A franchise cricket team earns most of its money from the league rather than from its own commercial activity. Understanding that distribution explains why franchises are valued the way they are.
Rights are sold centrally, not by teams
The league owns the broadcast and streaming rights to every match and sells them as a single package covering the whole tournament.
Individual franchises cannot sell their own matches, which means no team can build a broadcast income independent of the competition.
Central selling raises far more than the sum of individual sales would, because a broadcaster is buying a complete tournament with a guaranteed audience. Fragmenting the rights would reduce the total available to everybody.
Distribution is largely equal
A substantial share of central income is divided evenly among the franchises regardless of where they finish in the table.
Equal distribution keeps every team commercially viable and prevents a spiral in which weak results reduce income and weaken results further.
Prize money linked to performance exists but is small beside the central share, so finishing last is financially uncomfortable rather than ruinous. A rebuilding team is not financially punished for a bad season.
Franchise fees run in the other direction
Teams pay to hold their place in the competition, either as an annual franchise fee or as an amount agreed when the team was awarded.
That payment is the league's income from the franchises, and it sits alongside the central rights money flowing back out to them.
The net position for a team therefore depends on how the fee compares with its share of an income pool that has grown substantially. A fee fixed years ago becomes progressively easier to cover.
Local revenue is real but secondary
Franchises keep gate receipts, local sponsorship, merchandise and hospitality from their home matches, which rewards building a following in a city.
These sums matter for a team's identity and its relationship with supporters, but they are modest next to the central distribution.
This is why a franchise in a smaller market can compete financially with one in a larger city, unlike clubs in most traditional leagues. City size affects atmosphere far more than it affects budget.
Valuations follow the rights cycle
Because income depends on the central deal, franchise valuations move when broadcast rights are renegotiated rather than when a team performs well.
A rights cycle that increases the pool raises the value of every team simultaneously, whatever happened on the field during the previous season.
Owners therefore watch the media market as closely as the auction, since one determines their revenue and the other only their squad.
