Investing in the IPL: The Legal Playbook for IPL Franchise Investments
Since its launch in 2008, the Indian Premier League (“IPL”) has grown into one of the world’s most successful sporting competitions. In recent years, franchise valuations have soared, media rights deals have hit record highs, and brand partnerships have expanded across sectors, drawing global investors and sponsors. Reports suggest that owners of franchises such as Royal Challengers Bengaluru (“RCB”), Rajasthan Royals (“RR”) and Kolkata Knight Riders (“KKR”) may seek to monetize their investments through full or partial stake sales.
In a previous note, we have analyzed the diligence requirements for IPL franchises and the relevant regulatory considerations (accessible here). This note analyzes the key contracts that IPL franchises enter into, and highlights information useful to potential investors.
A REVIEW OF CORPORATE STRUCTURES OF FRANCHISES
IPL franchises have been generally structured such that a special purpose vehicle (“SPV”) is created for operating the IPL franchise, in which the shareholders/promoters (resident and/or non-resident) hold investments. RR (Royal Multisport Private Limited) and RCB (Royal Challengers Sports Private Limited) are two examples of franchises that are majority owned by non-resident shareholders. Franchises that operate through SPVs, which are majority owned by resident shareholders (with minority investments from non-residents in some cases) are: (i) KKR (Knight Riders Sports Private Limited), (ii) Chennai Super Kings (Chennai Super Kings Cricket Limited), (iii) Delhi Capitals (JSW GMR Cricket Private Limited), (iv) Punjab Kings (K.P.H. Dream Cricket Private Limited), (v) Mumbai Indians (Indiawin Sports Private Limited), (vi) Lucknow Super Giants (RPSG Sports Private Limited) and (vii) Gujarat Titans (Irelia Sports India Private Limited – prior to a sale of 67% equity to Torrent Investments Private Limited, this SPV was majority owned by non-residents).
There is one instance of an entity that has not created an SPV for operating the franchise – Sun TV Network Limited, a publicly traded company, holds the license to operate its franchise, Sunrisers Hyderabad, directly without a separate holding structure.
PRIOR TRANSACTIONS
In recent years, private equity investors have been involved in several transactions with respect to IPL franchises. CVC Capital Partners’ acquisition of the Ahmedabad-based franchise (which was later branded as the Gujarat Titans) in 2021, and its subsequent sale of a majority stake to the Torrent Group, indicate the growing private equity interest in the IPL.
Many IPL owners now operate multi-club portfolios across jurisdictions like England, the Caribbean, South Africa, the United Arab Emirates and the USA and formats like the Women’s Premier League, the SA20, International League T20, Major League Cricket and the Caribbean Premier League, enabling cross-market synergies and diversified revenue.
INVESTMENT ENTRY AND EXIT CONSIDERATIONS
From a regulatory perspective, the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 permit up to 100% foreign direct investment in sports infrastructure and services (subject to compliance with the neighboring country restrictions set out in Press Note 3 of 2020). While the sector promises strong long-term returns, investors must carefully assess their investment and exit landscape.
For any investment, including sports franchises, exploring liquidity and exit rights is crucial. For IPL franchises, typical exit options include: (i) full or partial sale to strategic buyers such as private equity players, high-net-worth individuals, corporate entities, and foreign investors; (ii) strategic mergers and partnerships with other sports teams, media conglomerates, and tech or entertainment companies; and (iii) phased exits where current owners retain control. Investors may also consider an initial public offering of the franchise (none of the ten franchises is yet listed but listing will likely be considered by the franchises in the coming years). Listing a franchise on a stock exchange may allow owners to secure a return on investments, increase brand visibility, and/or use funds for investing in productive assets related to the league.
Exit optionality will be subject to the conditions in the franchise agreements. These agreements impose lock-in periods for shareholders, prescribe standards for potential buyers, and require payment of fees on share transfers to the Board of Control for Cricket in India (“BCCI”). Transfers of shares in a franchise may also trigger change-of-control or share transfer approval requirements. However, these requirements do not automatically apply to all minority share transfers.
Where any IPL franchise has set up an entity (whether as a wholly-owned subsidiary or otherwise) outside India to operate a franchise in any other league, compliance with the Foreign Exchange Management (Overseas Investment) Rules, 2022 and regulations and directions issued thereunder will need to be ensured.
KEY CONTRACTS
A review of financial statements of IPL franchises highlights their various streams of revenue and expenses. The main heads of revenue include: (i) incomes from central rights revenue, i.e., the central pool earned from the BCCI by franchises, consisting of broadcasting rights and central sponsorship deals; (ii) sponsorship and merchandise; (iii) ticketing; and (iv) player trading agreements.
On the other hand, general expenses include: (i) annual franchisee fees payable to the BCCI; (ii) player and support staff fees; and (iii) event management costs.
Accordingly, the material contracts to be reviewed as part of the diligence exercise in connection with the acquisition of an interest in an IPL franchise include franchise agreements and central rights agreements with the BCCI, sponsorship and brand promotion agreements and player transfer agreements.
The BCCI franchise agreement
The franchise agreement with the BCCI is the foundational contract that gives the franchisee the right to operate a team in the IPL. It sets out the commercial and operational framework for the franchise’s participation in each season. This includes how revenue is divided between the BCCI’s central rights and the franchisee’s rights, such as sponsorships and ticketing. From the 2018 season onwards, franchises collectively receive 50% (prior to the 2018 season, this was 60-80%) of the central-rights income, shared equally among the ten franchises. Of this, 45% is a fixed entitlement, while the remaining 5% is linked to each franchise’s final position in the IPL championship at the end of the season. In addition, the BCCI levies an annual franchise fee equal to 20% of the franchise’s overall revenue (prior to the 2018 season, this was 10% of the amount originally paid to procure the franchise, as an annual fee).
The BCCI has previously terminated franchise agreements on account of failure and refusal to provide bank guarantees, as well as transgression of shareholding and ownership norms. Historically,1 the BCCI has had the power to terminate a franchise agreement with immediate effect, inter alia, for: (i) unremedied material breaches (including payment defaults) after 30 days’ notice for a remedy of such breaches; (ii) irremediable breaches or insolvency events; (iii) unauthorized change of control; (iv) material asset/business transfers; or (v) actions by the franchisee, group companies, or owners materially damaging the reputation of the IPL, BCCI, franchisee, teams, or game of cricket. Termination triggers BCCI’s rights to set off debts, retain payments, and enforce certain post-termination restrictions.
Stadium lease agreements
With respect to physical infrastructure, IPL franchisees operate with minimal fixed-asset exposure and rely on ready access to stadiums. Depending on the contracts entered with BCCI, IPL franchises have to pay to use their “home” stadiums. Franchises may secure usage rights from host state associations through arrangements that involve fixed payments, ticket allocations, and on other terms. This leads to a capital-light model with structurally high return on employed capital for the franchises.
Player contracts
Players in the IPL can be acquired through an annual auction process, where franchises bid for available talent within a defined budget and subsequently enter into player contracts. The BCCI also allows franchises to exchange players through transfers and trades outside of the auction (after obtaining the explicit consent of the relevant players). IPL trading windows open one month following the completion of a season, close one week before the annual player auction, and then re-open following the completion of the auction, remaining open until one month before the commencement of the next IPL season. Finalization of player transfers involves the buying franchise submitting an Expression of Interest to the BCCI following which the BCCI secures consent from both the selling franchise and the player. The BCCI retains the power to overrule or cancel the trade in cases of irregularity, conflict of interest, or regulatory breach.
Beyond the mechanics of player movement, the contractual relationship between players and franchises has also drawn legal attention. Adjudicating authorities in tax related matters have interpreted IPL player contracts as ‘employment’ agreements2 on the grounds that the franchises control and supervise players, pay them fixed remuneration for tournaments, and restrict them from engaging in other employment or business without their prior written consent.
Force majeure clauses
For the various contracts that an IPL franchise will enter into, a force majeure clause functions as a contractual remedy when an extraordinary event renders performance legally or practically impossible. This would prevent an immediate breach and provide all parties time to re-calibrate cash flows, negotiate pro-rata reductions, or carry forward advances to a later season. Without such safeguards, a franchise could face the prospect of strict liability for non-performance, exposing it to claims from players, sponsors, and service providers, even though the underlying tournament has been cancelled or severely truncated for reasons beyond the franchise’s control.
For example, where a sponsor (such as a cold beverage or cooling appliance company) targets advertising in the summer (when the IPL season typically takes place), and if the season is rescheduled to the winter (a “zero year”), a force majeure could permit the rescheduling of the deliverables.
By clearly defining qualifying events, notice requirements and the consequences of suspension (i.e., refunds, termination rights, extensions of term), the franchise could allocate the financial risk and preserve commercial relationships for any “zero year.”
Insurance
Franchises, the BCCI, broadcasters, and sponsors obtain insurance to mitigate financial risks arising from match washouts, player injuries or illnesses throughout the season. Insurance policies also safeguard against risks covered by general insurance for players, venue-specific insurance for matches scheduled by the BCCI, and even unforeseen extraneous events such as civil commotion and terrorism. For instance, in 2025, the IPL was paused for a week due to heightened tension on the India-Pakistan border – insurance recouped a part of BCCI’s losses in that case.
Across IPL seasons, insurance premium rates have been dynamic and are influenced by factors such as unpredictable weather patterns leading to match washouts, which can drive up the rates. Moreover, the overall insurance cover can vary considering market forces such as mergers and acquisitions among major broadcasting entities. Another key challenge in this space is India’s limited domestic reinsurance capacity for sports insurance, requiring reliance on overseas insurers.
Recent disputes with respect to policy repudiation3 indicate that sports insurance claims need careful attention to detail. Disputes often involve undisclosed pre-existing conditions or unclear coverage terms. These cases highlight the need for franchises to conduct thorough due diligence and understand policy terms to safeguard against financial liabilities and legal battles.
Sponsorship agreements
Sponsorship arrangements represent another significant revenue stream for IPL franchises. Sponsorship agreements (both jersey and non-jersey) typically oblige the sponsor to pay a fee in exchange for a right to display its marks on designated kit or inventory. Jersey arrangements are controlled under the IPL Clothing and Equipment Regulations. These regulations govern, inter alia, the logo size, placement (for example front chest, lead arm, helmet), and permissible industries of the sponsors. The franchise must control player’s attire accordingly. Both jersey and ancillary sponsorships could grant limited licenses to franchise IP, require agreed promotional appearances, impose confidentiality and provide early-termination triggers for regulatory breach or change-of-control.
CONCLUSION
The IPL presents a compelling investment opportunity, underpinned by rising valuations, predictable revenue streams, and growing global interest in cricket content. A successful investment would require a careful review of the key contractual arrangements, regulatory constraints and an assessment of exit options, to mitigate risks and potential liabilities associated with such an investment.
1. Board of Control for Cricket in India v. Deccan Chronicle Holdings Limited. 2021(3) ARBLR125(Bom)
2. R. Ashwin v. The Commissioner of GST & Central Excise, CESTAT, Service Tax Appeal No. 40244 of 2023.
3. United India Insurance Co. Limited v. Royal Multisport Private Limited, Supreme Court of India, C.A. No. 013118 – 2025.