On the day of the bids, another IPL post

February 20, 2008

Shakester wrote in response to an earlier post ‘The League’s Ripples‘:

The future you talk of is still a while away. Its not unthinkable, and probably likely; but it will be a few years before a league of this sort can start killing the long standing draw of nation v nation encounters. By then- assuming such a sea-change does take place- the market forces would have evened out the relevant acquisition costs. 

Instead of leaving a response in the comments, I’d write it out as a post. Here goes: 

I don’t think the IPL will kill national encounters as much as relegate them to slightly inferior status. But I’m being conservative. And I think it will happen within half a decade. Look, I’m not ‘in’ with either broadcasters or cricket folk, so this is entirely my assumption based on the following facts: lalit modi has been known to be obsessed with the western model of sports, ie. short, heavy on action, based on franchises. He’s purely money-minded, and I think he has a reasonable degree of clout. He’s also one of those wheeler-dealer types like Harish Thawani of Nimbus, who move to where the money is.

Twenty20 has more money than anything cricket has seen before. That’s why Lalit modi is backing this. Ad rates are one thing: high-profile India-Pakistan one-dayers sell ten-second spots for around 2.5 lakhs. A normal Twenty20 game would command as much, if not more, for the sole reason that there’s less ad clutter and many more people are tuned in. During the India-Pakistan Twenty20 final, I think a few spots went for 7 lakhs. It’s absolutely insane.

Please bare bear with me, for I’m going somewhere with this.

Knowing this, and knowing that Test cricket is barely watched by anybody, I believe that IPL will probably include one-dayers too. As far as Tests go, one theory is that because Tests are sacrosanct, nobody touches this format. But I’m being conservative. Taken to an extreme – by the time the existing round of national television contracts run out in 2012-2014 – the idea of mixed teams could be applied to Test cricket too, if there is enough money in it. We ignore the SuperTest because it was haphazardly created, with more emphasis on star power than any attempt to calculate the effectiveness of a bunch of players put together. Had the world XI team put up a good performance, we would have seen a prototype of teams to come. In three-four-five years, when we’re suitably used to the idea of mixed teams, we’ll probably ask: hey, why not do the same in Tests?

It’s because of this that I think Sony and WSG – who bid a billion dollars for the rights together and have a walkout option after five years – have a brilliant deal. I can’t see IPL hosting a Zimbabwe-Bangladesh game. There will be fewer useless fixtures.

As a result, the valuation of other television contracts will fall because the most-watched event is elsewhere. That’ll be the ‘evening out’ you mentioned. I’ll bet that at ESPN-Star they’re asking themselves: if Sony promised a billion for ten years of IPL, and we promised a billion for all world cups, including the under-19 and women’s world cups, what the hell did we pay for?

But the market hasn’t yet exercised the force it’s capable of. Not in the ICC league, and not in IPL. If market forces were allowed to operate unencumbered, Zee would have had the rights to the last two World Cups as well as the contract that Nimbus currently has with the BCCI. The IPL doesn’t need the bidding cap currently imposed on teams, as well as the ‘iconic’ status imposed on Tendulkar, Dravid, and others, which means these players can’t be bid for.

But other than this, I think the IPL is a godsend for cricket lovers. Frankly, one-dayers are getting boring, and surprisingly Test cricket is on the up. But who has time for Tests? In that way, T20 is brilliant. It has big hitting which crowds love, but there’s also so much skill at work by the bowlers. And I can totally see talent being developed by companies that hold their employees accountable. But the bit where I actually see cricket evolving is in the field of statistics and how we measure a player’s worth. So far we haven’t had an incentive to really look at the value a player provides to the team. This should hopefully change. I’ll be very surprised if, after a couple of years, franchises attempt to fill their team with players who have great averages, but little to offer besides that.

So Shakester, perhaps I’m over-enthusiastic, but I think the day when cricket gives in almost completely to the market is at hand. There are just too many tantalizing opportunities to not go down this path.

Ps. Perhaps I meandered a bit.


13 Responses to “On the day of the bids, another IPL post”

  1. Satish Says:

    “surprisingly Test cricket is on the up. But who has time for Tests? In that way, T20 is brilliant. It has big hitting which crowds love, but there’s also so much skill at work by the bowlers.”. Is that what you really believe? I somehow pictured you as the “true” cricket fan who knows that test cricket is the only format which truly tests cricket skills.

  2. Rahul Says:

    I believe the people genuinely don’t have time for Tests. The ratings show it. And while Tests do put skills and intelligence under scrutiny, they do so in one way. T20’s pressures are something else entirely. There’s a lot of quick thinking required here, and greater emphasis on fielding.

    About being a “true” cricket fan…well, I’m a little mercenary about the issue. As much as great bowling excites me, I like the idea of cricket played by people from all corners – Chad, Russia, China, everywhere. Chances are, we won’t see a capable team from these countries anytime soon, but there’s a better chance of one player with freakish ability emerging. The possibility excites me, and I think it will happen eventually.

  3. Rakesh Says:

    I certainly agree that People do not sit ans watch the entire test match, but they do follow that match in bits and peices either on TV or online and it can’t be said that no one watches Test Cricket. It is the ultimate test for any cricketer and the joy for a cricket fan.

  4. srivaths Says:

    Lots to be said but for now let me just say that a soft salary cap that the NBA uses would perhaps be better than the hard cap the IPL has employed. The teams pay a dollar for dollar luxury tax for every dollar spent over a threshold limit. The money earned through the tax is redistributed to the teams under the cap. The advantage of a cap is that the less rich small market teams can still compete with the teams which can be liberal with their purse strings. The Premier League presents the biggest argument for a cap: only Man United, Liverpool, Chelsea and Arsenal have a realistic chance of winning and the rest just make up the numbers. The rationale for a soft cap is to allow teams the benefit of retaining players whose worth increases with time.

  5. shakester Says:

    I am probably as ‘enthusiastic’ about the IPL as you are, and am quite sure that cricket in general could well succumb to the market soon. My tiny comment was only in response to your idea of current valuation of broadcast rights being diluted. By the time that starts to happen, new deals will be being made.
    If I am not mistaken WSG has paid for the 10 year rights, but Sony has them only for the first 5 (3?) years, after which theoretically WSG could sell them to someone else. Irrespective, i think ICC events in the ICC deal pretty much mean a big event every year (world cup, champions trophy, t20 world cup). But i meander too.

    Also, when this will take off really really bg is when the ICC comes into it, or the IPL shows a finger to the ICC and breaks off . Either way, for most cricketeres to get involved, and the market to go beyond that induced by these 8 teams, it will have to become bigger. could happen, or not. who knows.

    As an aside. Ind-Pak ODI matches, the prime advertising slots, saw a huge drop over the series. They play far too often now, and the soaring rates of the ‘friendship’ series haven’t really sustained.

  6. Rahul Says:

    Apologies for the delay. I wasn’t around yesterday.

    Rakesh: I understand where you’re coming from. But I don’t agree. While people watch Tests in bits and pieces, and follow them online, their ratings aren’t high enough, and online doesn’t count for enough. Sustaining interest over five days is rare. It’s why one-dayers are Twenty20 are so popular. Time has everything to do with it.

    Srivaths: The soft cap idea is intriguing. Realistically they could have run with it, rather than a firm cap. But I think having no cap at all could be a good idea too. Let’s take the current scenario: Given that there are only eight teams right now, and enough good cricketers to fill up a reasonable number of those teams, there will anyway be competition, cap or no cap.

    However, it’s in the long run scenario that I’m not sure what works well. If it’s going to be called a free market enterprise, then removing the cap is necessary. I wasn’t thinking of football when advocating the removal of caps as much as of baseball, where you have a very expensive team like the Yankees, and a very effective team like Oakland’s. It’s like India and New Zealand, I guess (my thinking is simplistic here) – one an underperforming but talented team, the other a team whose total is greater than the sum of its parts. Perhaps no cap will work, although the idea of soft caps is seriously tempting. I don’t know.

    Shakester: Your tiny comment got me seriously thinking (perhaps I just need an excuse to write. 🙂 ). I think Sony’s board allows them to take part in deals two years at a time. But has WSG paid upfront? I was under the impression that while they bid for ten years, they had a walk out option after five. But it’s likely that I’m entirely wrong.

    When you say new deals will be being made, what do you mean? I was unclear about what you meant.

    I agree about the ICC and/or situation. As of now, it feels like, for all the talk of cooperation, a collision is inevitable. The ICC’s statement day before about the IPL not being given a slot of its own on the calendar is at odds with what I’ve been hearing about Modi’s interactions with ICC officials. And now Cricket Australia has told Roy that if he doesn’t tour Pakistan, the IPL is a no-go. What does that do to Hyderabad, who bid that much only because they assumed he would play for three years? What does that do to the bidding process? I don’t know whether it’ll be possible to sustain this marking of dates by IPL on the ICC’s calendar. Playing on someone else’s time? I don’t know. Already looks like a conflict to me.

    Yeah, the Indo-Pak series had airtime sold for about 2.25-2.5 lakhs for ten seconds on both DD and Neo, while the 2004 series on Ten and DD went for about 4.5 lakhs per ten seconds. Perhaps rates for T20 will also fall, given the heightened interest right now. But then again, there’s the matter of underdeclaration of subscribers by cable operators. Two months ago Mint ran a study by the center for media studies that showed operaters failing to report up to 66% of subscribers in some areas. I guess once you have accountability the existing level of rates will seem dirt cheap.

  7. srivaths Says:

    The salary cap is a tough call for those of us who believe in the market but if they are going to insist on it, I’d rather live with a soft cap.

    Competitiveness is more vital to a sports league than any other product market and the old cliche about a league being as good as its worst team rings true. I think this is particularly relevant to cricket where there is significant talent disparity across countries. If they’d had no cap, I can see a Reliance outbidding everyone and stacking its team with Australians/Indian stars. They’d start off being favourites both in the cricket and brand building aspects and the eighth team will be left with scraps from New Zealand and Pakistan. While a team short on talent but greater than the sum of its parts is almost always competitive, they rarely win the big prizes; New Zealand themselves prove this. If they are planning to expand to 12 teams as I read somewhere, this problem could become more acute. The short format could negate these worries however. Oh well, more grist to chew over for us I guess.

  8. srivaths Says:

    To quickly go over the most important justification for a soft cap over a hard cap: Imagine a team like Hyderabad which had the foresight to pick a talented bat like Chamara Silva on the cheap manages to successfully develop him and turn him into a star. When he is a free agent again, he could possibly command a million plus contract and to not allow Hyd to go over the cap to re-sign him is unfair to say the least. In effect, they will be punished for their good work with him. This also explains why the NBA allows a player to sign an extension of fractionally greater value with his current team than with any other.

  9. […] three of you that got this far, Rahul Bhatia writes about some of the consequences of this here and here. Rahul is right on top of the IPL goings-on with his incisive commentary – do visit the Green […]

  10. […] For the three of you that got this far, Rahul Bhatia has related thoughts here and here. Rahul is right on top of the IPL goings-on with his incisive commentary – do visit the Green […]

  11. shakester Says:

    aargh. entire comment lost in cyber space. sucky office net.

    essentially- i am not sure either, but I had the impression WSG has the ights for 10 years and after 5 can theoretically sell it to someone other than Sony if they so choose.

    re: the new deals. I only meant that in the time it takes for the IPL to become the global behmoth we are saying it could, the fresh deals being signed for cricket rights world over will stand to be revaluated, and only then possibly devauled.

  12. shakester Says:

    which means that if the IPL is as big as the EPL in a few years time, the ICC will have some problem getting the same kind of money for its deals with the next set of rights. Maybe you are referring to the income generated through ads for broadcasters that will suffer with ther IPL around? For now I think there is enough in the pie. It will take a lot (and considerable time too) for the IPL to eat into the value of conventional (national) cricket encounters

  13. […] in all possible conditions accounting for the difficulty with which runs came in that match? Rahul has been a tireless advocate of the use of advanced statistics and in general more sophisticated metrics to measure player […]

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