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Explainer - How do the two new teams impact the IPL?

The 2022 season will include 74 matches with each team playing seven at home and seven away

Nagraj Gollapudi
Nitish Rana and Rahul Tripathi during the IPL 2021 final, Chennai Super Kings vs Kolkata Knight Riders, IPL 2021 final, Dubai, October 15, 2021

The IPL hasn't made a decision on its player retention policy for the 2022 season  •  BCCI

IPL 2022 welcomes two new franchises and with them come a whole host of questions like how will they impact the tournament format?
This will not be the first time the IPL will comprise 10 teams - that already happened a decade ago. The BCCI confirmed in a release that the season will comprise 74 matches (instead of the current 60), with each team playing seven home and seven away games. That means the tournament is likely to revert to the format used in 2011.
Then, the 10 teams were broken into two groups of five but were ranked on one consolidated points table. Each team played the other four in their group both home and away (eight matches), four of the teams in the other group once each (four matches, either home or away), and the remaining team in the other group twice, both home and away. A random draw decided the composition of the groups as well as who played whom across the groups once and twice.
The last time more than eight teams played in the IPL was in 2013, when nine teams took part and played a total of 76 matches.
Will it affect player retention?
The IPL has not shared any firm details of its retention policy with the franchises, but it is now known that there will be no right-to-match cards. It is also likely that a franchise will be allowed to retain a maximum of four players, with the local and overseas combinations yet to be ascertained.
The two new franchises will then get to buy an equal number of players before the auction through a draft system, the same one that was used in 2016 when Rising Pune Supergiant and Gujarat Lions briefly replaced Chennai Super Kings and Rajasthan Royals.
Will it impact the value of the eight original franchises?
Yes. The higher the amount the two new entrants bid for their franchises, the higher the amount the original eight will get if they ever decide to sell, like Delhi Capitals did in 2018, when Jindal South West (JSW) bought 50% ownership from the GMR group. At the time, the valuation of the Delhi franchise was pegged at about INR 1100 crore and JSW paid half that amount. So, it isn't over for the people who lost out on procuring an IPL team on Monday. They can still buy a share of it from an existing franchise for lesser money and enjoy the perks of being an owner.
According to one analyst who has been crunching IPL numbers since its inception in 2008, if each of the two new franchises had sold for at least INR 3000 crore, then each of the original eight would have had a minimum value close to INR 2500 crore. And the two new franchises have sold for much bigger sums: INR 7090 crore (Lucknow) and INR 5625 (Ahmedabad).
Is there a downside to paying such huge sums of money to own an IPL team?
Paying these massive amounts to the BCCI means the new franchises will take that much longer to make a profit.
There are three main revenue streams for a franchise: the central rights income (a share of media rights income and central sponsorship), team sponsorship and gate revenues. After the record sum paid by Star India in 2017 for media rights, each of the existing eight franchises earned close to INR 200 crore from the IPL's media rights central pool. That is bound to get even bigger as a result of Monday's events, potentially inching up to the INR 275-350 crore mark per season per franchise going forward for 10 years. All the franchises derive their main income from IPL's central media rights pool.
The new franchises will need to pay out their bid amount over a 10-year period. From year 11, each franchise has to pay 20% of its overall revenue as franchise fee to the BCCI.

Nagraj Gollapudi is news editor at ESPNcricinfo