सिर्फ खेलनेका नहीं: The Business of IPL

“It is pathetic – this spot fixing. They get so much money, and still fix”, cried my friend Swami, as we were having our weekend coffee. My broker friend Jigneshbhai was, as always, watching Swami and listening.

After a while, Jigneshbhai asked nonchalantly, “Who are you talking about?” As always, this irked Swami even more.

“Of course, those players in IPL. They get money to play cricket and those players are not playing cricket.”

“Well, don’t worry about it, the players don’t matter much”, replied Jigneshbhai.

Swami looked a bit lost and asked, “What do you mean?”

“Well, some of them do, probably for some time, but then beyond a point, even they don’t. New star players are created all the time”, Jigneshbhai asserted.

Swami’s lost look changed into a bit of amusement. “In cricket, if the players don’t matter, who does?” he mocked.

Jigneshbhai sipped his cup of coffee, and smiled. He looked at Swami and grinned.

“In cricket, the players matter, but in the business of IPL, only you do.”

“Me?” shouted Swami, so loudly that those on the next table glared at us. I signalled to Swami to tone down a bit. In a hushed voice, he repeated “me?”

Crowd-during-matchJigneshbhai, again nonchalantly replied, “Yes, only you matter. You – the cricket fan, the viewer and You – the consumer.”

This stumped me a bit too, and both Swami and I looked at Jigneshbhai with anticipation. But there was no further explanation. Finally, when we realized that he was not going to speak further, we requested him to explain himself. That got him started.

“Well, if you analyze the business of IPL, all the revenue is based on two fundamental premises; first is that the Indian viewer will watch a 3-hour capsule of cricketainment, and second is that advertisers would pay good money to reach the Indian consumer. And those premises are well proven and sound. That’s why you are so important.”

Swami and I looked at each other trying to check if the other got it. My broker friend realized that his explanation was not enough. He took a piece of paper and drew few boxes on it. He started writing on the boxes, and started drawing arrows connecting those boxes as he spoke.

“In the IPL ecosystem, first there is BCCI. They get money for basically selling rights to franchisees and broadcasters, as they own cricket in India.”

He pointed to the second box and continued, “Then there are the franchisees i.e. the team owners, who pay license fees to BCCI and pay salaries to the players. They make their money from their revenue share of title sponsor rights and broadcasting rights that the BCCI pays each of them, as well as individual team’s ticket sales, player/team sponsorships and merchandising which keep increasing every year. Got it so far?”

He looked up at us. We looked at each other and nodded – though both of us were not quite sure we had got it, and what he was getting to. Meanwhile, he continued.

“Then there is the broadcaster Sony who pays BCCI for rights to broadcast, and makes money by selling advertisements during the matches.”

“And finally the sponsors like DLF and Pepsi who pay BCCI for title rights, and advertisers who pay the broadcaster to reach the audience. Got it?”

Both Swami and I were rubbing our eyes trying to understand what Jigneshbhai was saying. Jigneshbhai looked at his diagram on the tissue paper at the cafe, and looked up at us.

Swami peeped into the diagram and asked, “Where are the players?”

Jigneshbhai looked up at us and smiled. “Well they don’t figure in the business of IPL. They get their salaries, they are supposed to play, make the games interesting and hopefully win.”

Then he turned back to his boxes in the diagram. “Hopefully what the players do on the field, and what rest of the ecosystem does off it makes it interesting enough to get you to watch the matches. It sustains the virtuous cycle of advertisers, broadcasters, BCCI and franchisees all making money. If you stop watching, this cycle ends. That’s why you are so important.”

Swami and I looked at each other in astonishment at Jigneshbhai’s explanation. We also felt an inner glow of pride on being told that we were so important for the IPL business. But that pride quickly melted when Jigneshbhai continued.

“The good thing for the IPL business and the problem for the game of cricket is that, irrespective of whatever happens, the fan still turns up and watches the matches. Honestly, they know that they can bank on you.”

He continued, albeit with a tone of resignation.

052612_21“So many controversies have happened in the past 5 years. Most of them bad for the game, many of them bad for the business.”

“All that they do every time is ‘get the bad eggs out’, so that the game continues. You still turn up in increasing numbers, and ‘business continuity’ is maintained.”

“What else does a business need to do if its customers turn up, come what may?”

As he explained this, his mood turned reflective. I realised that despite the business of IPL, as a cricket fan he was sad.

Swami and I looked at each other, wondering whether it was good or bad that Jigneshbhai had explained this to us. It seemed quite plausible that nothing much will come out of this spot fixing except the players caught being banned. How can a business punish itself? Unless, of course, the customers turn away. Which looked unlikely.

We were in a slightly pensive mood when the wealthy man in the sprawling bungalow dropped in. As usual, he was listening to our conversation for a while.

With a twinkle in his eye, he reminded us that today’s match begins in half an hour.

As we were leaving, he explained “It’s not about only the game anymore. सिर्फ देखने खेलनेका नहीं, get up and jumpak thumpak.”

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