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Mecca of cricket
Business Standard / New Delhi February 22, 2008
Something extraordinary has just happened in and to the world of cricket: the game’s centre of gravity has shifted, unequivocally, to India. In an informal sort of way this had happened about a decade-and-a-half ago when TV began to garner huge audiences — sometimes running to almost the combined populations of Western Europe and the US. But now the player auctions of Wednesday and the prices that they fetched have made India to the commerce of cricket what New York is to global finance: its nerve centre. In the process, the International Cricket Council has become a poor cousin. Its authority over national boards and players is bound to get diluted, as seen during the Harbhajan-Symonds episode. India flexed its financial muscle and the ICC ran for cover. Cricket Australia objected to its players opting for the India Premier League, but its players protested that they wanted to be included — and have been bid for. New Zealand players were concerned that their IPL contracts would prevent them playing for New Zealand teams in the Champions League that is to follow, because they would be bound to play for the IPL team — but some of them have signed up anyway. Amazingly, even mediocre players have attracted fees (auction prices) that exceed those of all but the top Indian movie stars.
 
The financial aspect to the bids has an interesting twist. For, what seem like stratospheric bids for teams and players are actually pretty safe risks, and not audacious at all — because of the assured revenues that will come to team owners. The real risk has been taken by the TV company that has committed a little over a billion dollars for TV rights over the next decade. Over the same 10 years, the team owners will get their lion’s share of TV sponsorship fees (80 per cent for the first five years, 60 per cent for the next five) and the title sponsorship fee (60 per cent) which is to be paid by DLF. Each team owner therefore stands to get a guaranteed share of between $80 million and $100 million over 10 years — which makes the teams themselves virtually free for some of the less ambitious bidders (even the highest team bid, by Mukesh Ambani, was for $111.9 million). The team owners also get access to all on-ground and local revenues as well as the obvious branding opportunities, all of which taken together should be comfortably enough to pay the players’ fees (a total of between $3 million and $5 million per team). After 10 years, team ownership is there in perpetuity without any further charges. So what might have seemed like a flaky play by movie stars and cash-rich businessmen is in fact a pretty safe bet.
 
The real bet, though, is on the Twenty20 tournament (to be played over 44 days) attracting large TV audiences. And herein lies the crucial unknown: will the Indian viewer, who so far has had time only for international contests, watch games that do not embody any nationalism, with the same fervour? Can the American baseball or football model or the European soccer model — both of which are based primarily on club-level fan loyalties — work in India? With the best players in the world taking part, the quality of cricket will be high. But fan loyalty needs something more, and the team owners as well as the league organisers will have to work out appropriate formulae for that as well.

 
 
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