ICL vs BCCI : Competition will unlock hidden value in cricket

[talksport]

By D.Murali Chennai, Aug. 22: In their purest and simplest form, the issues and controversies surrounding the Indian Cricket League (ICL) are typical of those engendered by the prospective end of any monopoly, says Mr Nandan Kamath, Director, GoSports (www.gosports.in), a Bangalore-based career management and advisory firm for sportspersons. Mr Kamath, a graduate of the National Law School (Bangalore), the University of Oxford (on a Rhodes Scholarship), and Harvard Law School, has represented India and captained Karnataka in cricket at the junior level. In a recent email interaction with Business Line, he demystifies many a question about the current quandary involving the BCCI (Board of Control for Cricket in India) and ICL. Excerpts. What is the problem, in essence? Essentially, this is a problem of ‘monopoly’ disruption. There are many beneficiaries of a monopolistic regime and each feels insecure about his impending redundancy and displacement. The new entrant is unconstrained by extant institutions and structures and is often able to think unconventionally and unlock or redistribute economic value. Why is the BCCI feeling insecure? Founded in 1929, for almost 80 years the BCCI has held the only set of keys to Indian cricket. The Zee-backed ICL is the new car on the block and, in its wake, the BCCI may no longer be able to retain the same gate-keeping value. Competition is good economics, isn’t it? Yes. The ability of competition to reveal true value is at the root of any capitalist economy. The cream rises to the top in a free marketplace and the provider that best delivers the highest value will be rewarded by the market in the long run. “Rivalship and emulation render excellency, even in mean professions, an object of ambition, and frequently occasion the very greatest exertions,†is a quote from ‘The Wealth of Nations’ by Adam Smith. That “Monopoly... is a great enemy to good management,†is another. But public interest may necessitate monopolies? Historically, a few markets such as the railways have received governmental protection from competition being categorised as ‘natural monopolies’ – there being a pro-competitive public interest in not replicating certain types of infrastructure and investment. Is BCCI one such? No, not a ‘natural’ one. BCCI, as in the case of many continuing monopolies, is a strong institutional legacy (which might have made economic sense at some point) that no one has, since, either dared or bothered to replicate. But why now? Given the amounts of money that have flowed into cricket in India, it is somewhat surprising that a rival league didn’t materialise earlier. Does ICL make commercial sense? Basically, an initiative such as the ICL makes eminent commercial sense because it provides the opportunity to marry the eagerness of Indian sponsors to spend on cricket with the very best international talent (unconstrained by nationalism and boundaries), much as the English Premier League does with sponsors and international football talent. Will it hit at some of the inefficiencies of the current system? Quite likely. For instance, in a global marketplace, it is hard to imagine that the current state of play – Australian World Champion cricketers earning fractions of the amounts that Indian World Cup first-rounders do – can last for long. Only an imperfect market would allow that and imperfect markets are the sorts facilitated by monopolistic entities. Do you see an unlocking of value, for the player? Yes. Spectacular sporting performances unlock value and all sporting talent requires stages, such as tournaments and leagues, to perform on. Performers will naturally ally with stage-setters who are willing to share fairly in the value generated by performances on their stages. Is there a distortion in the current scheme of things? When all the stages are monopoly controlled, more often than not, the stage-setter unduly benefits and the performer receives a very small share of the pie. With competition comes an opportunity, nay a necessity, to renegotiate this pie; because he has alternatives, each contributor is now better placed to receive fair compensation for the value he brings to the table. For that sole reason, competition is good for the game. What do you think of BCCI’s reactions? On expected lines. The BCCI’s retort to the ICL is typical of an insecure legacy monopolist – player and service provider bans, limiting access to stadia and revoking financial benefits that players have earned over long and, often, distinguished careers. This reaction stems from self-awareness that the BCCI could have been delivering far more value to its players (present and past) and sponsors. What more can we expect from the monopolist? The BCCI’s predictable next steps would be “rewards†for its “loyal†players through increased salaries and benefits (i.e., the beginnings of a market-led correction). Could an ICL have been averted? Were the administration of cricket in India completely spotless and transparent, the ICL would have no raison d’être. The fact is that the value-pie is open to renegotiation and this is the ICL’s automatic unique selling proposition to underpaid players and over-taxed sponsors. Is the BCCI on a strong wicket, from a legal perspective? A sticky legal wicket, I’d say, and it is of little assistance to the BCCI. India has an evolving competition law regime that frowns on anti-competitive acts. Ironically, the court case that established the BCCI as subject to this legal regime was its pyrrhic victory in its cricket telecast rights case against Zee Telefilms (of the group promoting the ICL)… On that case… In that case, Zee had failed to convince the court that the BCCI was a state functionary and therefore amenable to the writ jurisdiction of the courts. Stating that the BCCI was a completely independent “society†registered under the Societies Registration Act, the majority judgment of the Supreme Court held the organisation not to be “state†under Article 12 of the Indian Constitution. The flipside of this decision is that the BCCI’s practices do not enjoy the immunity from anti-monopoly, competition and restrictive trade practices laws that all state functionaries do. As a result, the BCCI’s actions would be subject to the general competition laws of the land. Which means the recent reactions of BCCI can be questioned? That’s right. The player and service provider bans, discriminatory denial of access to stadia and revocation of benefits could be challenged in a court of law by aggrieved parties based on legal principles such as unreasonable restraint of trade, unfair competition and the “essential facilities†doctrine. How do you see the ‘game’ unfolding? Only time and experience will tell whether it is the ICL or the BCCI that will be better able to effectively attract the best talent, administer the game professionally and share fair value with the various stakeholders. Ultimately, the two entities could well merge into one, i.e., when both recognise their mutual financial interests lie in retaining the cricket administration monopoly that makes it possible to squeeze maximum value from players and sponsors. Until such time, at an absolute level, competition will be good for the management, growth and development of the game and its participants. The toss is over. Now, may the best team win! Source: The Hindu

[Chandan]

Terrific interview!! It tell us why BCCI is feeling so insecure! Can the fans see the motive of the board here?

[Chandan]

Why the fans should welcome ICL initiative Rules of the game Wednesday, August 22, 2007 13:33 IST The Indian Cricket League’s challenge to the current cricketing establishment has shaken the Board for Control of Cricket in India enough to sack Kapil Dev from the National Cricket Academy. Dev is executive board chairman of ICL and has connected to India’s emotional quotient — as he has so often before — by saying that he is interested in cricket for India. His question to this churlish move by the BCCI is, why can’t the ICL and BCCI coexist? Why indeed. The BCCI has had sole run of Indian cricket for 66 years, and apart from a few recent decisions to increase match fees and pension for former first class players — and that too after a protracted battle between the board and players — the emphasis has largely been on making money for itself. Apart from the cash-rich organisation and a handful of high-profile players, not many others have benefited from these riches. No one grudges their incomes, but the fan would be well within his rights to ask what else the BCCI has done for the game itself. Maintaining and increasing infrastructure, creating a sporting ethos, providing encouragement to domestic cricket, ending the politics of the selection system — none of these have been on the priority of the BCCI, no matter under whose leadership. The World Cup and Greg Chappell fiascos only added to its bankruptcy of fresh thought. The arrival of the ICL is then a boon for talented players all over the country and even the world. They are being offered extremely generous remuneration as well as a platform to display their skills. It is hardly surprising that they have jumped ship and signed up with the ICL. For many, staying with the BCCI would have brought nothing. And cricket, ultimately, is about players and spectators. Many sporting disciplines have been through this phase of catharsis — cricket itself once before with the Kerry Packer tour. Other governing bodies have come up in chess, boxing and tennis. The BBCI has to adjust to this challenge intelligently. The point is, as far as we, the fans — who are also neglected by the BCCI — are concerned, good cricket is good cricket. The game is more than a sport; it is entertainment. With new forms emerging and television channels devoted to the game being launched, cricket has to be ‘sold’ to the viewer as a package. At the same time, domestic cricket has to be nurtured to create a pool of fresh talent. There is no reason to think that this should only be done by one organisation — today, competition must be expected and encouraged. Especially if it benefits the players and more so, the millions of fans of the game.

[Chandan]

Good ICL debut will be good for Indian cricket, best for BCCI Harsha Bhogle Posted online: Friday, August 24, 2007 The ICL isn’t about cricket, neither is the BCCI. One is, and the other hopes to be, about making profits in a booming market. There isn’t anything wrong with that as long as you state it upfront. And yet, by nature’s wonderful way of sorting things, a confrontation is on the cards and both, at least the BCCI, will be forced to think about Indian cricket, that poor little rich kid that nobody loves. That is why challenges are good, that is the positive side of free market existence. We are all driven out of comfort zones and forced to confront the truth. Batsmen rediscover the urge to play longer innings when a younger challenger knocks at the door, writers spend an hour more on their columns, airlines drop prices and offer better deals. The BCCI may be forced to look at the reality of Indian cricket in the eye rather than offer it a bored, distracted glance. What fun. All sport has to be about three things. Revenues and therefore, profits; the players; and the spectators. Normally, in a good competitive environment, the first of those should derive from the second and the third. If the players are well prepared and play good cricket, the spectators and viewers come in and revenues rise. But in a monopoly, you don’t have to worry too much about players and spectators; just as Indian Airlines didn’t need to worry too much about passengers. But if the ICL does reasonably well, and provides the players and the spectators with an option, the BCCI will be forced to think about them; like Indian Airlines had to with the arrival of private carriers. And so I think the BCCI will be forced to stop doing stupid things like going to Australia seven or eight days before the first Test with only one three-day game to get used to the conditions. At the moment, I am pretty certain they know it is wrong but I am just as certain they don’t worry too much about it because revenues are independent of players and spectators, products and customers. But if India look unprepared for Australia and do badly, and if viewers have the option of switching, the BCCI might be forced into doing something right. There is always another way of getting there, remember! At the moment though, the ICL is a concoction of has-beens and never-will-bes. And you have to wonder about some of the former players jumping at the opportunity of filling their pockets. They are a bit like call centre companies—anyone who wants a job is welcome—but I guess they have no choice at the moment for they must start with they have. But it is in their long term intent that I believe their success will eventually lie. Zee have been quick off the blocks with most things they have done in television but it is their vision that will be tested. They have had chief executives walk in and out every year, ambitious programmes vanish quietly and while they give the impression of being nimble you don’t always know if they are in it for the long haul. If I was a young cricketer today, I would want to be convinced of intent. There are also three key questions: who, where and when? We have some inkling of the who but have no idea of the when and the where. What are the teams going to be called? Are they looking to establish a culture of city rivalry? If, for example, Mumbai is one of the teams, are there enough players from Mumbai for the Mumbaikar to wear a team shirt with pride? The US leagues can do that and so can the Premiership (how many London players, or for that matter England players, are there at Chelsea and Arsenal?) because they have a long history of local affiliation. The irony of it all is that Lalit Modi wanted to start a similar league ten years ago and found the door being shut on him by the BCCI. Now Modi is in the BCCI and his organisation is shutting the door on what was really his idea! But there is an opportunity here, maybe two, for the BCCI. If more players leave the Ranji Trophy it can actually become more competitive because Indian cricket needs fewer, not more, players. And they can start a similar league that could well be more attractive and profitable. But will they? If you are used to having people come to you to buy tickets it is very difficult to go to them to sell tickets! I hope the ICL has a good debut though it seems that they are more at the start of a steeplechase than in the final straight. It will be good for Indian cricket and, if they want to look at it that way, best for the BCCI. ____________________________________________ Good article!

[Chandan]

Indian Cricket League-BCCI rivalry bodes well for advertisers The question is 3 years too premature It seems to be premature to ponder on whether ICL is an opportunity for advertisers. After all, ICL is still an unknown entity. The question whether ICL is an opportunity depends purely on whether the Indian viewer will decide to watch the event or not. Basically, no viewers and no fans equals no interest from advertisers! A more immediate question for ICL is: what is the product and why will it be viewed? As of now, the ICL product is ill-defined and seems to be a haphazard cricket league featuring a rag-tag group of unknown domestic cricketers and semi-retired international cricketers. This motley crew will play for as-yet unknown teams at as-yet unknown venues. Perhaps more hype than substance? For all the discussion on how ICL will ‘develop’ the game, let’s make no mistake, this is a commercial venture. The promoters are trying to develop a commercial property which challenges the writ of BCCI. What seems to have drawn public and media interest is the ‘soap opera’ between ICL and everyone’s favourite whipping boy, BCCI. Unfortunately, this may be all the current brouhaha currently is — a soap opera that will have no final bearing on the success or failure of ICL. There is a fundamental flaw with the ICL concept. Cricket is a sport with dominant affiliations for national teams, not club teams. The key driver of cricket’s popularity is international tournaments that are the jewels in the crown of the annual cricketing calendar, essentially ensuring the best cricketers in the world spend most of the year playing cricket for their countries. This is even more the case in India. Most cricketing fans and viewers in India watch cricket because of the passion that the entire nation feels when India competes in international events. The viewer wants to see India play. This is the critical affiliation factor defining the popularity of Indian cricket. The city teams that ICL will create go against this fundamental premise and this could be the defining reason on why ICL may not be successful. Every advertiser will look at the ICL offering on television and first ask the question: will my existing/potential consumers watch this, and will they feel a ‘part of it’? Thus, the question of whether ICL is an opportunity for advertisers is three years too premature. Will ICL be around till then to find out? It will help small advertisers & Team India alike FIVE film awards, two fashion weeks, three stand-up comedy shows, two dance-with-the-stars, three talent hunts for singers... Let’s face it. Success breeds clones. That the epicenter of the cricket world has had only one version till date is a little strange. Advertisers are after engaged audiences and cricket delivers that in abundance with minimum risk. India contributes around 55-60% of the global cricket economy estimated around Rs 3,500 crore annually. Organised domestic Indian cricket would be less than 5%. So why is it that a planned domestic tournament is stepping on some heavy toes? Outside of the noise and editorial value, does ICL really have anything? With economy growing at 10% and advertising expenditure at 20%, there are many new advertisers in the market today. An estimated 14,000 brands advertise on TV (that’s only 15% of all advertised brands). On cricket, advertised brands have doubled from 1,388 in 2004 to 2,966 last year. Many of these advertisers want the action through the line, from on-ground to activation of rights, not just on broadcast. League cricket has the potential to open this up and ride on the following: # Expanded base of advertisers: Increasing number of advertisers seeking opportunities to engage using this large platform. # Expensive cricket: Team India will continue to be the consumers (and advertisers’) darling. However, it will become the big boys’ play, thanks to escalating costs. There is a sizeable opportunity a few rungs below that a brand can leverage with such leagues. # Better leverage: The value of official on-ground partnership has significantly diminished over the years with little or no protection against ambush on air unlike football. An ICL-type league can correct that and hopefully advertisers can see more value in this. # Male audiences: In 2003, only three out of top 10 advertised brands predominantly targeted male audiences. In 2006, this had six signing the changing order of advertised brands. Engaging and entertaining league cricket will provide a better option than soap (operas). ICL is not going to change the viewing paradigm on cricket, and irrespective of (whether) it will exist a few years from now or not, it would have provided advertisers an opportunity and tapped an existing demand, fast-tracked newer (and bolder) initiatives of BCCI, enabled adoption of Twenty20, build interesting domestic cricket, merchandise et al. Team India will continue to reign supreme (if they perform) and leagues such as ICL are not here to dethrone that. If at all anything, it will only enhance the value of Team India. BCCI would have gone up in stature (and revenues) by acknowledging the leagues as a franchise model for a share of upside while creating more engaging and entertaining cricket content.

[Chandan]

BCCI in hot water Cricket row under MRTPC scanner Our Bureau New Delhi, Sept 6 The tussle between the Board of Control for Cricket in India (BCCI) and the newly formed Indian Cricket League (ICL) has received attention from a rather unexpected quarter. The Monopolies and Restrictive Trade Practices Commission (MRTPC) has asked its Director-General of Investigation to conduct a preliminary enquiry into the decision of the cricket body to take action against cricketers joining the ICL. “The Commission has taken suo motu cognisance of media reports relating to the decision of the cricket board and ordered the inquiry,” said a senior official of the MRTPC. The Director-General will call for the agreement that exists between the BCCI and various players. The Commission has given 60 days for the investigation report to be filed. BCCI’s Tough stance Taking a tough stance, the BCCI had recently decided to deprive its cricketers from pension and also disallow the Indian Cricket League, promoted by businessman Mr Subhash Chandra from using any of the stadia in the country for hosting tournaments. Some of the leading national and international players have joined the league with Kapil Dev as the head. Notable international players who have signed up are West Indies’s Brian Lara, South Africa’s Lance Klusener and Pakistan’s Inzamam-ul Haq, apart from 51 Indian players. The League had dragged BCCI to court saying that the board was “intimidating” the players who had joined the league. Subsequently, the Delhi High Court restrained public sector enterprises Indian Oil Corporation and Air India from taking any action against their employee-cricketers who had parted ways with the Board. The issue took a different dimension when the Union Railway Minister, Mr Lalu Prasad, not only said he would let the League organise matches in the stadia owned by the Railways but also described the ICL as a “good initiative”. Read Prem Panicker's take on this and also the PTI article .

[Chandan]

Problems that cricket faces with BCCI running it in India! Limited opportunities for boys from districts The urge to do well in cricket has been much higher in the boys from the districts, writes Makarand Waingankar. Cricket in India is no longer a game. With both sides throwing punches at each other in the BCCI-ICL match, had there been a match referee, he too would have found it difficult to press the right button. The cricket-loving public is confused about the claims of each party, and this will continue till the first match of the Twenty20 is played next month. What irks one is that, of late one gets to hear a lot about the development of the game in the districts. With 604 distri cts in 28 States and seven Union Territories in India, not even 10 per cent of the districts have been covered as it requires monumental work to be accomplished with a missionary zeal. There is no doubt that the BCCI has been making efforts to reach out to the districts. But not all associations show the same keenness or the concern to develop the game in the districts. After having travelled in all the 27 districts of Karnataka in 2001, I observed that the urge to do well in cricket has been much higher in the boys from the districts than those from the city. Lack of infrastructure forces them to travel long distances by rickety buses to attend cricket camps. Ground realities Having assessed the ground realities, a programme was devised and the KSCA Cricket Academy was formed. Tapping the untapped areas was the key to the success of the programme, and by 2003 inter-district matches were played in all age-groups. Playing inter-district matches covering three age-groups at the junior level made sense as talent sometimes emerged from places that didn’t have a proper cricket ground. The problem is the limited opportunities the boys from the districts get, especially if there is one State association in large States like Uttar Pradesh (70 districts), Madhya Pradesh (48 districts) and Bihar (59 districts). The players from these States suffered compared to those from Maharashtra (which has three associations), Gujrat (3) and Andhra (2). Either the BCCI should have one-State-one-association policy or bifurcate the big State associations into two associations so that uniformity is maintained. One-State-one-association leads to favouritism during selection process. Recently a former India junior player committed suicide in U.P. as he was not getting picked for the State team despite good performances. And now with the BCCI increasing the match fees, the selection process, if not controlled or monitored, would create major problems. Discontent One can’t deny the fact that the discontent in the selection process of certain associations helped ICL grow. The BCCI has been taking measures to streamline selections at the national level, but it’s at the State level that the discontent is spreading like a wildfire and that needs to be stopped. If the intention is to go to the grassroots level, BCCI will have to generate huge funds to deploy manpower to develop untapped areas. When the agents are appointed, accountability is the critical factor. This seems to be the only solution for Indian cricket. ------------------------------------------------- Very good article!