What I wrote about the IPL months back!

Lalit Modi is considered to be amongst the 30 most powerful Indians today. Heir to the Modi business empire; Vice-President of the BCCI; Commissioner of the Indian Premier League (IPL) and already it is a pretty heady list. And this canny businessman from Rajasthan deserves every bit of the accolades coming his way. A 7 fold increase in BCCI revenues over 2 years and a brainwave, the IPL that has sent the ICC and other member nations scurrying for cover and holding emergency meetings. The question that will inevitably rise once the pandemonium prevailing calms down would invariably be: Is the IPL here to stay?

Modi himself called the IPL India’s answer to the EPL (England’s club football championship for the less initiated) – the ubiquitous fad amongst today’s generation fed on an overdose of cable television. To the average sport enthusiast, this might sound perfectly reasonable and exciting. But the devil lies in the details.

Club football had its genesis in the later half of the 19^th century; a good half a century before international soccer kicked off. The Arsenals and the Liverpools of the world were well established by the time international football really kicked off with the first World Cup in the colonial era. Similar is the case with English county cricket which has its own history and hence is the most revered domestic competition. The IPL on the other hand is forced to do it the other way around. International cricket is already the established product and through the IPL we are initiating ourselves to the franchisee/club model.\

Here are a few numbers to digest first!

Going entirely unnoticed last year was a successful bid by ESPN to the tune of 1.1 billion USD for 18 ICC tournaments including the next two cricket world cups (one of which will be held in India) and a few T-20 WCs. Reconcile that with a SONY/WSG bid of 1 billion USD for the IPL over a period of 10 years. If you are left flabbergasted, it is with good reason. ESPN which had broadcast rights to the recent T-20 WC got advertisers to shell out 16,500 USD for a 30 second slot for primetime games like India-Australia and India- Pakistan. Even accounting for the same rates holding for the entire duration of the IPL (which is a fascinating assumption to put it mildly), Sony/WSG makes around 60 million USD annually which still represents a considerable loss. ESPN’s net advertising revenues during the hugely controversial and entertaining series of Australia was just 81 million USD. Whether the IPL is going to get as many people hooked on is anybody’s guess.

Now for the franchises!

The fascinating aspect about the franchise bidding was the valuations of some of the cities. While Mumbai, Bangalore and like were valued at sums in excess of a 100 million USD, cricket crazy Kolkata, Mohali and the rest were valued for sums sub 80 million USD. This is the clearest indication that the bids had more to do than pure business sense. Such wide differences would have been acceptable with a Delhi or a Jaipur which are not considered to be amongst the glamour capitals but what about Kolkata and Mohali?

The terms of the IPL say that almost four-fifth of the amount the IPL gets from media rights, sponsorship rights and television rights is shared amongst the franchises adding upto 10 million USD per year per franchise. CEOs of most franchises admit that local stadium rights, ticket revenues, merchandising and corporate hospitality could gain franchises a maximum of 8 million USD per year. This is assuming jam packed stadiums with ticket pricing at the levels of current international matches. Reconcile annual revenues of 18 million USD to annual operational expenses of around 8-9 million USD including player salaries and the initial investment that has been made to acquire the rights to the franchise to the tune of 7-10 million USD per year. For a logical accountant, the business sense doesn’t quite kick in. The franchises have been given the option to get listed on the Stock Exchange, but the detail lies in the fact that franchises and Sony/WSG, the two major investors stand to make losses for a considerable part of the 10 year period even considering a bumper-hit IPL.

And the lesson from the EPL is that clubs running losses generally sink in no time unless you are Mr. Roman Abrahamovich running Chelsea to get a foot into the glamour pie. Even if Mr. Ambani and Co. have similar intentions, it is certainly not a viable business model for a format very much untested.

This brings us to the question whether the IPL will take off from a cricketing perspective. If past flirtations with the franchisee model in India are anything to go by, the IPL is in for disaster. The hugely hyped Premier Hockey League is hardly in the news these days after a very successful first season. Similar is the case with the ICL. Rationalists will immediately point out to the viewership gap that exists between the two sports in case of the former and the ICL not really taking off with the latter. As cricket expert Harsha Bhogle points out, “The endurability of the IPL will depend on whether people will come out and support two teams at the same time: the national team and the respective franchise”. Critics feel that the IPL couldn’t have got its timing any worse with India threatening at long last to be a world power on the field of play. At this point in time, it seems too much to ask the average supporter to set aside nationalist jingoism for regional parochialism which would be required. This is unlike the EPL where years of national mediocrity have made supporters take refuge in the solace that the local club provides. Besides, there would also be a large chunk of uncommitted viewership in the Hindi heartlands, players from where have been largely responsible for India’s renewed strength. It is going to be difficult for a Mumbaikar to root against Agarkar playing for Kolkata bowling to Tendulkar. Similarly, the youth brigade would find it extremely hurting to root against Mohali which threw up some of the performers of the Australian tour.

Truthfully speaking, the IPL will provide a lesser spectacle in terms of the best in the world competing against each other when compared to the ICL. On careful analysis, most franchises wouldn’t be left with more than two mainstream international stars when the IPL reaches its climax due to international commitments. That leaves us with nothing but a jacked-up version of a regional T-20 tournament which was held last year, not surprisingly in empty stadiums. Most ICL teams on the other hand, have at least 4 international stars, albeit a few recent retirees.

The biggest obstacle that the IPL faces could very well have to do with the BCCI’s pretensions to help youngsters through this venture. The ICL which would be categorized as a damp squib for all practical purposes has however managed to send the BCCI into a corner over the state of domestic cricket in India; hence the move to have players from the franchise territory and U-22 players. It is undoubtedly going to cut little ice with anybody, least of all the cricket enthusiast who would rather have a full fledged ensemble of cricket stars. Astronomical salary packages would then be an exception rather than the norm and the issue of defections to the ICL would no longer arise.

Besides, it would make more sense if an Ishant Sharma turns out for a Delhi and a Harbhajan Singh turns up for Mohali because that could at least bring in some semblance of a franchise base. I expect the regional imbalances to correct themselves once transfers are allowed after the first season

If the IPL is espoused as the success of the free market, it should be allowed to operate in such a manner for it to be successful. Restrictions on the number of foreign players per team have only resulted in a few Indian players being over-valued. If reversed, the IPL would then be a star studded event even in the midst of international cricket as it would give the franchises options of buying based on the international calendar and huge salary differentials between international cricket and the IPL- the crux of most problems would be non-existent. .

Comment: In terms of a pure cricketing spectacle, the IPL might struggle to reach the heights that are being hoped for. It will be down to the hype-creators to package it as a commercial spectacle. But as in life, when your core product doesn’t have a very strong foundation there is only so much your marketing men will be able to do. The bitter truth is that T-20 is still not considered to be a serious enough form of cricket internationally and players very rarely bring in the same sort of intensity unless there is a significant prize at stake. Also bring to the table the fact that players are being bound just monetarily to these franchises and it is hard to see from where the competitive juices are going to flow in. It will be an entertainer because there is always a prospect of a Sreesanth staring at a Symonds and the Dada captaining at the Eden Gardens. But whether it will arouse the same passion that Sreesanth’s catching out Misbah did or the Dada ripping off his shirt after the Natwest Trophy triumph did is highly doubtful. It is moments like these that bring a cricket fan to the ground and make us follow sport. But when the stakes are considerably lesser, can the mere spectacle of a contest between bat and ball sustain itself to the audience? The IPL will certainly have to rewrite the rules of history for it to be successful.

Meanwhile, I shall enjoy the exciting climax to the EPL season.