@IPL WAGER
The lucrative sale of IPL media rights hold up a mirror to the rapidly transforming business of sport inspired by the cricket league. EPISODE #78
Dear Reader,
A very Happy Monday to you.
Last week the Governing Council of the TATA Indian Premier League (TATA IPL), under the aegis of the Board of Control for Cricket in India (BCCI), announced the winners of the media rights for broadcasting the next five-year cycle of the IPL beginning in 2023.
The cumulative receipts from the e-auction was a staggering Rs. 48,390.32 crore—half of what India spends annually on its rural employment guarantee scheme.
The bigger news is that the rights for the digital broadcast fetched just a shade less than the television rights.
There is more. Ever since IPL was launched in 2008 it has served as a lighthouse for Indian sport. Yes some view it as a bubble. Regardless, over the last decade its success has inspired a transformation of the way India conducted the business of sport.
A collateral gain has been a marked improvement in infrastructure and emoluments for the sportspersons—which no doubt contributed to Indian athletes trading up from an also-ran to winners in international sports.
From this perspective the massive payout for the broadcasting rights of an Indian sport is poised to be yet another point of inflection. The shift to digital opens up unbelievable opportunities in the world of Web 3.0.
So this week I explore these emerging contours and their attendant impact. It is longer than usual; request your indulgence. Do read and share your feedback.
The cover picture this week is another random moment from my daily travels within Delhi. I happened to chance upon a delivery person taking a break from his routine to catch up with his messages on the cell phone.
A big shoutout to Hemant, Ajay, Deepak, Gautam, Premasundaran, Kartik and Vandana for your informed responses, kind appreciation and amplification of last week’s column. Gratitude also to all those who responded on Twitter and Linkedin. Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.
IPL UBUNDLED
As already mentioned, last week the Governing Council of the TATA Indian Premier League (TATA IPL), under the aegis of the Board of Control for Cricket in India (BCCI), declared the winners of the media rights for broadcasting of the IPL matches for the next five-year cycle beginning in 2023.
The cumulative receipts generated from the e-auction was Rs. 48,390.32 crore, a massive jump from the previous auction.
According to Karan Taurani of Elara Securities Research, the go-to analyst on IPL, the compound growth in media rights per year is 13.9%.
And, the value of media rights per year has trebled in the just concluded auction at Rs 96.8 billion.
The bigger news is that the rights for the digital broadcast fetched just a shade less than the television rights. It accounted for 48% of the total media broadcast rights payout. Implicit in it is the big bet that the future is digital.
And for the first time the digital and television rights went to two different vendors—Viacom18 (part of the stable of companies owned by Reliance Industries Ltd) acquired the digital rights and Disney Star (wholly owned subsidiary of The Walt Disney Company India) retained the broadcast rights for television.
Battle for Eyeballs
There are several ways to look at what I believe is a benchmark moment.
The most obvious one is whether Viacom 18 overbid for the digital rights. The answer to this will only be settled in 2028.
If you have a subscription for The Ken, do read their long form this week on the media rights auction. The writer makes out a strong case for Viacom:
“Winning the IPL digital rights could turn out to be a game-changer, not just for Reliance but for the entire Indian sports broadcast industry.”
If you wish to read the piece please click here.
Personally I believe the company has made a very credible bet on the digital future of India. Yes the present does inform the future, but when change in the digital economy is exponential one is better off betting for scale.
But for an outlier event like a pandemic or war, the Indian economy is poised to grow—not only has it cleaned bank balance sheets and detoxed corporate India, it has, by delivering basic needs like food, electricity, water (still a work in progress), provided a very strong foundation.
The gap between Bharat and India is rapidly shrinking, so visible in the talent on display in the IPL—to cite just one example, Umran Malik who hurls the cricket ball at a blistering pace of 150 km per hour is from Jammu and not either of the two metros of Delhi or Mumbai.
More important is the fact that from the next season we are poised to witness IPL 3.0 (I am drawing deliberately from Web 3.0, which promises to disrupt our digital world like nothing else). It will be more than just the show stopper.
Frankly I believe that IPL shined the light on India’s ability to manage the business of sport for a world class event. Fourteen years ago it was seen as a wild bet by a brash Lalit Modi, the bad boy of the Indian cricket administration and now a pariah.
Coincidentally, I met a friend this week who was offered the job as the league’s first CEO. Modi pitched the moon to him, including on how IPL would be bigger than the English Premier League (EPL).
Modi, presently living in a self-imposed exile in London, must be chuckling to himself, as IPL just edged past EPL.
To be sure one must not read too much into this ranking as the next round of media rights auctions for the EPL would reorder it.
However the point remains that at the moment the IPL is among the top 10 sports franchises in the world. And this is no mean task, especially in a sport played by a clutch of nations and hosted by a country besieged by a multitude of developing country challenges.
More importantly IPL has rewritten the prevailing grammar of the business of sports in India.
Sporting Revolution
The relatively short history of the IPL coincides with the period of renaissance of Indian sport where our athletes morphed from also-rans to world beaters—the manner in which the Indian team won the Thomas Cup was reminiscent of the audacious 1983 win in World Cup cricket; the big difference is that today Indian sport is winning routinely.
If indeed there was a benchmark year/event to define this transition of Indian sport I believe it is the 2010 Commonwealth games hosted in New Delhi.
Looking back I feel chuffed about how I had convinced Mint (the business daily from the Hindustan Times Group and my then employer) to bet on 2010 being the turning point for Indian sport and do a special issue flagging it.
My conviction was based on the success of the IPL, which swept us off our feet, the mind numbing Olympic gold medal win in shooting by Abhinav Bindra—coincidentally both happened in 2008—and a string of consistently stellar performances in sports like badminton, shooting, wrestling, tennis, athletics, golf and hockey.
More than a decade later Indian sport has carved itself an enviable spot at the high table—reflected so well in the recent successes in badminton, wrestling, boxing, javelin, para-olympics and chess.
In the course of my research for this piece I stumbled upon a book (Go Sporting Transformation) which captures and explains this phenomenal makeover of Indian sport.
A link to the e-version is here and a cover picture of the book is below:
It is essentially a collection of some of the best writers and thinkers on sport and a book I would highly recommend.
The book’s introduction by co-author, Aparna Ravichandran, sets out the case for the transformation:
“We realised, in the process, that the larger mosaic of Indian sport was experiencing a coming-of-age of sorts.
Belief systems were changing gradually, and a revolution was being perpetrated by the new-age Indian athlete who refused to be told that he or she does not matter on the world stage.”
And then Santosh Desai, the man who explains India every week in the Times of India, details how this translates into good business:
“Consumption needs pipelines of attention, channels that connect it directly to the desires of people.
As the engagement with sport increases, it starts becoming a powerful way to get to people’s hearts and wallets. Commerce develops a vested interest in sport. It begins by exploiting the attention that exists.”
Desai then argues how IPL has so successfully incorporated this thought into their business model:
“It then scales up this interest so as to weaponise it. It converts interest into property. The Indian Premier League is a new kind of asset created that becomes a self-sustaining ecosystem that connects viewers, players, advertisers and investors in an upward spiral of commercial gain.”
Bindra, who has penned a chapter for the book, summed up this transformation of Indian sport best:
“I am hugely optimistic about Indian sports.
I feel like we have a number of the requisite ingredients to be a great sporting nation, and this is being helped along by a significant change in attitudes, in recognition and support of athletic journeys, a commitment to better governance through efforts such as the Sports Code, high-class infrastructure that we are seeing more of, and a commitment to building knowledge.
We are resourceful, smart and hard-working as a people, and there is no reason we cannot excel at sports if we put our hearts, and equally, our minds to it.”
The IPL Template
Rahul Dravid, better known as ‘The Wall’ of Indian cricket, made an insightful observation in the same book.
Dravid flagged the fundamental change in the mental make-up of Indian sportspersons as they gradually acquired much needed self-confidence.
“I have grown up in an environment where the dominant narrative of Indian sporting achievement was—We can’t.
These achievers have fought hard, built on each other’s body of work and knowledge, and have today changed the script to—We can.”
About half a century ago ‘Hamara Bajaj’, the two-wheeler scooter from the Bajaj group, dared the middle class to dream in an India overwhelmed by corruption, dysfunctional systems, poverty and chaos.
A decade later, a little car, Maruti 800, stoked these aspirations afresh even as it taught us how to drive. More recently, the launch of the metro rail served a master class on how it is possible to uphold standards in hygiene and social order amidst massive footfalls.
In the same way the IPL is teaching us how to successfully launch a world-class business in India without indulging in the usual jugaad.
What the league did was to commoditise cricket. The IPL offered a three-hour game guaranteeing a spectacle such that spectators would be entertained with aggressive cricket exploits in batting, bowling and of course fielding (click this link to see a sample of the fielding skills)
It is no coincidence that the IPL template has already been adapted to badminton, kabaddi, football and volleyball. Nothing succeeds like success.
Given the structure of India’s demography, two-thirds of the population would have no idea about the pathetic state of sports infrastructure that existed previously—the rare triumphs on the global stage were despite these handicaps. It was only in the 1980s, after the launch of colour television, that we were educated about the virtues of spectator sport; the moment being the telecast of the limited overs tri-nation series from Australia.
The next phase of IPL broadcasting, especially the digital version, promises many more tweaks. In the post-Jio world data is affordable to most.
And almost unnoticed a fibre network is slowly linking India’s villages; of the about 250,000 gram panchayats in the country as on 2 June, 177,015 panchayats are on the optical fibre grid. By next year all of India will be connected by a high speed data network.
Connect the dots and what we have is an entirely new generation of users on the anvil. The advantage with digital is that the ability to offer broadcast in regional languages is not a big leap. With growing convergence of consumer behaviour between Bharat and India, IPL may well have a new set of eyeballs.
Presume by now I have made my case that the IPL juggernaut is poised to accelerate. In its success it is holding a mirror to the future of India.
Recommended Listening
I found this week’s research was like a URL search—never ending. It was fascinating to chase down so many strands of thoughts. Was so pleased to note that others shared in the enthusiasm.
One such example is this wonderful podcast from Times of India featuring their cricket writer K Shriniwas Rao and cricket analyst Joy Bhattacharjya. While the former is among the few journalists who brilliantly tracks the intersection of sports and business, the latter wears many different hats, including being the first CEO of the KKR team.
Separately they lay out the canvas for the future of IPL in a digital era and further improvement in cricket infrastructure—including how the resources from the media auction will go to fund a league for women’s cricket and expand cricket’s footprint to the North East.
Please click this link to listen to the podcast. Hope you enjoy it as much as I did.
Till we meet again next week. Stay safe.
An excellent article on the complete transformation of the buisness of Sports!! A welcome change from politics. The way you have linked " Hamara Bajaj, Maruti 800 and Metro Rail to IPL is truly praiseworthy and reflects your deep insight and understanding of our complex economy!!
Surprisingly different, gripping and an excellent article 👏 👌 👍. Thought provoking, with insights and very informative. One aspect could be highlighted, is the participation of women in almost all the sporting disciplines. Who would have imagined that an Indian lady, almost clinched a medal in the Olympic games Golf competition or the women boxing team outshining their male compatriots in the same Olympic games. Looking forward to the Chess Olympaid being held in the country, with the emergence of a prodigy. Refreshing write up. Looking forward to next Monday Anil.