GOA: Even as IPL Governing Body chairman Lalit Modi caught his breath in the hurly burly of the auction jamboree in sunny Goa, he said that several international players had come forward and approached the IPL to even play for free in the 44-day tournament. Amazing when you contrast that with the phantasmagoric prices that some of the 17 beneficiaries got at the auction.
Though low on razzmatazz this time round, Fort Aguada was very much the epicentre of the air kissing swish set which saw an eclectic mix of industrialists, BCCI movers and shakers, young tycoons, actresses, agents and a full complement of media.
What the buzzing auction proved yet again was that while the dreaded R word is all pervasive across all walks of life, cricket, to use Lalit Modi’s favourite phrase, is still recession proof. As a gung ho Modi himself said, “We are well on the road to making it a bigger, better, with higher ratings IPL in season 2.”
Against 100 players on sale last year for which as much as $ 40 million was coughed up, only 17 slots were available and a tad under $ 13.5 million was at stake. Only $ 7.67 million of the $ 13.5 million was spent by the 8 franchises this year. Deccan Chargers spent only $ 250,000 of its designated $ 1.9 million at the auction. Mallya (Royal Challengers) and N Srinivasan (Chennai Super Kings) were undoubtedly the most aggressive. Mallya said, “I was prepared to pay even more for KP (Kevin Pietersen).” Srinivasan hastened to add that he targeted Flintoff for the same reason, ‘both are matchwinners’.
Oh, yes cricket gives the best bang for the buck. There is empirical evidence to support this argument and if the pre season 2 whirligig is anything to go by, it looks like another winner. Cost per TV rating point is highest for cricket matches and the IPL in particular showed that it could hold its own against blockbuster reality shows on telly. Raj Kundra and Shilpa Shetty actually jumpstarted the IPL auction by picking up almost 12 per cent in Rajasthan Royals for $ 15 million valuing the franchise for over $ 130 million. Deccan Chargers, which has valued its franchise for Rs 12.4 billion, unfortunately has found no takers at that number yet. Deutsche Bank head of global markets Anshu Jain has reportedly picked up 15 per cent in Mumbai Indians for an undisclosed sum.
‘VALUATIONS WERE A BIT CUCKOO’
Kundra, 29-year-old self made London based metals and precious stone trading millionaire, speaking to SportzPower said, “You have to be ‘into’ a sport to enjoy it. Cricket has been a passion for a long time and the marriage of cricket with entertainment from a business standpoint is something that needs to be exploited. Ravi Krishnan (vice chairman, Emerging Media which owns the Rajasthan franchise) was my introduction into the Royals, but valuations were a bit cuckoo when we started discussing things. But as we talked, valuations came down to realistic levels and Shilpa (Shetty) was a good selling point.”
So, this potent mix of cricket and the entertainment industry is what acted as a catalyst for the deal. Kundra says, “Shilpa has a global presence, she is a very recognisable face and we need to use her effectively in this mix. We are planning the team music videos and merchandising solutions around her. This will help sell the franchise better.” Shilpa Shetty added, “I am lucky to have such a great team, it was a no frills outfit, cheapest franchise and it won the toruanement.”
STRATEGIC PURCHASES
Incidentally, Shahrukh Khan’s Kolkata Knight Riders and Royals were the only teams that made a profit last year. Now three of the franchises have actor-star owners – Shahrukh Khan and Juhi Chawla at KKR, Priety Zinta at Kings XI and Shilpa Shetty at Rajasthan. Bywords in IPL land are clearly business, cricentertainment and profits. Maybe that is why Mumbai Indians was represented at the auction by Nita Ambani and executive director Nikhil Meswani. The potential upside of these franchises is what has caught the imagination of all and sundry.
Given this scenario, most franchise owners were strategic in their purchases this time. They knew the number of slots to be filled, they had the balance of the side to consider and most importantly, each one of them knew what the other franchise had to spend. So, there was a thought process involved and tactical bidding was done accordingly.
Despite that things did go haywire once or twice – Mashrafe Mortaza who was courted aggressively by Kolkata Knight Riders and Kings XI Punjab, going finally for 12 times his reserve price – $600,000. Kings XI though must be laughing for they bagged Jerome Taylor instead for $150,000 and a day later he destroyed England in the first Test.
Last year, Deccan Chargers for instance blew up $ 3.3 million on four international stars including marquee names like Adam Gilchrist and Andrew Symonds. In a sign of the times, they were more prudent and spent only $ 250,000 for two West Indian stars Fidel Edwards and Dwayne Smith. While ‘KP’ Kevin Pietersen and Andrew ‘Freddie’ Flintoff were the shining stars, young South African Jean Paul Duminy also saw fierce bidding, selling for $950,000.
Delhi Daredevils again were strategic, opting for Paul Collingwood and Owais Shah at $275,000 each, while Kings XI probably paid too much for Ravi Bopara at $450,000. Another surprise was South African Tyronne Henderson of Middlesex who was pouched by Rajasthan Royals for a hefty $ 650,000 against a base price of $100,000. So, with the number of foreign players per side increasing to 10 from 8 in the first season, sides though can field only four at a time.
Vijay Mallya coughed up big bucks for KP, as much as $1.55 million, but at the same time he slashed Kingfisher pilot salaries by Rs 80,000 per month. It was the number of unsold players which shocked everyone. Agreed that there were only 17 slots to fill, but the number of international players who had put themselves on offer only threw into stark relief what Modi was saying that the IPL is global cricket’s toniest address. Chamara Kapudegera, Stuart Clark, Brad Haddin, Phil Jacques, Luke Wright, Nuwan Kulasekera, Ashwell Prince, Andre Nel, Ramnaresh Sarwan, were just some of the big guns in a stellar list that remained unsold.
HOMEWORK DONE WELL
And the global network of coaches and agents who are now part of the IPL fantasy factory had obviously done their homework well. For if Henderson was acquired by Rajasthan Royals for his exploits for Middlesex, Tasmanian batter George Bailey was bagged by CSK for his reserve price of $ 50,000. Who knows, he might emerge as the Shaun Marsh of season 2.
Vijay Mallya sounded the right note when he said, “While bidding, several factors had to be kept in mind, who is available for the first half and who is available for the second half had to be considered. The team balance has to be right for the entire tournament.” Ness Wadia added that objectives, budgets and alternatives were kept in mind even as the purses changed with every bid. Wadia said, “It is a business at the end of the day, let us make no bones about it, a lot of thought goes into it. We looked at what adds value and reduces risk. We are building a franchise. KingsXI is something that people in north India will look up to, we want to grow cricket from the grassroots, we have started a KingsXI Punjab Cup locally and want to promote it actively.”
Interestingly as many as six of the franchises are listed companies – Delhi Daredevils (GMR), Chennai Super Kings (India Cements), Deccan Chargers (Deccan Chronicle), Royal Challengers (UB/Kingfisher), Mumbai Indians (Reliance Industries). In fact KingsXI owners Ness Wadia (Bombay Dyeing) and Mohit Burman (Dabur) are also listed. Only KKR and Royals are owned by unlisted entities. So, while their shares may be down in the dumps, profits may be taking a hit, cricket remains enduring. But they are planning to leverage these franchises and maximise revenue potential from in and around the game.
In stock market lingua franca the future earnings potential of the company is what matters. Ditto for IPL franchises.
