Firstly, IPL is completely based on a long term investment. In the first few years of IPL, KKR has been the only team to rake profits consistently.
This is how the teams earn money:-
Lets take the example of the IPL jersey of RCB above. RCB is paid by Hero Cycles, Lloyd, Tata, Britannia and Lyf. The companies get publicity and the teams are paid handsomely, a win-win situation.
IPL has always been welcomed warmly by the Indian fans. Almost 60% of the matches in IPL have a full house. The home team gets to keep a share of the ticket sales. That is the reason each team has 7 home games.
Sony India has been the official media sponsor of IPL for a decade. It takes a contract from BCCI for a certain sum, of which, a certain sum of money is given to each team based on the TRP Ratings by BCCI. Sony TV in return, earns money in the form of advertisements. For a 10 second slot of an advertisement, companies shell out money in lakhs.
Every year, we see the title sponsor of IPL changing. For the year 2016, the title sponsor has been Vivo.
Vivo pays 100 Crore per season as per the contract. However, majority of this share goes to BCCI.
One cannot deny the fact that actors like Shah Rukh Khan and Preity Zinta add glamour to the league. Also, players like Virat Kohli, MS Dhoni and Yuvraj Singh are associated with many brands. Their association with a team increases it’s ‘brand value’ and attracts many sponsors. Eg. SRK endorses 20+ brands, hence most of these brands act as sponsors for his team too.
IPL offers a prize money to the winners and runners up. This would be around 15 Crore.
For attracting sponsors and creating a brand value for itself, a team needs consistent success, for that it needs to win games, for that it needs good players who are bought for exorbitant amounts.