through the season, delivering on a bold strategy to include the highest number of players from India’s Under-19 World Cup winning team. KKR’s brand was boosted by stable governance standards and a huge fan-base mobilised by its owner, Bollywood star Shah Rukh Khan. KKR’s host of local and national sponsorships has shown loyalty over the years, while fans filled their stadium through the season. The solid leadership provided by Dinesh Karthik as captain, Sunil Narain and Andre Russell from the West Indies, and Australian Chris Lynn kept the KKR one of the most feared teams.

Fastest-growing Sunrisers Hyderabad retain third place
Growing faster than any other IPL franchise brand, Sunrisers Hyderabad (up 16% to US$54 million) retained third place in the rankings. In 2018, SRH saw their brand value increase despite losing their captain, David Warner, in the aftermath of the Australian ball-tampering scandal. New Zealand’s Kane Williamson led the team with such aplomb that the absence of David Warner was not felt. Williamson was also the highest run scorer in the IPL 2018 season, and led the team into the finals, where they lost to CSK. SRH boasted one of the best bowling attacks in 2018 with the Afghan star Rashid Khan leading the damage alongside Indian swing bowler Bhuvaneshwar Kumar. After a change of hands in the recent past, SRH now have stable management, new recruits, and a support team, which should be useful building blocks to challenge CSK next year.

ENDS
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The most valuable IPL brands are included in the Brand Finance IPL 2018 league table.

Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.

Additional insights, more information about the methodology as well as definitions of key terms are available in the Brand Finance IPL 2018 report.

Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts
Konrad Jagodzinski

Communications Director

T: +44 (0)2073 899 400           

M: +44 (0)7508 304 782          

k.jagodzinski@brandfinance.com

Sehr Sarwar

Communications Manager

T: +44 (0)2073 899 400

M: +44 (0)7966 963 669

s.sarwar@brandfinance.com

About Brand Finance          
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.

Methodology
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post-tax to a net present value which equals the brand value.

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