IPL Cricket is taking over the world

Sascha: [00:00:02] Welcome to the diverse podcast that asks Who said business news needs to be old business world cricket? Now stay with me if you don't like cricket. Well, cricket is going through one of the biggest moments of transition in its 300 year history and whether or not you think cricket is the best way to spend a long, hot Australian summer or more boring than watching paint dry. There is a giant power struggle playing out behind the scenes of the world's second most popular sport right before our eyes. We are watching the privatisation of cricket. It's Wednesday, the 9th of August. And today I want to know what does this mean for the future of cricket? And to talk about this today, I'm joined by my colleague and the co-founder of Equity Mates. It's Alec Renehan. Alec, welcome to The Dive. 

Alec: [00:00:52] Sascha, Good to be here. And I know that you are an avid cricket lover, so I'm glad that you brought this one to our attention. 

Sascha: [00:01:00] My grandad is very disappointed in me, but are you a cricket tragic? 

Alec: [00:01:06] Yeah, I played cricket growing up. It was my sport. It's a bit too much of a commitment these days, but yeah. Big fan of cricket. And this story, I promise you, is interesting. Even if you don't love the world's second most popular sport, as you said in your introduction. 

Sascha: [00:01:22] Look, I don't want to self-praise, but you have promised me interesting things before and they have proved to be interesting. So I do have high hopes. We're talking about this today because professional cricket has come to America. 

Audio Clip: [00:01:37] Now, the Sports and one we definitely do not cover very often cricket. But get this, it is the second most popular sport in the world. And now there's a push to gain fans here in the US.

Alec: [00:01:48] Yeah, big news, Sascha, the home of sport and we're not in America and plenty of people will take issue to that. But if it's not the home of sport, it's where sport goes to get commercialised. 

Sascha: [00:01:58] Also, it's the home of capitalism. So yeah, where there's money and an audience, America finds a way to, you know, monetise that. 

Alec: [00:02:07] Yeah, professional cricket has come to America. The first season took place over three weeks, finishing up on the 30th of July. And this has been a dream for cricket lovers in America. There's been fits and starts Before there was the pro Cricket League that played one season in 2004, there was the American Premier League, which was a proposed professional cricket league that was going to be jointly run by the US and New Zealand cricket, but that never got off the ground. But this time cricket has come to America. And no, it's not because Americans themselves have taken off the gridiron pads, put the basketball down and thrown the ice hockey puck away. It's because a number of wealthy Indian investors have poured money into the game. This tournament came about after a $1,000,000,000. 1 billion investment from American Cricket Enterprises, a company backed by some of the wealthiest men in India and particularly some big media executives over in India. So we have six teams. We have the Los Angeles Knight Riders. Am I New York, San Francisco, Unicorns, Texas Super Kings, Washington Freedom, Seattle Orchids. Which side note is pot owned by the Microsoft CEO and noted cricket tragic Satya Nadella But Sachin, you're not interested in the team names or how the teams have gone. I did promise you an interesting business story. We're going to get that. 

Sascha: [00:03:35] Look, I actually am intrigued by the names like Knight Riders, great name Orcas with the Orca uprising. At the moment, Not sure I'd be aligning myself with such a violent animal, but that's a story for another day. Professional cricket coming to America is huge, but to tell a story alike, we do need to take a step back and share a bit of the history of cricket. This is just for my sake, as much of it as anyone else's. Because you've made the argument to me that much like Taylor Swift, you know, you know how to make an argument if you're bringing in my favourite pop star. Cricket has defined eras and. 

Audio Clip: [00:04:11] Hazy, oppressive conditions, conditions that look to me as though they would favour the pace bowlers of the side fielding first look, Tony Greig won the toss for the third time in a row and a very good. 

Alec: [00:04:20] Toss. Yes, I am playing to the crowd here, Sachin, but three errors to be exact, from when cricket was first invented to the 1970s, England dominated the game. There is a reason that basically every cricket playing country is or formerly was a British colony. India. Pakistan. Bangladesh. Sri Lanka. South Africa. Zimbabwe. Australia. New Zealand. If you sensing a pattern here, it's because at one stage we all part of the British Empire. So England dominated the game from its inception to the seventies. That's the first era, the second. Era was Australia's era, and it was an era of cricket that started in 1977 when Australia's Kerry Packer became the dominant force in the game with his breakaway World Series cricket. We dominated the game for about 50 years, 40 years. And times were good. The world came to our shores when we wanted them to. The money was here in Australia. But good times do not last because there is a country of 1.5 billion people or 1.3 1.4 billion people to our north. That is the true powerhouse of the game and they have emerged. The third era of cricket is India's era. They dominate the sport at the moment. India alone is responsible for about 90% of cricket's revenue. 

Sascha: [00:05:46] Wow. 

Alec: [00:05:47] But when we look back on the history of cricket, we will say that India's era launched with the Indian Premier League in 2008. 

Sascha: [00:05:55] Okay, so for someone who doesn't necessarily know top of their mind what the Indian Premier League is, can you shed some light? 

Alec: [00:06:03] Yes. So the Indian Premier League is India's 2020 cricket tournament. 

Sascha: [00:06:07] Okay, Alex, you're going to start there again and tell me what 2020 cricket is. Yeah. 

Alec: [00:06:12] Good note, Sachar. So in 2020, each team gets 20 overs and the high score wins. It's a much shorter version of cricket than a test match, which lasts five days. So 20, 20, very short version of the game. And the IPL, the Indian Premier League is India's 2020 tournament and it is big business. In 2022, the IPL was valued at more than $10 billion. In terms of crowd attendance, it's the sixth most attended sports league in the world in 2022 as well. The media rights deal was worth $6 billion and it is the second richest deal across all sports on a per game basis. So in terms of the number of games played, the IPL brings in the second most amount of money from TV, right? Such a bit of trivia. Do you want to guess the number one.

Sascha: [00:07:04] Or is it NFL? 

Alec: [00:07:06] It is NFL. It is NFL. And then there's daylight and then there's the IPL.

Sascha: [00:07:10] Okay. Interesting.

Alec: [00:07:11] So estimates are about half a billion Indians watch at least some IPL and millions tune in religiously to every game. Importantly for our business story today, the owners of the ten IPL teams are a who's who of Indian billionaires. There's N Srinivasan, the head of India, cements. There's Bollywood legend Shah Rukh Khan, the media mogul Conaty Maran and India's richest person owner of Reliance Industries, Mukesh Ambani. But it's not just wealthy Indians that are in those teams. CVC Capital, a European buyout firm, paid $750 million for the Gujarat Titans, one of the Ipl's newest teams. And Australian billionaire Lachlan Murdoch has been a part owner of the Rajasthan Royals since the tournament was introduced.

Sascha: [00:08:02] Interesting. And these billionaires, they're not content with the giant tournament in India. They have visions of turning cricket into a sport much like basketball or soccer, where the clubs dominate over national teams. This is the privatisation of cricket and we're going to unpack that after the break. Welcome back to The Dive. Today we're talking about the privatisation of cricket. Before the break, we mentioned that basketball and soccer are sports where clubs dominate over the country. What do we actually mean by that, Alec?

Alec: [00:08:52] Yeah, so if you think about most sports, the pinnacle of the sport is representing your country. But in these hyper capitalist sports, like basketball and soccer clubs dominate. And then there's like specified small windows throughout the year when you can go and play for your country. But your primary employer and in many cases, your primary allegiance is to your club over your country. Yeah. To give you a snapshot of what that looks like. Take an English football and English soccer player. The Professional Footballers Association report that the average player in the Premier League makes just over £60,000 a week. Good salary. You can get it. 

Sascha: [00:09:34] Not bad. 

Alec: [00:09:36] If you're then selected for the English national team and you represent England in football, you receive £2,000 a game. 

Sascha: [00:09:43] Oh, wow. 

Alec: [00:09:44] That's so little compared to their club payments that since 2008, English players have been donating those match payments to charity. Okay, so for about 15 years, English players have just played for free for their country. But to put that in perspective, the most capped current English player. So the English player who's playing now, who's played the most games for England is Raheem Sterling. He's played 72 games for England, so he's earned £144,000 in match payments. Mm hmm. He currently earns more than £300,000 a week playing for Chelsea.

Sascha: [00:10:20] What is it that you want to achieve next?

Audio Clip: [00:10:22] Champions League is definitely one and definitely something on my country. Yeah, I just feel that's the ultimate. I don't think nothing. Nothing could beat that to any city. So bring something home for England for sure. 

Alec: [00:10:34] But that is soccer in a nutshell. The club is so dominant, makes so much money and is so powerful that they dictate how much you play, where you play, and then playing for your country sort of takes a back seat and fits in with your club commitments. 

Sascha: [00:10:51] And this is the vision that the Indian Premier League owners have for cricket as well.

Alec: [00:10:55] Yeah, that's right. Traditionally, playing for your country has been the pinnacle for cricketers. That's what it is now. But if India's all powerful cricketing governing body gets their way, at least according to sources, and importantly, if these Indian billionaires that own those IPL teams get their way, they want to stretch the tournament to six months and beyond and they want so much money in their version of the sport that they can essentially dictate the cricketing calendar. 

Sascha: [00:11:23] And these Indian billionaires, they're not content with owning a giant sports team just in India. They want to take it to the world. 

Alec: [00:11:31] That's right. And that's where the American story ties back in with what we're talking about here. These IPL owners are looking at the biggest sporting businesses in the world and trying to replicate what they've built. A business like city football group that owns Manchester City, one of the biggest soccer teams in the world have taken stakes on other clubs around the world, including here in Australia, such a melbourne city owned by the same sporting giant. That is the model that these Indian billionaires want to replicate with their cricket teams. These IPL team owners have spread their wings into three continents to actually four continents. If you include India, from South Africa, the Caribbean, the United Arab Emirates, and now the United States as well. Starting in South Africa. The owners of the Indian Premier League have bought all six teams in South Africa's 2020 league. They've bought three of the six teams in the United Arab Emirates T20 League, and they've bought four of the six sides in the Major League cricket. The new American competition that we started this episode with. They're trying to grow international cricketing franchises around the world. So we mentioned Mukesh Ambani before, India's richest person, the owner of Reliance Industries. Let's take his team as an example of how this spreading around the world. So he owns the Mumbai Indians. Since then, he's bought a license for the Mumbai women's team. So the Mumbai Indian women's team, not that surprising so far. He's also bought a team in Cape Town, South Africa, introducing the Mumbai Indians Cape Town. He's bought a team in New York, introducing the Mumbai Indians and New York, and he's bought a team in the UAE. And his fifth team is the Mumbai Indians. Emirates. I would argue he needs to change that. 

Sascha: [00:13:28] I mean, it is it does make the research process a little easier when they all have matching names. 

Alec: [00:13:35] Yeah. Well, but it's the Mumbai Indians New York is confusing.

Sascha: [00:13:41] I didn't even clock their own geographical allocation. That is really confusing. 

Alec: [00:13:49] There is an argument. He could have just called them the Cape Town Indians, the New York Indians, the Emirates Indians. But instead he's gone. Mumbai Indians, New York. So anyway, I'm not a branding expert, but essentially the way that this giant sporting conglomerate is meant to function is that these overseas teams are seen as sort of feeder clubs to the giant Indian Premier League team that sits on top of it. They're meant to help these franchises build their rosters, test new players and I guess act as a scouting, coaching and FADA system to talk about Mukesh Ambani, his team again, the Mumbai Indians, they signed a promising South African fast bowler, Dwayne Johnson for the Mumbai Indians Cape Town. He performed well in the Cape Town team, so they then brought him across to the Mumbai Indians team in Mumbai. For cricket fans, this is dizzying, disappointing and worrying. The game has long been organised around international contests around the country. The domestic tournaments played in each country was seen as the way that you grow and coach talent to then play for the national team. But this club, this international club structure that is emerging really undermines all of that. 

Sascha: [00:15:07] Yeah, it just makes me think of the phrase like it's just not cricket and it feels like, well, the cricket fans are going to say. 

Alec: [00:15:15] That has been said. 

Sascha: [00:15:17] A lot of this Alec, just comes down to money, doesn't it? 

Alec: [00:15:21] 100%. This is all about money. And as much as cricket fans around the world want to complain, I do also feel that sport is business in many cases. And you know, you can't blame the players for wanting to maximise their earning potential for the. You know, I imagine the average cricket career is less than ten years and you can't blame, you know, if the fans it is what the fans want and the owners are responding to an economic incentive. You can't really blame them either. 

Sascha: [00:15:49] I mean, you just demonstrated that so clearly with the soccer salaries. It's like money speaks when it comes to it's not necessarily in order of prestige. Sometimes it's just eyeballs and a business proposition. 

Alec: [00:16:02] Well, let's dig into the money to sort of illustrate what it looks like today and then talk about, I guess, the trajectory that the IPL is on. So even today, right now, IPL owners can offer players far bigger salaries than even playing for your country can provide. And so what we're saying is cricket is cutting short the international careers to play more 2020 IPL to make more money. Every year there's an IPL auction and players are auctioned off to the different teams. The top IPL contracts are a little over $2 million a year. I think in the most recent auction, three players got over $2 million a year. Compare that to playing for Australia, where an Australian contract averages $951,000 plus match payments in super. But you know, maybe half a little, little bit over half what you get as a top IPL player. Importantly, you can play for both and you can get both, but it just shows you, I guess, the difference. But that's the money to die. According to the Times over in the UK, IPL franchise contracts could exceed $9 million per year by the end of the decade, and that's a figure that national cricket boards just won't be able to match. And so as I said, we're seeing players retire from international cricket earlier to lengthen their 2020 careers and make more money. New Zealand's Trent Boult is an example of that. He got criticised a bit at the time, but it's a trend that we're seeing more and more. 

Sascha: [00:17:40] So Alec, then the million dollar question or the $9 million question. What does the future of cricket look like? 

Alec: [00:17:45] Yeah, well that is the power struggle at the moment between some of the wealthiest people in the world and some of the most powerful people in the world of cricket. Then I saw the chief executive of the Kolkata Knight Riders franchise, which also owns teams in three other leagues, wants to sign players on year round contracts to play for all of his sides. 

Audio Clip: [00:18:08] What does this mean for you when you hear that the match is sold out? Obviously, you made the right call trying to bring cricket here to America. Oh, absolutely. There's 7000 people who are going to be here for the first time and there's going to be 2 billion people watching the late match here from Grand Prairie tonight. So the eyes of the cricket world are going to be on Graeme Perry.

Alec: [00:18:29] So his vision of the future is you play for Kolkata Knight Riders during the Indian Premier League season, then you go and play for the Los Angeles Knight Riders in the American competition, South Africa. You play for the Knight Riders there and on and on. And if you can fit it in around that, maybe you play for your country every now and then. That's the vision that IPL owners have. Hmm. That hasn't been executed yet, but that is where they want to go. There have been reports that certain players have been approached with contracts like that. The Times in the U.K. report that at least six English players have been in discussion with IPL teams, about 12 month franchise contracts. And in that world, they would be dependent on the Indian club for their main source of income rather than playing for England. Earlier this month in Australia, The Age also reported that IPL teams were actively pursuing Australian senior cricketers with similar lucrative deals. So it's all reported, it's all alleged. But Sascha, that is potentially where the world of cricket is going. Looking more like soccer and basketball, where you play for a. Club. That club is likely domiciled in India, where 90% of the revenue for cricket is coming. And then you play for your country in specified international windows. As we've said, money talks. That is one vision of the future. 

Sascha: [00:19:54] Well, it's a vision that we're definitely going to keep a close eye on. And I, for one can say, well, I am not a cricket tragic. I know plenty in my life. So they're going to certainly be talking about this story as it unfolds. If you've enjoyed this episode, or better yet, if you know a cricket tragic, who might want to listen and commiserate along with Alec to this story today, why don't you send the episode to them? It takes 30 seconds of your time. It makes all the difference to us. Alec, thanks so much for joining me today.

Alec: [00:20:23] Thanks, Sascha. Now, the million dollar question or the $9 million question, was this interesting enough?

Sascha: [00:20:30] It really was. I do find the business of sport really fascinating, and it's that balance between money speaks and the traditionalists who want nothing to ever change. 

Alec: [00:20:42] That's life, isn't it? 

Sascha: [00:20:43] Until next time.