MUMBAI: The party lasted twenty years. Now comes the hangover. The Indian Premier League’s media rights, which grew six-fold since the first auction in 2008 to reach $5.4bn in the current 2023-27 cycle, are hitting a structural ceiling. The next rights auction, for the 2028-32 period, will fetch exactly the same number in total but deliver 13 per cent less per match, as an expanded 94-game format adds volume without adding value. Two decades of compounding growth, in short, are over.

That is the central finding of a report published on Monday by Media Partners Asia (MPA), entitled The IPL: Teams, Rights and Valuations. It is a forensic, and at times uncomfortable, read for anyone with money in the game.

The arithmetic of the current cycle is already painful. Rights holders are staring at cumulative losses of $1.8-2.0bn across the 2023-27 period. Total advertising revenue grew at just 7 per cent compound annual growth over the last three seasons, a sharp deceleration from the 18 per cent of the prior cycle. The culprits are familiar: policy-driven exits by ed-tech and real-money gaming companies, a BCCI ban on crypto advertising and a narrowed advertiser base that new sectors such as AI have not yet come close to replacing. Global macro headwinds are not helping either.

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The structural story, though, runs deeper than a bad advertising cycle. The near-threefold jump in rights values seen at the 2023-27 auction was driven by fierce competition between Viacom18 and Disney. That competition no longer exists. The merger that created JioHotstar has eliminated the primary source of bidding tension, and with it, any realistic prospect of another auction war. MPA is blunt about what this means: the dynamic that supercharged rights values cannot be repeated.

“The IPL has created extraordinary value over two decades, but the conditions that drove that growth are now shifting in ways that are structurally consequential,” said Mihir Shah, vice president, India, at Media Partners Asia. “The rights reset in 2028 will not be a correction to be absorbed and forgotten. It marks the beginning of a period in which franchise value creation depends on building the non-media revenue base, focusing on sponsorship, international presence and digital monetisation.”

The warning to investors is pointed. Media rights now account for 75 per cent of total franchise revenues, up from 48 per cent in 2017. EBITDA margins have expanded from an average of 10 per cent in the first cycle to 34 per cent today, but that operating leverage, MPA notes, cuts both ways. When rights values correct, the pain is amplified. Non-media revenues are growing at 22 per cent compound annual growth since the pandemic, but from a low base that offers little cushion in the near term.

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Against this backdrop, franchise owners are moving. Stake sales are accelerating, and MPA believes franchises are advancing liquidity plans precisely because they can see what is coming in 2028. Shah’s message to those pricing franchises at current multiples is direct: “Owners and investors who are pricing franchises today on current EBITDA multiples need to factor in both the rights cycle headwind and the concentration risk it implies. The window at current multiples may be shorter than the market assumes.”

MPA’s franchise scorecard, which assesses all ten IPL teams across championship wins, playoff appearances, social media following and international presence, places Mumbai Indians first with 360 out of 400 points and Chennai Super Kings second with 320. Royal Challengers Bengaluru ranks fourth, its enormous social media presence, anchored by Virat Kohli’s 274 million individual following, undermined by a single championship title across 18 seasons, no international franchise presence and dangerous dependence on one icon player. Punjab Kings and Lucknow Super Giants prop up the table at 90 and 100 points respectively.

The digital picture adds a further layer of irony. JioHotstar recently broke 70 million concurrent users during the ICC T20 World Cup final. Audience scale has never been greater. Yet that scale has not translated into the monetisation needed to justify current rights pricing. The structural gap between what streaming costs and what streaming earns remains, MPA says, the single biggest constraint on 2028 valuations.

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Seventy million people watching at once and the economics still do not work. That, more than any other number in the report, tells you everything about where the IPL’s next chapter is headed.