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A League of Their Own: The Rise of the IPL

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They have cheerleaders and everything.
They have cheerleaders and everything.

If you could have bought or invested in a professional sports franchise in any league in the entire world two years ago, which one do you think would have given you the greatest return on the investment?  

The NFL or NBA?  Not likely with both leagues looking at possible work stoppages as they look to address issues necessary to reach new collective bargaining agreements.  

Back to the question at hand though, which league would you choose?  I'm assuming nobody is picking baseball as every year the sport seems to wane in popularity.

Hockey's popularity is pretty stable with it's following in Canada, but significant growth is unlikely until Americans start to care, which doesn't seem to be the case even after a wildly successful and exciting Olympic hockey tournament.  

Sidenote: How much of a nightmare would that be if both leagues had stoppages in the same year?  We'd be stuck watching college football and basketball from the end of October until April.  The biggest winner in all that coule end up being the NHL as fans looks elsewhere for entertainment.

You can also go ahead and cross out any international soccer leagues like the EPL, La Liga or the Bundesliga.

The answer, that I'm sure you're all waiting for with baited breath, is the Indian Premier League (IPL).  The IPL is a cricket league that was formed in India two years ago in 2008 and currently consists of 8 teams.

Before the advent of the IPL most players played their club cricket in their own country's domestic leagues.  With the creation of a league in which players command multi-million dollar salaries and businessmen and movie star owners willing to shell out the money, the IPL has created a global market for itself.  It has also capitalized on an endless demand for cricket in India as stars from across the world ply their trade in front of sold out crowds.

Toronto Globe and Mail:

Bollywood starlet Shilpa Shetty acquired an 11-per-cent stake in the Rajasthan Royals in 2009 in a deal that valued the team at $140-million.

That's more than double the $67-million the owners originally paid for the team.

India's largest private company, Reliance Industries Ltd., paid $111.9-million for the Mumbai franchise, an investment that has returned about 230 per cent in two years, based on bids for new teams.

Business experts in India say the soaring valuations are justified despite the fact that the league and most franchises have yet to turn a real profit.

Kishor Orstwal, managing director of Mumbai-based CNI Research, expects the value of an IPL franchise to rise to $500-million next year when two more teams are added, for a total of 12 clubs. That would make an IPL team more valuable than the most expensive NHL franchise, the Toronto Maple Leafs, which is worth an estimated $470-million.

Last Sunday, two more cities were awarded franchises in a bidding process, with Pune getting one for $370 million and Kochi for $333.33 million.  Pune's franchise is more valuable than 19 NBA franchises9 MLB franchises and all but 2 NHL franchises according to Forbes' rankings.

There's a reason why a country with a population of over a billion only sent 3 athletes to the 2010 Winter Olympics.  Cricket in India isn't king, it's more like a totalitarian dictator wiping out all competition from other sports it faces and it's popularity can seen in the rapid growth IPL franchises have experienced and the ballooning valuations of its franchise.

The IPL has reduced the length of the game to a three hour experience similar to a football or baseball game by implementing a format known as Twenty20.  Other forms of cricket can take anywhere from 8 hours, or in the test format, days and are experiencing a decline in viewership and popularity.  Twenty20 in the meantime is experiencing an enormous boom in its popularity with the IPL being the main cause behind its rise.

The IPL has already entered into numerous broadcasting, licensing and sponsorship agreements, including a $1.026 billion, 10-year deal for global media rights with Sony Entertainment Television and World Sport Group.

If you plan on investing in a professional sports franchise anytime soon, you might want to consider taking a look at the IPL as it continues to rise in the face of a global recession.