Subir Gokarn: Cricket de-coupled?

An arrangement should be made to align the Indian market with cricket's multi-national heritage.

Over the last several weeks, the pieces of the Indian Premier League appear to have come together. The television rights for league games stretching over ten years fetched over a billion dollars. The auctioning of eight franchises generated over $700 million. And, last week, 77 international players were bid for by the eight teams, operating under a salary cap so that some balance between teams could be achieved. Beginning April 18, there will be a game a day until May 27. After a two-day break, there will be two-semi-finals, with the final scheduled on June 1. Each team will play every other team twice in the league phase, once at home and the other time away. Consequently, each venue will stage seven games during the season. The semi-finals and finals will be in Mumbai, giving that venue ten games in all.

The business opportunity intrinsic in the 20/20 version of the game is being well and truly exploited by the IPL model. It brings cricket with top international players to Indian audiences during a traditionally lean time of year. The only country whose domestic schedule the IPL calendar clashes with is England; consequently no England players were up for bids. The format will fully occupy the prime-time slot on television, while also allowing people to watch full games live on weekdays. While live audiences are a very significant component of the revenue model for professional leagues, the fact that each venue will host only seven games in this year's programme obviously limits that contribution and makes the role of television viewership that much more critical.

A schedule involving only one game every day provides every game full access to the entire national television audience, protecting the broadcaster and the league against possible differences in audience appeal between teams. In essence, it is a model that combines strategies to maximise consumption with those that minimise risks of viewer fatigue, differences between teams and low turnout at the stadia.

On the face of it, one would have to give the league a significant chance of success, even in the first year, at least in terms of viewer interest and commitment. Financial viability for the franchises and the broadcaster may take some time, but the confidence of various stakeholders will be bolstered by the league's ability to attract viewers, more so, live ones. However, the operation of the league cannot be viewed in isolation.

Given both its international sweep with respect to players and the very large advertising commitments that will be necessary to make it financially viable, it will clearly have an enormous impact on all other formats of the game. Is it possible for the IPL to succeed without completely debilitating traditional cricket formats? Should it be a matter of concern if the IPL can only succeed at the expense of other forms?

One perspective from which this issue has been viewed is that of audience loyalty. Sceptics against the league have argued that the teams will find it impossible to capture the passion which at least Indian fans display towards the national team. If this isn't there, both the number and commitment of viewers cannot be banked upon. I personally don't think this is much of an issue. An evening of channel surfing will tend to stay awhile with a cricket match for many people if a Dhoni or a Jayasuriya or a Gayle is batting in full flow. On the contrary, I think the IPL is a potential threat to other forms of the game and the cricketing community needs to think about how, if at all, to manage the trade-offs.

The main threat comes from the duration of the league and the density of the scheduling. Forty-four days may be a good starting point, but can hardly become a permanent timeframe. The franchise will have to be expanded to at least twice the current number of teams over the next couple of years and the frequency of games will have to be reduced to mitigate viewer fatigue. Realistically, this means at least a four to five-month season every year, which will both eat into the domestic schedules for many countries and reduce the time available for the international calendar, which is set up by the International Cricket Conference several years in advance.

If the IPL is to work financially, it cannot but challenge the ICC's international schedule. While it is entirely possible that the ICC and the IPL, with the power of the Board for Control of Cricket in India behind it, can arrive at a compromise, the impact of such a compromise on the economics of cricket may be significant. For the foreseeable future, quality foreign players will play a major role in the success of the IPL, just as they have done for so long in all the major national football leagues in Europe. The audience appeal and value of foreign players will, in turn, depend on their performance and reputations in "" of course "" international cricket. It would be rather unrealistic to expect foreign players in the IPL to emerge from the ranks of domestic cricket in other countries.

At the same time, international cricket administrators have to recognise that, in the best interests of the game the money power of the Indian audience cannot but be taken full advantage of. The amount of money that has been committed by the franchisees, all of whom have reputations for solid business sense, suggests that the commercial potential for a high-quality domestic league far exceeds that of a predominantly international format. The challenge before them is how to align the two to serve the best interests of both players and viewers around the world.

In short, the IPL does threaten the current model of international cricket by taking away time, players, viewers and, ultimately, advertising spends from it. However, if this were to happen, I would argue that the long-term viability of both the IPL and the game itself is also under threat. India's market power may make it the inevitable hub of the game, but the contribution of international players is critical to its appeal to both purists and consumers looking for another form of entertainment. De-coupling is, ultimately, a destructive outcome. The search should be on for an arrangement which aligns the strength of the Indian market with the game's multi-national heritage. This calls for long-sightedness and flexibility on the part of both the IPL and the ICC.

The writer is Chief Economist, Standard & Poor's Asia-Pacific. The views are personal