From Rich to Richer

1396405762_dc7079fb4a.jpgA famous Pepsi slogan said, ”We eat cricket, sleep cricket and drink cricket“. India, the country of various identities, comes together with, and for, cricket. In this era of profit making, even something like charity becomes a business venture. Hence, it comes as no surprise that Cricket also has become an arena where investment can be done and profits can be gained. From sports to religion to now business, that is what Indian cricket has become. On January 25, 2008, giant Indian companies and Indian movie industry stars bid for this cricket’s shorter version called Indian Premier League or IPL. IPL was launched by BCCI on September 14, 2007, based on of English Premier League and the National Basketball League. It is said to be the brainchild of BCCI’s vice-president Lalit Modi. One IPL Council has been formed by the BCCI; it will manage the affairs of the IPL independent of BCCI. IPL is owned by eight franchisees. They can run them in their own style, bring their own sponsors and even name the team according to their choice. They will even be free to list their teams on the stock exchange. The Bangalore team is owned by Vijay Mallaya for $111.6 million, the Kolkata team went to Shah Rukh Khan for $75.09 million and GMR Holding got the Delhi team at $84 million. Mukesh Ambani owns the Mumbai team for $111.9 million while Emerging Media got the Jaipur team for $67million dollars. The Mohali team is owned by Ness Wadia for $76million and Deccan Chronicle bagged the Hyderabad team at $107 million. In all of these eight teams, there will be 16 players each.

BCCI, the richest cricket board in the world, is becoming richer. The funds are flowing and this upsurge of funds seems to suggest that the Mecca of cricket is shifting from Lords to India. Excess of money in this field is not a new trend; however, sponsors coming out into the open is something new. Sony TV has the rights to broadcast the series in $ 1.026 million, and they will enjoy these rights for ten years. From the sale of media rights, IPL will keep 20% for itself, give out 8% as prize money and distribute the remaining 72% evenly between the eight franchisees. These proportions are valid until 2012, after which IPL’s share will go up in two stages by 2018, with decline in the shares of both prize money and franchisees. The second stream – other central revenues – will be shared between IPL, franchisees and prize money in the ratio 40:54:6 up to 2017. After that, IPL’s share will increase to 50%, the franchisees’ share will drop to 45% and the remaining 5% will go for the prize money. The third major source is, of course, the amounts bid by the franchisees. The fourth stream comes from the revenues generated by the franchisee rights, of which 20% will be given to IPL. Players will get annual fee contracted with the franchisee and get a daily allowance of $100 through the IPL season which lasts about a month-and-a-half. The total amount spent on player fees for an IPL team cannot be less than $3.3 million each year and is actually expected to be significantly higher. In other words, players will earn about Rs. 80 lakh, or more, per season on an average, though the amount would vary from one member of the team to another. IPL is reaching two different kinds of agreements with players when it gets them on board. Under one arrangement, called the “firm agreement”, the IPL commits a certain fee to the player. If a franchisee bids more for that player in the auction between franchisees for different players, the IPL gets to keep the excess. Under the other, the “basic agreement”, the player gets whatever is bid for him. Not surprisingly, most players so far have opted for the “basic agreement”.

Cricket is attaining more glory through investors who are selling from where maximum profit can be earned .We have moved from politicization of cricket through BCCI to corporatization of cricket through investments. The question for the future is whether India can start a new trend similar to that of football in Europe or basketball in America. However, there are other questions also to consider. Is this sport, affected by politics and corportisation, now worth being called a sport? Lastly, if IPL is a success, then will we see more investment in Cricket and complete negligence of other sports? Clearly, a lot needs to be considered.

Anupriya Prakash

[Image by SAURABH C]