From the publishers of THE HINDU

VOL.32 :: NO.07 :: Feb. 14, 2009

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COVER STORY

Bucking the trend

All last year, economies struggled and gasped for breath and the pipelines of the global fiscal system clogged to the point of debilitation. If it could happen to Fannie Mae and Freddie Mac and Formula One, it could happen to anybody and everybody else. But the Indian Premier League appears to have defied the recession. By Kunal Diwan.

AP

Kevin Pietersen.

The gavel landed to a hissing murmur in the crowd. Chairs rustled, conspiratorial whispers began doing the rounds. A lot of money was at stake; and a lot more of social and business credibility. A million dollars; hmmm… that sounded tidy for a few weeks of cricket; especially when doomsayers under every stone and at every dinner table were raving mad about the END.

After an excruciating year-long wait, curtains were lifted on Season Two of the Indian Premier League with the time-honoured practice of resource distribution: an auction of players and a legitimised show of putting your money where your mouth is. And going by the tearing success of last year’s event, the bidding is just the beginning.

All last year, economies struggled and gasped for breath and the pipelines of the global fiscal system clogged to the point of debilitation. If it could happen to Fannie Mae and Freddie Mac and Formula One, it could happen to anybody and everybody else. All this did not stop Chairman Lalit Modi from declaring at the auction in Goa that “the IPL has defied the recession. It is apparent that the games will attract crowds and be a huge success”.

What was it then that prevented the choppy waters of world commerce from rocking the boat of Indian cricket? It would be prudent to indulge in some recent history before dipping one’s toes into the monetary eddies of the IPL.

The IPL was born last year when— under its ambitious vice-president Modi — the BCCI formulated a blueprint of the League, ostensibly to tap the huge market for Twenty20 cricket in the region. Patterned on the English Premier League and the National Basketball Association, the IPL took off from where a similarly planned hockey league had failed to dent public imagination.

But this was cricket, and with the mesmerising sway the sport held over Indians, finding investors and participants was always going to be a breeze. The eight franchises that were sold by the BCCI for a grand total of $723.59 million made big news. For example, Mukesh Ambani’s Reliance Group ‘purchased’ Mumbai Indians last year for $111.9 million, payable over 10 years.

PTI

Lalit Modi, the Chairman of the Indian Premier League, is confident that Season Two will be a huge success.

The $1 billion sale of the global television rights made even bigger news. One thing was certain from the very outset, the IPL — even if it did little in terms of evolving the quality of the game — was definitely setting a benchmark for the amount of capital being pumped into the sport.

Viewers lapped up the first season like their lives depended on it. TRPs did not just go through the roof, they reached the sun and stars. People complained of withdrawal symptoms once the competition concluded. And the BCCI, the first to laugh all the way to the bank, was joined in its financial revelry by the franchises — some of which almost broke even, and two that actually wriggled out a profit in the opening season itself.

Shah Rukh Khan’s Kolkata Knight Riders may not have made the knock-out stage, but it played its boardroom games just right — SRK’s magnetism ensured hefty sponsorships for his team — exiting the tournament with a surplus of Rs.13 crore.

The ‘cheapest’ franchise at $67 million, champion Rajasthan Royals also eked out a Rs. six crore profit. Bangalore Royal Challengers, liquor baron Vijay Mallya’s ‘Test-match’ outfit, suffered the heaviest losses, ending the season with a whopping Rs. 43 crore deficit, besides going down tamely in a majority of its matches.

Despite the past season’s drubbing, Mallya sounded upbeat this time as he bid an unprecedented $1.55 million for England’s firestarter Kevin Pietersen. Mallya indicated that the deposed English skipper would bring more than just his batting skills to the Challengers.

AP

Andrew Flintoff.

“We have not discussed the captaincy yet, but we will discuss it. Kevin certainly could be a strong contender, but there are others as well… so we will take a call,” said the flamboyant industrialist.

Pietersen’s team-mate Andrew Flintoff was picked up by Chennai Super Kings — the losing finalist last year — for the same amount as his compatriot. With Matthew Hayden and M. S. Dhoni already in its ranks, Super Kings would surely want to go one better this time. Trophy-holder Royals snapped up Aussie speedster Shaun Tait, who would be expected to deliver under the commandership of countryman Shane Warne.

The IPL, however, stands for much more than winning or losing the cup (how can it not when Preity Zinta and Shilpa Shetty are among the stakeholders and Katrina Kaif is in the stands?). The game — rendered palatable and easy-to-assimilate like a fancy box of digestive cookies — tends to be marginally shrouded by the economic framework that makes it possible.

And economics is a flitty bird, it evades capture; it would be preposterously impudent on this writer’s part to even attempt an expression of the principles and factors that determine the flow of capital, even though it would be relatively simpler to understand the motives behind each deal. Yes, yes, of course, we all love cricket, but it would surely help if everyone knew what everybody else was in it for.

So here’s the real deal: The viewer gets pure, guilt-free entertainment for over a month. The player gets his contract fee. The franchises get their gate collections, sponsorships and cuts from television rights. The logo guys get their rightful display. The BCCI gets the lion’s share (TV rights, plus the franchise costs, plus a lot of other revenue that eventually finds its convoluted way into the Board’s coffers).

The TV networks rake in the cash after selling exorbitantly priced air-time slots to advertisers. But if the advertisers are so sure of getting a suitable ‘Return-on-Investment’ in the end, where does the money come from?

The keyword here is advertising. All the capital that goes directly and indirectly into the formation of a brand — its ‘identity’ and ‘attitude’— is expected to pay off in the future. Product promotion and presentation are vital, and both of these are largely taken care of by advertising, something that business houses consider to have a heavy bearing on actual sales.

How many have been befooled into an impulsive splurge under the influence of repeated televised indoctrinations! So remember, the next time you reach for that curvy bottle of Coke and slip the vendor a tenner, a part of the C-note is financing your evening of IPL. And yes, the cheerleaders too!



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