IPL has been sport’s Bitcoin, unaffected by demonetisation
With the IPL narrative focused on retention rules (especially MS Dhoni’s triumphant return to CSK), the larger picture that it will bring better days for players went largely unnoticed. As the squad strength is reduced to 25 and player purse increased to ~80 crore for each team, almost ~700 crore will chase 200 players!
Of this, ~500 crore could be splurged on Indian players. Given the stipulation of having seven Indians in the playing eleven, it is crucial for teams to recruit good Indian talent. Which is why KC Cariappa and M Natarajan go for serious money and talent scouts scour the country to discover another Jasprit Bumrah and the next Hardik Pandya.
Reduced to basic economics, player prices are a simple demand and supply equation. Eight competing teams look to hire a minimum of 15 Indian players each, a total of 120, to cover for injuries, varying playing conditions and loss of form. A severe shortage of quality Ranji players fuels demand and aggressive bidding for proven performers drives prices up.
In a seller’s market, top Indians get top rupee. The IPL record for the highest auction price belongs to Yuvraj Singh (bought by Delhi Daredevils for ~16 crore), but if Virat Kohli was up for sale the hammer could come down on ~25 crore. The latest IPL player payment rules hike the base price of domestic players, and for cricketers yet to hit the big league, this is the equivalent to the Pay Commission for government employees. Last year, 135 Indians had IPL contracts; the top 50 (mostly international stars) received a disproportionate share of the player purse while the bottom 50 (mostly uncapped domestic players) languished close to the ~10 lakh minimum wage limit.
This skewed distribution is set to change and, hopefully, the average price of the uncapped domestic player picked on potential, promise or a punt should go up. This in turn will encourage Ranji players to push hard to secure an IPL contract.
Already, driven by desire, youngsters are raising the quality. To break through to the IPL, the average Ranji player is polishing his game and sweating in the gym. Recognising this trend, Ravi Shastri made a wonderful comment --- he described the IPL as the best physio in the world!
Not just players, the teams too are smiling, happy that years of financial distress and red balance sheets are behind them. In the last 10 years, their business models went for a toss and they lived on hope and hype. Hope that they’d break even, losses would disappear, fan base would be created to boost revenue --- all of which did not happen. Hype because the IPL was positioned as a ‘valuation game’ where the team’s brand value was to become a tradable asset. This did not happen either --- not one stake sale deal materialised in 10 years, despite many teams searching for strategic partners.
Now, with a R16000 crore television deal in place, loss-bearing clouds hovering over the IPL have disappeared. Going forward, under the agreed central revenue sharing formula, the teams are derisked and profits assured. The changed ecosystem has sparked investor interest and team owners are busy negotiating with proposed buyers.
This proves that IPL is cricket’s Bitcoin, unaffected by recession or demonetisation!