R Jagannathan: Getting ROI in Indian cricket

MICROVIEW

The pathetic performance of the Indian cricket team against Australia must have angered millions of cricket fans. But I don't know how we could have done any better. From team selection to compensation and to the way sponsors fall over one another to dish out money, we have created an excellent system to reward the unworthy.

If I were a shareholder in any of the companies that have signed up non-performing batsmen in the Indian team, I would sue the board. The main job of the board is to protect the company from taking on undue risks for uncertain rewards.

But undue risk for almost no reward is what many of the managements have accepted to get over-rated players to sign on as brand ambassadors and product endorsers.

Any system works on the basis of the inbuilt incentives and penalties""and ours is primed for mediocrity, if not failure. If you want a top-performing cricket team, you need to have a compensation structure that not only rewards excellence adequately, but also penalises failure or poor performance consistency.

In Indian cricket, moderate success or a temporary good run ensures extraordinary returns in the form of bonuses and high-value corporate contracts. A cricketer needs to have only one good season to earn enough money to retire. After that, an occasional good performance is enough.

If we want the Indian cricket team to become a world-beating one, we need to look at three areas carefully: one is to yoke talent to work ethic and discipline; two, we need to align the interests of the prime stakeholders better; and, three, we must get the system to reward only long-term performance.

* Let's take talent and discipline first. India has oodles of talent""especially in cricket, which is a national passion. The only problem: we expect talent to deliver without discipline. Ask the Japanese, who produce the world's best cars with fairly ordinary shopfloor talent. How do they do it? They stress process over results. Meaning, if you are following the right process discipline, the results are inevitable.

As Harsha Bhogle, cricket commentator, told Indian Management, a magazine I edit, in a recent interview: "Talent is the most over-rated virtue of our times. But the fact is you cannot succeed without a work ethic." Indian cricketers can never be world-beaters unless their obvious talent is yoked to discipline, professionalism and frequent practice.

Cricketers here become superstars overnight. But in any disciplined set-up, superstarhood has to be earned every day. It can never be a permanent title""till you have retired. When the rewards of star status and money come too early and too easy, what you get is bloated egos""not great cricket.

* Next, there is a complete misalignment between the interests of the three main stakeholders in Indian cricket: the teams, the fans, and the corporate sponsors. In today's structure, when the team gets selected by the BCCI, it is more important for cricketers to be on good terms with the powers-that-be rather than with their fans or sponsors.

This invariably results in wrong selection and poor team morale, resulting from regional biases and other non-performance-related criteria used for selection. Companies lose out when their sponsored players fail to perform, or underperform.

Fans, of course, get the worst deal when the team lets the nation down consistently. Reform in this area is not going to come from the BCCI, since it has everything to lose by giving other stakeholders a say in its affairs.

The only way things can change is if the companies investing money in cricket break the BCCI's monopoly by funding an entirely different cricket team of their own""something like what Kerry Packer did with the one-day game in 1977. There's no lack of money.

Zee and ESPN Star Sports bid over Rs 1,500 crore for the BCCI's cricket telecast rights. That's more than enough to finance a parallel global cricket tournament, this time with fans and sponsors calling the shots.

* Finally, it should be obvious to anyone that rewards must be related to consistent performance. The most successful companies usually structure rewards for long-term performance. Companies adopting metrics like economic value added (EVA) pay bonuses in a deferred manner.

Something similar needs to happen in cricket too. Paying cricketers huge bonus money on the basis of one match or one series is pointless. Bonuses should be banked and stretched out to ensure future performance too""with minus points for weak performance.

This will not only even out the rewards over the playing life of a cricketer and make his performance more consistent, but also deliver returns to companies that use his services to push their own products.

Empirical research shows that advertisers get poor returns on their investments in cricketers who don't perform. In fact, a poorly-performing cricketer is the worst advertisement for his product. It is time they started demanding higher returns on their investment in cricket.

rjagann@business-standard.com