Karan Taurani, Executive Vice President at Elara Securities, had been valuing the RCB franchise at around Rs 9,000 crore, approximately $1 billion, within United Spirits’ broader valuation. The deal came in at $1.8 billion. That gap alone, he says, adds 7 to 8 percent to his target price for United Spirits, assuming the cash is retained on the company’s books rather than distributed as a dividend.
Why IPL teams cannot be valued like normal businesses
The mistake most people make when looking at IPL valuations, Taurani argues, is reaching straight for revenue multiples. At 30 to 32 times revenues, these teams look expensive by any conventional measure. But revenue multiples miss the point entirely.
The more relevant frame is scarcity. There are ten IPL teams. There may eventually be twelve or fourteen, but the number will always be small and tightly controlled. That scarcity commands a premium that no revenue model fully captures.
Beyond scarcity, the underlying business metrics are genuinely strong. IPL teams have grown revenues at a compounded annual rate of 20 to 25 percent over the past ten to twelve years. EBITDA margins sit at around 35 percent for most franchises. Return on invested capital runs at 25 to 30 percent on an annualised basis. Very few businesses in India or anywhere else can point to numbers like that sustained over more than a decade through a global pandemic and repeated economic uncertainty.
The next 5 years will look different
Taurani is careful to temper the excitement with a note of caution about the near term. The current valuation already prices in much of the upside from the next IPL media rights cycle, he believes.
The reason is structural. Indian cricket derives around 80 percent of its revenue from media rights. By comparison, a club like Manchester United gets less than half its revenue from media, with the rest coming from ticketing, sponsorship, and commercial deals. Indian teams have barely scratched the surface on those alternative revenue lines.On the media side itself, the next auction cycle faces headwinds. Television advertising revenue is declining. Digital growth has been strong but penetration has reached a level where the explosive early growth is behind it. With consolidation in the media industry leaving essentially two serious bidders, the bidding dynamic will be different from the last cycle. Television rights on a per-match basis may actually fall, with digital offsetting some but not all of that decline. The net result, Taurani estimates, is that revenue CAGR for IPL franchises could slow from 18 to 20 percent historically to somewhere around 8 to 10 percent over the next several years.
Where the long-term value comes from
The levers for the next phase of growth are different from the ones that drove the last decade. Ticketing remains significantly underdeveloped relative to global sports properties. Sponsorship and brand endorsement deals have room to grow as franchise brands mature and player profiles rise. But the biggest untapped opportunity, Taurani suggests, is international. International revenues currently account for less than 5 percent of the total. If cricket continues to expand as a global sport, the upside from that dimension alone is significant.
Will IPL teams list on exchanges?
The RCB deal brings the listing question back into focus. CSK has already been demerged from its parent entity, though it has not yet listed. With a financial investor now on the RCB cap table, the pressure and the appetite for a public listing will only grow.
Taurani sees these as compelling listing candidates. Even in a moderated growth scenario, a business generating 15 to 17 percent return on invested capital with genuine scarcity value and no meaningful external disruption risk is a rare proposition for public market investors.
The valuations of other franchises, he estimates, will vary by 20 to 25 percent from the RCB benchmark depending on brand strength, player profile, and sponsorship pull. On that basis, teams like Sunrisers Hyderabad would be valued in the Rs 12,000 to 14,000 crore range, while Rajasthan Royals sits closer to Rs 15,000 to 16,000 crore.
The IPL is no longer just a cricket tournament. It is an asset class.