Overkilling The Golden Goose

The IPL and T20 cricket are changing how the game does business

EHSAN MANI
Former ICC President

In frenzy Sachin Tendulkar during an open media session before a Champions Trophy match

IN 2007, THE ICC signed a media deal with ESPN Star Sports for the next eight years at a figure in excess of US $1 billion. This followed the BCCI’s deal with Nimbus of over $600m. The national cricket boards similarly saw substantial increases in the value of their media rights, often by upto 400 percent.

When the BCCI launched the Indian Premier League (IPL) in 2008, business houses, private entrepreneurs and even Bollywood stars came together to become ‘owners’ of teams. For the first time, a national cricket board was promoting ownership of teams by the private sector.

Never before has cricket seen a large part of the profits going to shareholders instead of going back into the game. The BCCI astutely retained a substantial part of the income, but the key attraction for the IPL was the overseas players. Their boards would not receive a penny. The overseas players’ values were determined through open auctions and each player would be paid according to their ‘market value’. Some of the players would be paid more than their oards could afford to pay them and would have to choose whether to play for their country or for money. Some players were prepared to retire from ‘official’ cricket so that they would play only in the IPL as they would be financially better off. The IPL was getting bigger than the game; in the long term this can only harm the game.

Some of the boards realised they were caught on the wrong foot and rushed to arrange something with the BCCI. Cricket Australia and South Africa were invited to become partners in the Champions League. But the ICC seems incapable of providing the leadership to take control. The BCCI, with Cricket Australia and South Africa, took another step to take control of world cricket. The media and sponsorship rights for the Champions League were auctioned by the BCCI to ESPN for $1 billion.

Between the IPL and the Champions League, approximately 90 T20 matches will be played annually. This will lead to an oversupply of cricket in India. This is having an impact on the TV advertising rates that the cricket broadcasters obtain. Media companies are now going back to the cricket boards asking for a reduction in the fees they had agreed to pay. There are four main reasons for this trend:

1. The first thing companies cut in difficult times are their marketing budgets. In India, for example, Maruti has slashed its annual marketing budget by 50 percent, Pepsi by 40 percent, Vodafone by 50 percent, Airtel by 30 percent. Companies insist on lower CPRPs (cost per rating point), so the pressure is on media companies to reduce rates accordingly.

2. Since the IPL was launched last year, and ICC introduced the T20World Cup event, viewership of the T20 format has skyrocketed. TRP’s (television rating points) of the T20 matches are double that of ODIs; this translates to more money. Approximately $100 million (Rs 500 crores) has been spent by corporations on IPL2 and the ongoing ICC T20World Cup.

3. India is largely a single TV household, and is split between the female (largely Hindi soaps) and the male (largely cricket) viewers. With more than 10 Hindi entertainment channels available, it’s getting tougher for the Indian male to find his voice.

4. India has been playing back-to-back tournaments for two years and there is an event every month. No wonder, then, that viewer, as well as corporate, fatigue has set in. Corporations have the option of picking and choosing which India series they will advertise with, unlike the trend a few years ago.It is worth remembering that scarcity breeds interest. The BCCI could be killing the proverbial golden goose with oversupply of product.