Why IPL teams are worth billions: Decoding RCB and RR’s valuation playbook | Business

Indian Premier League (IPL) franchises Royal Challengers Bengaluru (RCB) and Rajasthan Royals (RR) have raked in billion-dollar valuations, opening a window into how the cash-rich league has evolved from a cricket tournament into a tightly held sports-media economy.

This raises the question about how IPL teams are valued and whether these valuations are justified.

What does valuation mean in IPL’s context?

The report valued RCB’s brand at $269 million and Rajasthan Royals’ at $146 million in 2025. RCPL’s revenue was ₹504 crore in FY25. 

Santosh N, managing partner at D&P Advisory, says the reported franchise prices are “at a significant premium to intrinsic value”. If annual revenue for an IPL team is roughly ₹700 crore to ₹800 crore, or under $80 million, then valuations of $1.6 billion to $1.8 billion imply revenue multiples of around 20x to 22x.

How are IPL teams valued?

The main financial method is discounted cash flow, or DCF. Houlihan Lokey says its IPL business valuation primarily hinges on the income approach, specifically DCF, which estimates the present value of projected future cash flows and terminal value discounted back to today.

For brand valuation, it uses the relief-from-royalty method, which estimates what a franchise would have had to pay to license its own brand if it did not own it. The methodology explicitly considers the role of marquee players such as Virat Kohli and MS Dhoni, along with the importance of the brand to sponsors, advertisers and fans. 

Why media rights matter most

The biggest anchor in any IPL valuation is the central revenue pool, especially broadcasting and league sponsorships. The Houlihan Lokey report says top franchises generate around ₹650 crore to ₹700 crore in annual revenue, with up to 80 per cent visibility secured before the tournament begins, helped by long-term media rights and front-loaded sponsorship deals.

This is also why IPL teams are increasingly viewed less as conventional cricket clubs and more as scarce media-linked assets. When media-rights expectations rise, franchise values tend to rise with them.

But Santosh also flags a constraint. The broadcasting market has consolidated, mainly by JioHotstar, making it harder to assume a sharp rise in rights values in the next cycle. “So it is difficult to argue that team revenues will rise 30 or 40 per cent, or even 20 to 30 per cent, in the near term. That is why, from a pure valuation standpoint, these numbers are hard to justify,” he says.

What makes IPL teams valuable

The central pool sets a floor. Team-level strengths then determine the premium.

Fan base is one factor. A large, nationwide and digitally active audience improves sponsor pull, merchandise potential and pricing power. Another factor is sponsor quality. Teams that consistently attract blue-chip partners are seen as stronger businesses, not just louder brands.

Houlihan Lokey’s study also argues that IPL franchises benefit from an asset-light structure, salary-cap discipline and low fixed-asset exposure compared with many global sports teams.

Scarcity matters too. There are only 10 IPL teams, and not all are realistically available for sale. “Out of 10 teams, maybe only one or two are realistically open to investment or sale. When many investors chase very few assets, premiums rise sharply,” says Santosh.

Why RCB’s valuation is not much higher than RR’s

The sale of both RCB and RR begs another question: why is the valuation of a popular franchise like RCB not significantly higher than that of RR?

On one hand, RCB boasts one of the league’s biggest fan bases, mainly driven by Virat Kohli’s stardom, a premium Bengaluru market and strong sponsor appeal. RR, on the other hand, never had a marquee player like Kohli, or boasts of a die-hard fanbase.

Santosh says that even though there is a gulf between the brand values of both teams, their revenues may still be nearly the same.

“Each franchise gets around ₹500 crore from the BCCI’s central pool, regardless of whether it is at the top or bottom of the table. Team-owned revenue is typically in the ₹200 crore to ₹300 crore range. A team like RR may generate around ₹220 crore on its own, while RCB may generate ₹270 crore to ₹300 crore. So the overall revenue gap remains modest,” he says.

What are the risks behind these valuations?

The bull case is not without caveats. Santosh identifies three major risks:

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  Media consolidation could weaken future bidding intensity for IPL rights.
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  Regulatory or policy action affecting key advertiser categories could hurt broadcaster economics and reduce future rights aggression.
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  Some investors may be building in aggressive assumptions about a much longer IPL window, which remains uncertain because it depends on player availability, support from other cricket boards and sustained viewer appetite.

Why buyers may still pay up

Santosh says that these assets are not being bought like hold-forever dividend plays. “These (teams) are like trophy assets. For many investors, especially ultra-rich individuals and strategic buyers, the appeal may go beyond return on investment. Ownership brings status, access, visibility and proximity to the worlds of sport, entertainment and business,” he says.

The second reason is the exit value. According to Santosh, investors may believe that five or six years from now, demand for these assets will remain strong and someone else will be willing to pay $2.5 billion or $3 billion. In that case, their return comes from capital appreciation, not operating cash flow.

“So this is not a hold-forever, collect-dividends investment. It is more likely a prestige asset plus a bet on future resale at a higher price,” he says.