The IPL is not about cricket, big sixes or cheerleaders. Instead its about more mundane things like TRP ratings, media spends and a big bet on the regulations in the broadcasting sector. But I could be wrong.
Because Mr. Reliable thinks its project execution by one key man with loads of serfs (precisely the way he runs his businesses) Unfortunately his key man was injured and Mumbai looks more confused than sheep without a shepherd. Mr. Raja Fisher thinks its entertainment and ended up selecting the cheerleaders leaving Dravid to select a T(est)20 team. King Khan's Lal Mirch Manoranjan thinks its the movies ... which is why he's paid each of his players deserving (Ishant, Gayle, McCullum) or underserving (Saurav, Ponting, Akhtar, Agarkar) like movie stars. The wage bill of the Knight Riders is the highest of the eight at $6.2 million. The Deccan Chronicle thinks its all about big sixes which is why they packed their side with so many pinchhitters like Gilchrist, Symonds, Afridi, Sharma, Gibbs and Styris that they forgot to select bowlers. To their credit Delhi and Chennai have a well balanced side. But then they have also overpaid for their respective licenses. Given that all the above teams have superstar players they will also have to increase the player fees significantly next year which will put more strain on the team finances.
But the man who has got it all right is the man who understands TRP ratings, media spends and maybe has a sneak preview of what may unfold in Indian broadcasting. That is Lachlan Murdoch of Emerging Media and son of media mogul Rupert Murdoch who owns the Jaipur franchise - A man who understands that break even is more important than glam dolls. He went shopping for decent players with a budget of $3.3 million, half of what Mohali and Kolkata paid; a license that was available cheap since nobody wanted the relatively small Sawai Mansingh Stadium where gate revenues would hardly amount to anything and one star player whom all the boys would look up to as captain, coach and master. The sole blemish being Kaif who I guess would have had a better career in athletics than cricket.
My gut feel, and I again say I may be wrong, is that Murdoch has bet on two things - one that the IPL opens more franchisees - which means more matches to be played but more importantly that broadcasting regulations in India are at an inflection point. Today, 10-15% of subscribers of cable TV networks are reported which means that 85% of people who watch the IPL fund the mafia (which owns the cable networks). If somehow in the future regulations were to change, these monies would flow to the broadcaster, which after Lalit Modi and his BCCI friends take their cut, would flow down equally to all franchisees. There is a performance bonus too! A portion of what flows down to the franchisees (20%) is proportional to the points scored. Now the more matches you play the more people watch (given that we are a cricket crazy country), the more TRP ratings are, the more media spends are (considering that there is 60% less advertising time than a one-day match hence more premium), the more broadcasters make and if Murdoch gets the regulatory call right, he breaks-even faster than anyone in the league irrespective of whether his team wins or loses considering his threadbare budget. Which then allows him to be the first one to make decent transfers since he would have recovered his investment.
There could also be more than just numbers here. My guess is that Murdoch thinks the IPL is a much safer bet to get evening prime-time in Indian households than the content on Star TV. Why go through the hassles of creating content, making directors, producers, actors and spot boys rush through the rigamarole of soap operas and reality shows when you have the biggest reality show all served on a platter. Where people have overpaid (Mumbai and Bangalore licenses were bought for a staggering $111 million. Players fees another $6 million) Murdoch has made a $70 million investment everything included. The synergies he gets far outrival all other teams. The great perfornance of the team is just an icing on the cake - Kicker as is called in the investing world.
Jaipur was the most financially viable side before the tournament started primarily because they didn't play the auction like it was played; rather they made an investment. As my Finance Prof in MDI said, 'The only guy who makes money in an auction is the auctioneer.' My money is firmly behind Jaipur. But don't listen to me. As I have said umpteen times - I could be wrong ;)
PS: I do not doubt Mr. Reliable's and Mr. Raja Fisher's business acumen. However, in an interesting twist to my hypotheses above is the fact that came to light when I was discussing soccer clubs. It seems that businessmen with loads of unaccounted cash indulge themselves in club ownerships. Not to suggest that the two gentlemen above are enagaged in such activity. I do not care if they do or not. But an interesting thought nonetheless.
PPS: Names have been changed on request!
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