Subir Gokarn: Approach to building a professional league

A 'stakeholder' approach is a good way.

In the aftermath of India's early exit from the World Cup, there was some natural venting of feelings against the cricket establishment. One manifestation of this was the announcement of the establishment of the so-called Indian Cricket League, visualised as a professional league, with a guaranteed television deal.

Very little has been heard of this since the initial announcement, except the occasional comment about the legitimacy of the league's challenge to the monopoly power bestowed upon the Board for Control of Cricket in India (BCCI). Meanwhile, the "official" version of Indian cricket continues on its merry way; matches against Bangladesh in the middle of May, playing to empty stadiums and rain disruptions, not to mention, not available for viewing in many, if not all, cable territories in the country.

It really is amazing that a sport with such an enormous and dedicated following in this country cannot operate on a commercial model that has the potential for not just larger, but far more widespread and evenly distributed gains that will reinforce its sustainability. From this perspective, the idea of the Indian Cricket League is an excellent one; but to be viable, it needs to be built on the principles that have made professional domestic leagues so successful in many parts of the world, and in environments in which the captive audience is appreciably smaller than that for cricket in India.

A "stakeholder" approach is a good way to highlight these principles. On one side of the equation, of course, is the consumer""be it for live action in the stadiums, the broadcast or the various merchandising opportunities that emerge from a popular sporting activity. On the other side""the supply side""stand four stakeholders, the balance between which make or break a professional league. These four are the players, the team "owners"""individuals, corporations, clubs or any other ownership structure""local governments, and the media.

First, let's look at the players. It is striking that, with the amount of money that the sport generates in the country, only 20-25 players should dominate the flow of income. With total revenues running into several thousands of crores, surely a lot more players, certainly running into the several hundreds, should be able to visualise the sport as a career option in which lifetime income security is a realistic goal. This can easily be translated into a league structure with perhaps 20 top-tier teams with 20 players each, plus supporting lower tiers.

A players' association has a role in designing standardised contracts for each tier which guarantee a minimum level of earnings for each player, while leaving room for the stars to maximise their earnings potential. Standard contracts will, necessarily, allow players to migrate across teams and across tiers based on their performance and the team's willingness to pay them what they think they are worth.

Team "owners", as a group, are in a pivotal role. In collective mode, they enter into contracts with the players' association to design and comply with the standard contracts. They also negotiate with the media with respect to the total value of any broadcast deal and, equally importantly, work out a transparent formula for sharing broadcast revenues between teams. Finally, common resources to be allocated for either development of the sport itself or broader community initiatives are decided upon by this group.

Beyond this collective role, their individual roles are equally important. Each of them operates in a distinct socio-economic environment, which poses different challenges for commercial viability. Each team has to develop a strategy that balances between the collective priorities of the league and the imperatives of the location it operates in. Struggling teams do not make for a successful league.

One critical relationship in this context is with the local government, for whom a successful top-tier team can provide an enormous boost in revenues. However, this is going to materialise only if these governments either directly invest in stadium and supporting infrastructure consistent with the requirements of a team in the tier that they want to accommodate, or effectively facilitate these investments by the private sector. Who owns or operates the stadium is not important; under any circumstances, the local government has a huge stake in hosting a professional team and needs to devise ways to maximise the benefits flowing to the community from its presence.

Finally, the media: it clearly needs to enter into a deal that allows it to give maximum exposure to individual stars as well as the more popular teams. However, unrestricted flexibility will hurt the collective interests of the league because teams located in smaller cities or towns and lesser-known but promising players will not receive adequate exposure. A sustainable contract between the media and the league will guarantee a minimum level of exposure to less prominent teams, while, of course, allowing the broadcasters to showcase the teams and players that are doing particularly well at the moment.

With all these arrangements in place, we now return to the ultimate stakeholder: the consumer. They are best served when they are allowed to develop a stake in their teams' performance, participate physically in the teams' activities by finding it attractive and convenient to watch matches in the stadium, and have the opportunity to watch games, either physically or electronically at times convenient to them, with minimal risk of disruption or inconvenience caused by the weather.

Where does international cricket figure in this model? We can certainly draw on the experiences of European football leagues to argue that it is entirely consistent with a strong domestic league. There, we have successful international competitions at both the club and national level. Two, if that model doesn't quite work for cricket, given the hugely skewed demographics of cricketing countries, an Indian league could certainly accommodate a large number of foreign players, who will add variety while earning a reasonable living.

For reasons of sheer numbers, the sustainability of cricket both as a sport and a form of entertainment is critically dependent on India. Its chances increase when the number of stakeholders increases, as do the benefits that each of them can expect from the game. These, in turn, depend on various investments and financial arrangements that each stakeholder is willing to make.

A bottom-up approach exemplified by a professional domestic league is more likely to achieve this than the current top-down approach, which seems, increasingly, to generate outcomes like the World Cup and the Bangladesh series.

The author is chief economist, Crisil. The views here are personal