Friday, September 18, 2009

The Business of IPL:Written for moneymint.in

What started as a small idea conceived in the most improbable circumstances for a cricketing league in London’s Wimbledon suburb in the year 2007, today is the hottest sporting league the world has ever seen. It is amassing itself with each passing edition and promises to enthrall not only the audiences but also to spring up money like never before. Cricket has got its money minting machine, its own kuberan in the form of the Indian Premier League and hence, the epicenter of world cricket is no longer in London or Sharjah or even Australia but it is India.

The magic began in Jan 2008 when eight teams were auctioned for a whooping sum of $724 million. The revenue generated from media and sponsorship deals not withstanding in this figure. A part of this whole sum was reinvested in the aging cricket stadiums in the nation and specifically to those which were to host IPL matches. A typical example of successful business strategy. It was a win win game all the way. The players were not left behind. For instance, players are being offered a fee of $1.55 million for just a five week season, against $500,000 to $1 million, depending on the country, for an almost year-long slate of national team games. This was the beginning of a revolution in cricket world, A revolution which took the whole cricketing fraternity by storm.


The shift in paradigm is so huge that many players have already leaving their national teams to focus on the IPL. To cite a few examples, Hayden and Gilchrist have a lot of cricket left in them which is evident from the form they are displaying in the IPL chose to retire from the international cricket to join the league. The stage was set up just like a blockbuster movie and what a fitting finale the first edition met. The results of each of the matches had its influence on the business. How? Let me explain. The fact that underdogs Rajasthan Royals triumphed in the first edition increased their worth by a whooping 71% against an average of 31%. But the road was not as smooth as it looks. In spite of the huge success of the first edition and the enormous amount of money it was minting for everyone involved, the terror attacks on Indian soil had taken its toll on IPL. Govt. of India, rightly so weighed security of elections as being more important that the security of IPL and hence, after a long period dual IPL was finally moved to South Africa for the second edition. Now, an Indian premier league in SA, the doubts of it being successful again began to surface in some minds. But proving everyone wrong, the second season began with bang with the new players surpassing the older ones in terms of revenue they would generate. Even though, South African govt. welcomed IPL with open arms, it was left to smart business strategy of the league to draw in the crowds. Giving out charity tickets to the local schools and the success of local players in this edition pulled in more and more crowds and eventually it seemed like the match was being played in India only. Knowing that the ticketing revenue would be lesser this time around, the moves like having strategic breaks of 7.5 mins in mid of each innings which was to be filled by commercials was a smart move and it paid off in terms of revenue if not in terms of cricketing virtue. All corporates chose this time as the moment to cash in. Vodafone went out all guns blazing with its zoo zoo ads and 15 of them had the audiences in splits.

Though cricket is played in 104 nations across the world for a period of 165 years, before IPL, the professional leagues had never truly looked into cricket from a business perspective. Most leagues around the world are operated by non-profit entities. But private franchise ownership opened a new chapter in the history of cricket and it has changed cricket like never before and the change is a permenant one.

As for the after effects of this, the third season is going to be bigger with more teams joining. Other countries like Pakistan, USA have plans to start similar leagues of their own. 20-20 cricket has found new meaning and it is all set to rule the cricketing fraternity as the youngest and richest member of the lot.

IPL is all set to transform the way cricket is played all over the world.

The same article on moneymint.in