Sports and economics

The Board of Control for Cricket in India (BCCI) has become the owner of the most lucrative sports asset in the world. This is because Air Sahara has won the bid to be the Indian cricket team's sponsor. It will pay Rs 313 crore for four years, starting January 1. Now Nike has offered another Rs 197 crore for the sportwear contract. More contracts will follow, for TV rights, stadia rights and so on. Don't be surprised if the total take approaches Rs 1,000 crore. No other sports organisation (leave alone cricket body) gets close to that kind of money.

Talk of the power of the Indian market, and the devotion of the Indian cricket fan. The reason why firms are willing to pay top dollar is that they get a far bigger bang per advertising or promotional buck in cricket than in anything else. Viewership, even for a Test match headed for a dull draw, runs into a few millions over the whole day. Apparently, some 12 million people watched the last day of the rained-out first Test match between India and Sri Lanka at Chennai earlier this month. And if, as the BCCI has cannily done, an Indo-Pak series is arranged every year, viewership rockets into hundreds of millions over the entire series. But credit BCCI for unbundling sponsorships.

Some of the money will trickle down to the players, even the mediocre amongst whom now can now earn a minimum of Rs 20 lakh per year if placed under contract. The second slab is Rs 35 lakh and the maximum is Rs 50 lakh""topped up by match fees. These sums will be raised, perhaps by as much 20 per cent in each category for the new season, because the BCCI spends only 13 per cent of gross revenue on players' contracts. An equal amount goes to the players engaged in domestic cricket.

Now that cricket has emerged as such a major business, the politicians have got into the act (Sharad Pawar, Arun Jaitley, Lalu Prasad et al). Why then should economists too not get into it? The central issue, as comparative research in other countries has shown, is how the rent that accrues to talent, on the one hand, and monopoly rights, on the other, are to be divided amongst players and owners. At the moment, the bulk of the money goes to the owners. Which is why the minister in charge of India's troubled agriculture sector spends the bulk of his time fighting cricket elections, meeting cricket officials, controversial players and such.