What makes the IPL one of the few profitable sporting leagues?

Posted on December 8, 2020 by administrator

Published by: Forbes India

In a recent co-authored book, Rajasthan Royals owner Manoj Badale and acclaimed cricket journalist Simon Hughes track the upward trajectory of the league and how the franchise has evolved through it, surviving spot-fixing and suspension.

When former IPL commissioner Lalit Modi first told Manoj Badale he was looking to raise $100 million from the franchise auction of a cricket league that no one had yet heard of, he had a good laugh. Born in India and brought up in England, Badale, a founding partner of venture builders Blenheim Chalcot, had an inherent love for cricket—earlier, along with co-founder Charles Mindenhall, he built a company to acquire the commercial rights to run English county Leicestershire. While that faced a few hitches, Badale turned his focus to investing in the game in the sub-continent. But would Modi’s league live up to his lofty ambitions?

Thirteen years on, the answer is a no-brainer [even as the league’s architect has since been banned for life over financial irregularities and is in exile in London]. From its initial TV rights of $1 billion, forked out by Sony Sports for a period of 10 years, IPL broadcast rights now command a whopping $2.5 billion for five years (acquired by Star Sports in 2018).

What makes IPL such an attractive proposition, one of the few profitable sporting leagues in the world? Badale, the lead owner of the franchise Rajasthan Royals, explores in a book, ‘A New Innings’, co-authored with globally-acclaimed cricket journalist Simon Hughes. Initially meant to document the “rollercoaster ride of the Rajasthan Royals”, the book evolved into a discussion on the business of cricket and the future of cricket. “And then it was completely unreadable,” says Badale, “at which point Simon, a very old friend, looked at the nonsense and decided to jump in. We worked on it for over 18 months.”

“Some business books tend to be boring. They get the detailed information but aren’t too easy to read. I thought this was the kernel of a very good story. But it needs a story to make it readable and interesting to a wider public,” says Hughes, an award-winning sports writer. In an interview to Forbes India, he and Badale give us a peek into their insights. Edited excerpts:

Q. Give us the top three reasons why the IPL has turned out to be so successful.

Manoj Badale: A focus on creating a product that had media rights and entertainment at the centre of its design; a league format that ensured as much a level playing field as possible [with player salary caps for each franchise ensuring a richer franchise didn’t pick up all the top players]; and a narrative in a production that has as wide an audience appeal as possible, taking it beyond just the cricket fan.

Simon Hughes: The entertainment factor has brought in female audiences. According to the TV viewership data, about 42 percent IPL viewers in 2019 were women, up from 28 percent in 2008, when the league started. That really does transform the appeal of the game. Plus, the money that was available from media rights and private investors enabled the teams to buy the best players in the world. But also bringing them all together has made them excited to play against each other. A lot of people think the IPL is just about money and the players are going to come because they are paid so much. There is a bit of that, but at the same time, they are also getting to interact with the best players on and off the field. That enhances its value for the players individually.

Q. IPL 2020 was devoid of much of the glamour and glitz. No spectators, no cheerleaders, teams caught in a bio-bubble. This time, cricket took precedence over entertainment. Do you think this will mark a fundamental shift in the tenor of the tournament in the future?

SH: One of the reasons this IPL was so successful was because the crowd, while being a very important part of a sporting spectacle, is not the fundamental part. The players are so excited to play against each other that they almost don’t notice the lack of a crowd. From a sporting spectacle point of view, it was brilliant. Because the players aren’t distracted by the crowd, or the sort of media responsibilities they have, or the kind of congestion and travel required to tour around India. They were all in one place and they had one focus, which is to play well. I think that was why this year’s tournament was so exciting.

MB: I don’t think it will change the tone for future tournaments. You can’t extrapolate too much from the tournaments that are taking place during the coronavirus. I think Simon’s right, the quality of the cricket has been exceptional and that’s why the last tournament was so successful. That said, I do think the crowds, and their presence of especially Indian crowds, and the creation of events around the match are important parts of the experience.

Q. Most IPL teams come together for a very short period of time. How do you build a team culture within that period?

MB: I think that’s the toughest challenge for the cricket leadership group. I actually think it’s the toughest challenge in world cricket to gel that squad that brings disparate players together in such a short period of time, with many players arriving just before the start of the tournament or even after that. How you do it is a question really for the captain and the head coaches.

If you look at the most successful teams, and we [Rajasthan Royals] haven’t been that successful in recent times, there is a tight linkage between the head coach and the captain, who form the backbone of the playing squad. And there’s a clear set of values that the franchise stands for because you’re trying to get the players to play for more than just money.

SH: Players who have played for the Rajasthan Royals (RR) have talked about it being an inclusive family. There’s a sort of caring, pastoral aspect to the Royals, which I don’t think you get with other franchises. Another thing RR has done differently, and other teams have copied probably, is bringing on young players and giving them an opportunity. These players that no one have heard of in India and certainly not around the world get the opportunity to play at a level which is close to the international level. It’s also one of the reasons why India is such a good cricketing country now.

Q. How do you manage star egos in a team with Steve Smith, Jos Buttler, Ben Stokes and Jofra Archer and help them blend with emerging ones like Riyaan Parag or Yashasvi Jaiswal?

MB: Our philosophy is every player gets treated equally, be it Steve Smith or Yashasvi Jaiswal. Again, I think the role of the cricket leadership here is extremely important in creating an environment where that sort of integration can take place. The IPL has clearly become the best domestic cricket tournament in the world that all players, be it the elite or the emerging, come with a real desire to perform with a real excitement and nervousness. That is a great leveller.

Q. As the owner of the franchise, where do you draw the line of intervention?

MB: It is a really important line to be drawn and since Season 1 we’ve always maintained that the cricket leadership runs the cricket. I’d be disingenuous if I said there aren’t times when I expressed views to the cricket leadership. I think all owners do that and that’s fine. But, fundamentally, you have to leave the final decisions on selection, coaching environment, coaches etc to the cricket leadership. And the dressing room has to be the sanctity of the coaches and the players.

Q. You’ve mentioned in the book how the spot-fixing scandal in 2013 rattled the players and the management alike. And two years later, RR was suspended for two years due to alleged illegal betting. How does an enterprise turn around after facing hard knocks?

MB: That was, without question, the toughest, most difficult managerial challenges that I’ve seen either in cricket or outside it. Three things come to the fore in situations like that. One, people can write down values and what the corporation’s culture is. But, in those moments, you test whether those values actually have the resilience that you’d like to think they’d have. Second, rely on your leaders, in this case Rahul Dravid and Paddy Upton, to rebuild the trust or, in our case, remind the players of the trust and the values that were there. And third, as an owner, you have to commit at the time or straight after, to really investigate and understand what you could have done differently to ensure the situation isn’t repeated.

Q. How do you do that?

MB: The BCCI and the IPL have taken many steps. But till we have the issue of the increasing influence of gambling and gaming, it’s going to create an existential risk for the game. I don’t think you can ever remove the risk, all you can do is manage it. Regulators need to take steps for that, but so do the franchisees and the government. I think it’s a reality of India, which is the dominant market for cricket, that gaming and gambling are both on the rise. Until there is more transparency around the regulation of that industry, we will face the threat of nefarious activities. The BCCI has invested a terrific amount in anti-corruption protocols, working closely with the ICC. As teams, we need to invest in the education and awareness of players.

Q. RR has been known as a team with a moderate budget. Do you think it has come in the way of building it into a brand like MI or KKR?

MB: If we were being self-reflective, our strategy of frugality served us well in the early years. But, as I say in the book, I think we held on to the strategy for too long. I think we underestimated the importance of Indian star player power. Ultimately, it has affected the rate at which we’ve built the brand. So, it’s a fair criticism.

Q. Will there be a course correction soon?

MB: I don’t know. You pick your players first on their performance and you pick your team on the basis of ensuring the best balance. When you are mid-flight, in the middle of a three-year cycle of contracts, it’s dangerous to jump from one strategy to another. Over time, we have to think about the Indian star player presence. But, equally, the IPL now creates many more stars, far quickly than we were ever used to. Back in 2008, while we had a relatively short list of Indian stars, I think there are many more Indian household names today.

SH: Slightly related to the last point is that the IPL has created a new cricketing economy, not just players but coaches, analysts, marketeers etc. It’s what the book is about—opening up the game to a much more professional operation, with young Indian coaches, analysts, technicians, dieticians, psychologists…essentially, a massive economy. The analysis of the game is only at its infancy and that will interest the Big Tech companies, which will make these technologies affordable for the common people. Facebook buying a percentage share in Jio, for instance, shows that the Big Tech companies are coming to India and, by association, the IPL. It will create more job opportunities and make tech far more affordable.

Q. From one IPL in 2008 to a number of T20 leagues around the world. Will this format dominate the cricket calendar and international schedules be worked around them?

SH: It’s a difficult question for the game’s global regulators in terms of player workload, especially in the environment of bio-secure bubbles, where the artificiality of the environment, time away from the families and the relative isolation is exaggerated. I do think a player’s mental health and time away from the game are going to become much more important over the next 12 to 18 months than ever. The only way you can have that is with a balanced schedule. And that will force a debate about the number of leagues and the number of formats. And the players will have to pick and choose. In the end, if they play too much, their performance will be affected, and their market price won’t be high.

Q. Live sports is a big draw on TV, as is evident by the skyrocketing broadcast deals they fetch. But with the rise of digital platforms that have begun to stream live sports do you sense a shift in viewing patterns?

MB: We are going to be in a fascinating period for the next two to three years as we see the shift in power between traditional broadcasters and the emerging Big Tech players who sit behind many of these OTT platforms. When the IPL was created, 95 percent of the media rights value was broadcast and 5 percent digital. Going forward, I think the digital rights will attract a much larger slice of the pie. When you look at the rate of smartphone penetration in South Asia, the data costs or the video hours viewed per day, the upward trends in digital rights is going to be very significant. How all that plays out in terms of absolute appreciation is unclear. But we expect to see a very strong growth in the value of these rights over the next five to seven years.