Friday, August 01, 2008

Yikes! And they call it a gentleman’s game?

The cricket tamasha has begun. But, amidst the hoopla around IPL, can rebel league ICL, survive? pallavi srivastava finds out...

The nearly packed 55,000 seat Chinnaswamy stadium in Banglore was on fire during the opening spectacle of the hyped Indian Premier League (IPL). The cheerleaders from America, stilt walkers from Holland, bubble dancers and acrobats performing on 250,000 watts of music… left the crowd awestruck. Many in the crowd were gesticulating excitedly while on their mobile phones, exchanging notes with friends & family watching the tamasha cricket live on the idiot box in pubs, clubs or their homes. You couldn’t help but flashback to November 2007, when Subhash Chandra’s Indian Cricket League (ICL) played its first match. It generated about 1/10th of the excitement that IPL did. Is this a harbinger of ICL’s impending doom? The natural response will be in the affirmative, keeping in mind the present frenzy around IPL and its association with biz & Bollywood biggies. But then there are many who are mooting for ICL instead. 4Ps B&M presents a reality check of the war between underdog ICL and current hot favourite IPL.

ICL: One fish eats all the profits
IPL: Many hands chasing the money
Going by sheer numbers, there are ten big stakeholders in IPL – BCCI, eight franchise owners (or even more considering that there are more than one stakeholder in most team franchises) and Sony Entertainment Television – taking the most conservative estimate. So, whatever revenues & profits are garnered by IPL will get divided among at least these ten big stakeholders, resulting in a thinner slice for each.

On the contrary, ICL is the sole beneficiary of all revenues generated by the league. “Everything associated with the event, whether it’s ground sponsorship, team sponsorship, on-air broadcast, ticket collections, et al, all the revenue streams belong to ICL. That’s the best part of our revenue model,” says Himanshu Modi of ICL. But IPL’s Lalit Modi rubbishes the argument, “We are very happy with the business and revenue model that we have. And there is a lot of money to be made in IPL. If people are raising doubts about IPL making money they simply don’t understand our model.” ICL: Making tomorrow’s star

IPL: Cashing-in on existing stars
Most ICL players are upcoming cricketers. For them ICL is a platform to hone their skills in the cricket battlefield. The best of these fresh talent may be picked up for the national cricket team (that is if BCCI agrees). IPL however is charged with cashing in on the popularity of existing stars. Lalit Modi argues, “It’s not that we have only star cricketers and we are not giving chance to fresh talent. It’s mandatory for each team to have at least four under-19 players. Plus, what’s wrong in having star cricketers in the team? Even EPL has star players in the team.” Be that as it may, the star players in EPL clubs are reckoned as ‘stars’ because they are playing for their respective clubs and not the other way round like IPL.

What cannot be ignored is that these star cricketers have indeed managed to get all eyes hooked to the IPL game and created so much hype. Purists argue that the strategy can backfire. A former leading cricketer (who is associated with IPL), on conditions of anonymity, told 4Ps B&M, “An Indian cricket lover found himself in a dilemma when Zaheer took Ganguly’s wicket! He is in utter confusion: should he feel gloomy for Ganguly or cheery for Zaheer?” There is no such dilemma with ICL, as most ICL players are playing for the first time. You see them as a member of Mumbai Champs or Kolkata Tigers, and more importantly as each others’ competitor. So viewer loyalty is not divided. Besides, the commitment of international cricketers to IPL can be shaky because of their previous commitments. In fact, Cricket Australia has confirmed that the rescheduled Pakistan tour of Australia may inhibit them from playing for IPL next year.

Preparing for the long run – building stadiums and academies
IPL: The focus is on here & now
Like the EPL model, ICL is building its own set of stadiums (they own three stadia as of now) and is also opening formal training centres (the first one will be announced by June). “If we go by the EPL model, a considerable amount of revenues comes through stadia,” says Gaurav Saxena, Senior Analyst with a research firm. Saxena further explains that this is where ICL has an edge over IPL. IPL is not looking at creating such infrastructure; it is relying on the lease model, which reflects its short term focus. But then, IPL is targeting on minting money in the short term and so in the long run, the league will be in a better position to buy stadia and training grounds in one go.

ICL: Phased investment; less risk
IPL: High investment; high risk
IPL is very high on investment. With teams backed by the big daddies of business and Bollywood, there is a rat race among the franchise owners to brand their respective teams, while they are crazily putting up big bucks to create big noise. This makes IPL a heavy investment model, increasing the risks involved. On the contrary, investment in ICL is in a phased manner and based more on the development of the game (stadia, training centres). “These investments in itself open additional avenues of income. If you have a formal training institute you will have additional revenues through that,” adds Saxena. But then, there’s another school of though, which claims that the bigger the risk you take, the higher the return you reap. Today, the odds may be against ICL, but Subhash Chandra is known to redefine the rules of every game he plays. Remember 2001-2005 when everybody said that Zee is dead because of competition from Star and Sony! But Zee made a smashing comeback, dethroning Sony from No.2 slot and giving a tough fight to Star as well. History may repeat itself once again! If that happens, the Mallyas and Ambanis would have at best lost a few hundred crores (small change for them), but what of SRK, Juhi & Preity Zinta’s new-found entrepreneurial zeal? Hey, this is not to say that we don’t believe in IPL. After all, the higher the risk...

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Source :
IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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