In 2008, Lalit Modi's announcement to launch the Indian Premier League (IPL) triggered disbelieving smirks, widespread skepticism and sharp criticism.
Traditionalists disapproved of the showy tournament that reduced cricket to a crude Bollywood item number, with dancing cheerleaders and leering spectators.
They were appalled that cricket changed from sport to spectacle and disliked IPL’s vulgar cocktail of cricket, commerce and entertainment. Other non-believers wondered if 20 over cricket would even work.
That was then.
Today, the doubts have disappeared and the IPL is a commercial blockbuster – a huge hit.
The IPL invited private enterprise into cricket and successfully created a commercial property that aligned with the changing social trends and lifestyles.
In a fast-paced world with low attention spans, the IPL fitted into space available for result-oriented sport that was short, snappy, snazzy and spicy.
IPL: The Business Model
The construct of the IPL broke the conventional mould as it was cricket's first-ever handshake with private investment; of actual ownership of a team, not sponsorship.
Bruised from an earlier botched attempt in the mid 1990s, when a similar proposal was struck down by the BCCI, Lalit Modi knew IPL’s private investment had to sit with official sanction. That cricket won't survive without BCCI approval was proved by Packer in Australia and Subhash Chandra's renege ICL in India.
While the IPL was carefully shaped to be owned and operated by the BCCI, the private sector was allowed in and handed out a share. This was not the government exiting a failed business or offloading stake in a collapsed PSU. More a case of visionary economic bhagidari (partnership) for creating an asset and generating wealth.
By inventing an arm of Indian cricket to run commercially, corporate India entered Indian cricket's dressing room.
Team owners were also assured value by limiting the number of teams so that demand outstripped supply, translating into rise in value. Also, the side benefits of owning an IPL team (social status, image-building and networking) were good for business, priceless for bragging rights.
The IPL aligned this philosophy to a creative business model which ensured the BCCI was a guaranteed winner with assured revenue from media rights, central sponsorships and franchise fees.
Like a good batsman, the BCCI de-risked itself and deflected potential danger to the teams.
IPL: The Exciting Cricket Cocktail
The IPL works because it is bling but cricket is the king. It works because it remains true to cricket, the only tweak is shrinking its duration to deliver a result.
Also, it taps into India's recession-proof cricket economy and its huge fan base. The true impact of IPL lies in sparking intrinsic change and converting cricket into a three-format sport, with T20 the driving force that fuels its economy and subsidises Tests.
It’s success forced batsmen to be aggressive and bowlers to discover new tricks for survival. And as cricket evolves and run rates go up, Test cricket stands energised.
When Devdutt Padikkal (first season in IPL) smashed Jofra Archer (bowling at 150 kmph) through the covers, KP on the commentary gushed about fearless young Indian batsmen. Only to be interrupted, and corrected, by SMG who said: "It’s not the new Indian batsmen at the crease. This is new self-confident India."
The IPL is Indian cricket’s great export that changed the power dynamics of the global sport. Because of IPL, India is an entrepreneur, not a customer, and thus, a world leader.
The IPL is India’s sole creative contribution to world cricket since Ranji invented the leg glance one hundred years ago. He made almost 25,000 first class runs (with 72 hundreds) but did nothing for Indian cricket except make a statement that non-whites played better than the whites who invented the game.
IPL – The Journey So Far
The IPL’s money spinning formula unlocked cricket’s financial value, seduced a new generation of fans and changed the grammar of the sport. No wonder its blueprint is being cloned everywhere.
The IPL disrupted Indian cricket and gave Indian sport a good shake. Designed as a league where opportunity shook hands with talent, the IPL is a masala mix of sport spiced with entertainment and loads of glamour. High quality cricket smartly packaged and home delivered at prime time – a great product customised for fans.
It is no surprise the IPL took off like a rocket. Thirteen seasons since it started, the league's journey has seen more ups than downs, both in terms of cricket and commercial success and, thanks to COVID, discarded the peripherals it never needed. There is less noise now and far less tamasha.
Team owners who earlier grabbed media attention have receded to the background to take a dignified backseat. SRK continues to wave imperiously from his box at Eden Gardens but the days of celebrities exchanging excited high fives and hugging players near the boundary are of the past. Today, IPL is about players and brands, fan loyalty and engagement.
IPL – The Disruptor, and the Cash Revolution
The IPL did to cricket what the Green Revolution did to Indian agriculture and liberalisation to the Indian economy. It changed the system by ‘auctioning’ players and determining wages through the interplay of market forces. Players got paid according to merit, not on a fixed scale decided by the BCCI, and this injection of cash made IPL the fast track to fame and riches.
Players seized on this opening, a gap in the field to say, to earn money and secure their future.
Market driven salaries reduced the dependence of domestic players on lowly government jobs and temporary PSU contracts.
Fortunately, the BCCI designed the IPL as a ‘domestic tournament’ and granted reservation (seven Indians in the playing eleven rule) to Indian players and gifted contracted players financial benefits – full salary even if not picked for a single game.
Result: IPL’s cash revolution created cricket crorepatis.
IPL’s Economic Impact and Atmanirbhar Cricket
The IPL altered cricket’s economic landscape by integrating cricket with the economy through private ownership of teams. Later, as teams searched for financial partners, more businesses connected with cricket in order to connect with customers.
Given its reach, the IPL is the perfect platform for product launches ranging from film releases to new automobile models to mobile handsets.
Over the years, the IPL‘s cricket economy saw rapid growth and each team today has at least 25 commercial partners. According to Duff and Phelps, the brand experts, the value of IPL currently stands at $7 billion. KPMG assessed IPL’s role in raising economic activity, creating cricket/non cricket jobs downstream and contributing tax revenue.
The 2020 season added a new twist to IPL’s commercial surge with Dream 11, a FS business, becoming its lead sponsor. This is the first instance of a cricket corporate, an insider, stepping up to support the tournament instead of an outside entity such as a real estate player, a cola or a mobile handset manufacturer.
IPL’s association with Dream 11 demonstrated the rising influence/role/ power of the fan and the economic possibilities/opportunities that it throws up.
Earlier, the fan was useful for buying tickets/merchandise; now the boundaries are extended for deeper engagement. The evolved fan (with knowledge/smartphone/cheap data and good connectivity) is an active participant in Fantasy Sports virtual contests and no more a passive consumer of cricket.
That fans, through fantasy operator Dream 11, are directly funding cricket is a game-changing development and this is Indian cricket’s atmanirbhar moment!
The IPL smashed box office records by netting Rs 4000 crore annually from sponsorship deals that made the BCCI the richest board in the world. Like the BCCI, franchise teams too are in robust financial health. The ‘achhe din’ promised by Lalit Modi finally arrived when the STAR media deal (Rs 16,000 crore over 5 years) kicked in and each team’s share of central revenue went up.
This changed the colour of balance sheets from red to green and teams turned the financial corner, moving from certain losses to guaranteed profits. Together with ticket/sponsorship revenue, every franchise presently is assured an annual profit exceeding Rs 100 crore.
No surprise therefore that IPL team valuations have soared. In 2018, JSW bought 50 percent of Delhi Daredevils (now Delhi Capitals) for Rs 550 crore. Rajasthan Royals, after the latest stake changes, is worth approximately Rs 18000 crore.