Is the Saudi investment in the IPL really needed?

The Kingdom of Saudi Arabia is on a worldwide mission to invest in sports and its investments in Golf and football (Soccer) have garnered unlimited coverage it has been reported in the Indian and global sports media that Saudi Arabia is reportedly eyeing a multibillion-dollar stake in IPL.

Saudi Arabia proposed investing $5 billion in IPL. Crown Prince Mohammed bin Salman’s advisers have reportedly discussed the possibility of moving IPL into a holding company valued at $30 billion. 

When I first heard this news, I immediately had a question and that was Does the BCCI need this investment?

IPL as we know is a very successful sports league in terms of its valuation with its media rights deal being the biggest contributor to its growth. Last year Reliance beat Disney to IPL’s digital media rights in an auction winning the rights to stream IPL matches for  $6.2 billion which roughly works out to $15M per game and Reliance will drive all the viewers to their Jio Cinema app. To think of it, Jio could have invested much less in marketing or in creating/buying content to get the downloads but in India Cricket rules and the investment made absolute sense.

Broadcast and streaming rights are more like a double-edged sword for Indian cricket though. Think about it, IPL makes almost 80% of its income from its media rights deal. The rest of the 20% comes from sponsorships, ticket sales and merchandising, out of which sponsorships (Title, Official and Franchise) bring in close to 15-18% and the remaining comes from ticket sales and merchandise sales.

This is where the need for investment as a backup makes sense. Although the BCCI don’t need the investment, the Saudi investment can be utilised to expand the league’s presence in other countries by playing matches in other countries like the NFL and MLB play in the UK for example. Another way to utilise the investment could be in the form of giving the next round of media rights a breather in terms of reducing the bids helping them to recover the investments in building infrastructure – so the BCCI can make investments in creating and leasing their technology giving broadcasters respite and making money by renting out top-level tech.

The other beneficiaries of the investment can be the franchises as well. The investment could mean a wider central pool with the franchises making more money and most importantly it can be invested in developing the income stream for the IPL which underperforms compared to other global sports leagues and that is Merchandising.

The investment can test BCCI’s vision for IPL and if this rumoured does go ahead it would it will be interesting to see how much will the BCCI prioritise fan engagement, merchandising, tech development and most importantly how it will impact the media rights deals in the future.