IPL: A Commercial And Cricket Masterstroke | Cricket
More than a hundred years after Ranji invented the leg glance, the BCCI created the IPL – India’s most important (perhaps the only) contribution to world cricket. IPL is a winner, a business and a cricketing masterstroke.
Three major aspects were kept in mind while shaping the IPL. The league was to be sited within the BCCI, not outsourced, to ensure that ‘control’, the crucial C of the BCCI, was maintained. Cricket and cricketers had to be profitable and in the end, it had to generate cash. lots of it.
The creation of IPL brilliantly addressed these three guiding principles. To retain control, the BCCI treated the new league as any other local tournament. With this, the IPL became a domestic tournament managed by a sub-committee, no different from the Vizzy Trophy for inter-university cricket.
This closed the door on outside involvement in running the league. Clear message to private investors: this is our area, our property, we don’t need advice. The owners were excluded from governance and their contractual right was to operate their teams in perpetuity only for rough commercial consideration. This meant the annual franchise fee was more than 700 crores for the LSG – was not enough to get a seat in the Governing Council. As a result, the IPL remains an in-house property of the BCCI. Completely surrounded, completely protected.
The financial arrangement of the IPL between the teams and the BCCI is very creative. The BCCI, the owner of the league, averted all risk for the investors while giving themselves guaranteed revenue and profits. It received the franchise fee from the teams and retained a substantial portion of the media and sponsorship revenue. For perspective, just look at one number. BCCI maintains approx 25,000 crore (about 50% 50,000 crore) from media rights sale/sponsorship for a five-year cycle. he is 5,000 crores annually.
IPL teams are also on a good financial wicket. Technically, business risks are present but the eco system makes sure their ride is smooth. Their annual costs (on team operations/players/marketing) are largely determined by ticket sales and sponsorship deals. And they are profitable because of the huge amount they get as share of central revenue from media/sponsorship rights deal of IPL.
There is much more to this annual benefit. Teams understand that IPL is not a balance sheet business, but a brand valuation game. This asset continues to increase in value as the supply is strictly controlled. With only 10 teams in the IPL, anyone wanting to enter this elite club has to pay a hefty premium to cross the entry barrier. net result? The IPL is on a fast upward trajectory, and the team owners are all smiles.
BCCI fulfilled its objective of strengthening domestic cricket through IPL. Seven Indians reserved jobs for domestic players in the playing 11 rule – teams hired 18 domestic players. They got a great deal – assured jobs, high pay, a great platform to showcase talent, and excellent perks.
Indian players are paid the full contractual amount even if they do not make the playing eleven in any game. The arrangement is more lenient for centrally contracted players. If they are ruled out of IPL due to injury (like Bumrah), then their contracts are covered and they get full salary. The effect of player rule allows more domestic players to play and teams also appoint experienced players (Mohit Sharma, Pradeep Sangwan) as net bowlers.
The BCCI has been very astute in maintaining and strengthening the IPL brand. To maintain their distinctive character, Indian players are barred from participating in foreign leagues. The IPL sets benchmarks others find difficult to match. Each team spends $12 million on player salaries; Foreign leagues cannot afford even a quarter of that. Sam Curran’s IPL earnings could pay for an entire squad in England’s Hundred.
The board exercises tight control over IPL teams to ensure that the brand is not diluted. They cannot play each other in exhibition matches, friendlies or tournaments. IPL teams can travel abroad but strict conditions apply – they are only allowed to play in associate cricket nations, and that too during a specified window. The guidelines are so strict that the only way to export their brand is by buying teams in foreign leagues.
The BCCI is often criticized for focusing on the commercial conquest of cricket while neglecting the game itself. Purists dislike the surround sound, noise and hype of the IPL, and find the cheerleaders’ drills grotesque. But the message from the ground is that Indian cricket is in good health because of the IPL. This is a big step for which a 22 gun salute should be given.
