In the PSL, the winning team will receive 130 million rupees. Yes, 130 million rupees! From an average person’s perspective, this seems like a lot, but from the standpoint of a PSL team, it’s not that significant.
This is because PSL teams have a value ranging from 6 billion to 20 billion rupees. Additionally, organizing a single PSL match costs 1.4 billion rupees. This clearly shows that the reality behind the PSL, as seen on TV screens, is very different.
PSL Business Model
When we look at the PSL, we only see the tip of the iceberg, while the real games are deep beneath the surface. Here we will try to understand the entire business model of the PSL. The PSL, or Pakistan Super League, is similar to the IPL in India, where teams from different cities compete against each other.
In India, the IPL is controlled by the BCCI, and in Pakistan, the PSL is controlled by the PCB. It’s important to know this because the PSL operates as a private entity, functioning as a private company where many stakeholders have a significant role.
When it comes to the PSL, it starts with broadcasting. Then there are the PSL teams, which are operated through private companies, followed by sponsors who sponsor the PSL and the PSL teams. Finally, there’s the PCB, which governs the PSL.
Title Sponsorship
There are two types of sponsors: the first is the title sponsorship, where a brand pays to attach its name to a league. In PSL, whenever PSL is mentioned, it’s referred to as HBL PSL Powered by HBL.
Here, HBL is the title sponsor and will remain so until 2025. For this title sponsorship, HBL has paid PCB 3.91 billion rupees. However, all this money doesn’t go to the PCB; according to the business model, 5% is kept by the PCB, and 95% is given to the PSL teams.
Keep in mind, when we talk about a PSL team, we mean a PSL franchise like Lahore Qalandars, which has an owner.
Official Sponsors
The second type of sponsor is the official sponsor, who sponsors the events of the matches. For example, billboards in the stadium or boundary walls are sponsored. If you’ve noticed, whenever there’s a Super Six or TikTok Official Sponsor, followed by an Ittehad Power Run event where you see people running with batteries, Ittehad is working as an official sponsor.
Then there are the banners in the stadium, all of which are official sponsors. Roughly calculating, official sponsors generate more than 3 billion rupees in revenue for a PSL, and as per the business model, here too, the PCB keeps 5% and gives 95% to the PSL teams.
Broadcasting Rights
Thirdly, broadcasting rights are sold to the TV channels that air the PSL. In 2020, PSL’s broadcasting rights were sold for 4 billion rupees. Again, the PCB keeps 5%, and 95% goes to the PSL teams. If you’re thinking from the broadcaster’s perspective, why would they pay so much money?
Let me tell you, broadcasters always profit because a 10-second ad during a PSL match costs 1 to 1.5 million rupees. Interestingly, different brands compete to get these ads. So, whenever a broadcaster buys rights, they not only recover their money but always end up profiting.
PSL Team Price
From the perspective of a PSL team, a lot of money is needed to buy a team. In 2015, when the PSL was launched, five teams were auctioned, costing 93 million dollars, and the most expensive team, Karachi Kings, was sold for 26 million dollars.
But two years later, in 2017, the Multan Sultans were introduced, and since PSL had become very established, Multan Sultans became the most expensive team at 45 million dollars. All this money goes directly to the PCB, with no profit-sharing involved.
How do PSL Franchises Generate Revenue?
Buying a PSL team requires a lot of money. In addition to that, the franchise owner bears all the expenses for the players, including their salaries, food, accommodation, and transportation. So, does the owner make any profit? This is where the actual business begins, as the PSL teams already receive 95% profit from the PCB.
Logo Sponsors
Most of their revenue is also generated from Sponsors. As you’ve seen, each team’s shirt has 8 to 10 logos, which are not just random logos they’re team sponsors. The bigger the brand that sponsors the jersey, the more profit the team makes.
PSL Tickets
Additionally, 95% of the revenue from ticket sales is also given to the PSL teams, and according to 2020 data, PSL tickets generated 360 million rupees. In the future, this number will only increase.
Merchandise Selling
PSL team owners also make a lot of money from merchandising, like the shirts you buy in the market of your favorite team, and the profit from that goes to the team owner.
Prize Pool Money
Besides that, the prize pool comes last because 50% of the prize pool goes to the team owners, and the remaining 50% is equally distributed among the players.
How do PSL Players Make Money?
Speaking of players, they first make money from their salaries. Then, the prize pool further motivates them to play better. After that comes the draft, where all players in the PSL are available for selection. The draft has five categories
- Platinum
- Diamond
- Gold
- Silver
- Emerging
Platinum is in the top category, with the best players like Babar Azam, Shaheen Shah Afridi, and Mohammad Rizwan. The Platinum category’s price is the highest, with players being bought for up to $200,000.
In the Diamond category players are bought for up to $150,000, and similarly, the prices decrease in Gold, Silver, and Emerging categories. The better and more famous the player, the higher their category, and the more money they earn. However, teams can’t pick all players from one category. The draft is worth $1.2 million, and each team must choose players from every category.
So, with all this talk of billions, why would a team want to win the tournament? If we look from the perspective of a PSL team, they are not motivated to win the 130 million rupees, but because winning increases their brand value. Higher brand value means more popularity, leading to more viewership. More viewership means more sponsors and more sponsors mean even more money. So, PSL teams don’t just compete to win the prize pool; they do it to enhance their brand value.
Conclusion
the PSL is more than just a cricket tournament; it’s a complex business model with various revenue streams and stakeholders. While the prize money may seem modest compared to the expenses and investments involved, the true value lies in brand recognition and long term profitability.