𝐓𝐡𝐞 𝐈𝐧𝐯𝐢𝐬𝐢𝐛𝐥𝐞 𝐇𝐚𝐧𝐝

Have you ever wondered how media companies make money from broadcasting sports events? When I first read that Viacom had bought the IPL broadcasting rights for $2.5 billion from 2023-2027, I was shocked. Never could I have imagined that a company would have to pay $500 million per year to broadcast the IPL while we essentially watch it for free. Inquisitive about this topic, I started wondering how these companies make money.

I am sure you all have experienced this, whenever we are watching a match, we constantly keep on getting advertisements. Those advertisements are essentially how these companies make a profit. Then the question arises how does a company acquire broadcasting rights? Broadcasting companies from all over the country meet together with the event organiser (the BCCI for the IPL) and they have an auction for these rights. The broadcasting company that bids the highest is awarded the exclusive rights to broadcast the event. This exclusive right allows the broadcasting company to be the only one to show the event in the country.

Broadcasting companies generate revenue from sports events by selling advertising spots during the broadcast. Advertisers pay the broadcasting company to advertise their products (like Noise headphones) or services (like Cred) during the broadcast. The cost of advertising during sports events is generally high (during the ICC cricket world cup it was around $34000-$41000 for a 10-second advertisement) because of the large audience that sports attracts. The audience loves the sport so would continue to watch it even if they are shown advertisements they don’t want to see. The audience’s affection for sports makes it a perfect place for advertisers to advertise their products. 

The cost of advertising during sports events depends on the popularity of the event and the audience it attracts. The more popular the event, the higher the cost of advertising. For example, the Super Bowl, which is one of the most-watched sporting events worldwide, has a high cost of advertising, (the average cost of a 30-second advertising spot during the super bowl was $6.5 million in 2022). Advertisers are willing to pay millions of dollars to advertise during the Super Bowl because of the large audience it attracts. 

Broadcasting companies also offer different types of advertising spots during the broadcast. During the CEAT strategic time out in the IPL, broadcasters show a lot of advertisements for example. They also show advertisements during the game- like on the pitch, they show a large logo of a company, or on the boundary. 

After I found out this another question came to my mind… does advertising even help companies? Does anybody even watch them?

The answer is yes. Companies have greatly benefited due to advertising in sporting events, for instance Nike’s “Dream Crazy” during the NFL season opener helped boost the company’s sales. According to reports, Nike’s online sales surged by 31% in the days following the advertisement’s debut. Another example is Coca- Cola, in 2014, the company ran a successful “Share a Coke” campaign during the FIFA World Cup. The campaign involved printing popular first names on Coca-Cola bottles, and consumers were encouraged to share photos of the bottles on social media using the hashtag #ShareaCoke. The campaign was a huge success, generating a 2.5% increase in Coca-Cola’s global volume sales.

In conclusion, broadcasting companies make money from sports by acquiring exclusive broadcasting rights to sports events and selling advertising spots during the broadcast. The revenue generated from sports broadcasting is significant, and it has led to the growth of the sports industry. The investment made by broadcasting companies in acquiring broadcasting rights to sports events is high, but it pays off through the revenue generated from advertising spots during the broadcasting.

-Qaid Bandukwala