IPL is drowning in cash, but what about the cricketers?
Over the years the BCCI and the team owners have increased their share of the profits from the Indian Premier League significantly. However, the surge for cricketers has not kept pace
The 10 franchises will largely rebuild their teams, each allowing a maximum budget of ₹ 90 crore. That's only 6% more than in 2021. When the IPL started in 2008, that purse was $ 20 billion per team. A 4.5x increase in player salaries in 14 years may seem generous, but the IPL ecosystem has grown much faster during that time.
The teams' auction box office has grown since 2008 with a cumulative annual growth rate (CAGR) of 11.3%. The peaks occur when the number of teams increases (2011) or when the Board of Control for Cricket in India (BCCI) strikes a new broadcast contract (2018). In comparison, sales of broadcasting rights, the proceeds of which are shared equally between the BCCI and the teams, grew at a CAGR of 19%.
So while more money is flowing, it's the BCCI and the teams that pocket more than the players. The BCCI is also charged with developing the cricket ecosystem in India. But given the limited data available, this is not where this new flood of money is going.
In fact, the share of player salaries in team income is falling. Take Kolkata Knight Riders (KKR). In 2010-11, the franchise generated 62 billion yen in revenue and paid its players 28 million yen, or 46% of its revenue. Over the years, these two amounts have increased. Its earnings doubled after the new TV deal that started in 2018. For example, KKR had sales of 448 billion yen in 2018-19, but paid its players 72 billion yen, or only 16% of the revenue.
For comparison: In European club football, the wage-income ratio of the top 20 tier I leagues in 2018-19 was between 53% and 79% according to UEFA, the sport's governing body. BCCI and franchises can expect another jump in revenue in 2023 when the next five-year broadcast cycle begins and is expected to double from current levels of 3.270 billion per year. This is intended to further reduce the players' wages.
In the name of parity, the IPL rules do not give players the right to choose their team or to negotiate their salaries. Although there is a time slot for player swaps, transfers between teams are rare and cannot be initiated by the players themselves. The Indian all-rounder Ravindra Jadeja was punished in 2010 with a one-year ban for negotiating a higher salary with other franchise companies.
The salary cap sets a cap on how much a franchise will spend on its entire squad, up to a maximum of 25 players. While the total spend of the cadre in the franchises is roughly in a wide range, franchises like Rajasthan, Punjab, and Hyderabad have consistently spent less than the maximum allowable limit. In 2014, four of the eight franchises were working with the salary cap. In 2018 and 2021, only Bengaluru operated with the salary cap. The other franchises spent even less, some marginally and some significantly.