A new enterprise was formed yesterday. Like most of the speculation-based industries mushrooming in India wherein valuations reach sky-high limits even before the first brick of the enterprise is laid, this behemoth too claimed mouth watering revenue figures before its inception. Which, as i said, was yesterday.
i am, of course, referring to the Indian Premier League [acronymed IPL], which is now, deemed as the showcase for cricketing talents around the world. Either you are a part of it or you are no good. Period. IPL, but naturally, plays on the raw cricketing nerve that runs through any true blue Indian, of which, as odds favour, there are many. But what makes this enterprise different from most other sporting gimmicks we have been subjected to in the past is that IPL is backed up by a sound revenue model. And by that, i don’t just mean your run-of-the-mill game shows with advertising revenues grabbing for eyeballs. This, for once, truly sounds sound.
When unveiled, IPL was primarily seen as an altervative for the ‘rebel’ cricketing league, appropriately called Indian Cricket League [acronymed ICL] launched in a haste to make way for some head room. But when announcements kept trickling in and finally assumed the full blown shape that it took yesterday, one cannot but agree that this was no mean achievement. Ever since i read about the revenue structure of the IPL, i have been blown away by the sensibilities of the deal and the potential that it promises. The details of the deal are many, but i’ll particularly elicit my 2 cents on the most potent of the initiatives.
As any enterprise will agree, the three important [and often only] constituents of a successful venture are the employees, customers and the shareholders. The most profitable and promising venture keeps all the three constituents happy and promises each with growth potential as time goes by. IPL has managed to rein in all the three constituents almost perfectly, thus ensuring for themselves, at least on paper, a happy and a coffers-filled future.
Customers are a given. Cricket will always invite audiences and eyeballs. Give it a dash of the best players and you have managed to grab your customer. By inviting franchises per city, IPL had managed to drag in more shareholders to the venture. More shareholders means more capital and hence, grander scale for the venture which will drag in even more customers. Each of the franchise owners own the team representing the city and it is upto the franchise owners to monetize on the city crowd by creating brand loyalty and awareness. The first leg of the league will lay the foundation of the franchisees to eventually create the brand and the passion that supports it.
Which finally gets us to the players and probably, the most contentious issue of the entire initiative. The auction process, which allowed franchise owners to bid for players they wished would play in their team, has been criticized for more that one reason. Part of the criticism lies, of course, in the morals of the process. After all, no one would like to go under the hammer and be labelled as being “sold to this franchisee owner”. After all, players are no commodities. An even bigger issue with it all is that the price paid for a player does not reflect his capabilities as a player, rather it only reflects the marketability of that player and the potential for monetization that player would bring to the franchisee owner. Which explains a sum of $1.35m for Andrew Symonds and a comparably paltry $400,00 for Ricky Ponting
On a different perspective, quality and merits cannot be measured, especially in dollar terms. If so needed, the best way to get that answer is by throwing that question to other people who also have opinions on merit and quality and let them collectively come up with intelligent answers for quality on dollar value. Since there was no available yardstick to measure by, the first leg of the league used the market hype or pull metric and rewarded those with a larger pull on the Indian [this being the key] consumer. And as a result, i think that the valuations as a result are a good mix of hype [good for the franchise owners] and quality [good for the consumer]. With time, market forces will exert their pull and normalize the values of the players as well. And in more cases than less, the normalization would be on the lines of cricketing abilities.
All that jargonry aside, this venture could be a success only if the basics are satisfied; i.e. the consumer is left happy. And while all this was twirling in my mind while i sat in the galleries in Chinnaswamy stadium yesterday watching IPL unveiling itself, i could not help but realize that this would be the first truly Indian export that relies hopelessly on the Indian mass and frenzy that would show the world where the muscle of the new-age cricket sporting lies.
The model, by itself, is no genius; after all, it is followed by many sporting leagues [read English Premier League, etc.] around the world. The beauty, here, lies entirely in the complex marriage arranged by an archaic organization of an equally archaic sport, with the glitz and glamour of media and the passionate fervour afforded by a burgeoning mass of people who cheer every boundary and shake a leg to every Shah Rukh Khan’s number. A mass of people who, hopefully for the stakeholders of IPL, will shape the brand that they wish to be recognized with.