The Business of IPL

Another guest post by Satya Prabhakar, the author of that last one I'd posted, dating back to 1994. This one's much more contemporary though, talking about the IPL business model and Lalit Modi.

Here's Satya:

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The success of a business depends on the following, in the order of decreasing importance: opportunity, competition, business model, resources and execution. First, there must exist a ready opportunity to exploit and a customer base willing to buy what you seek to sell. It helps – and, frankly, it is lot more fun – to have little or no competition so you may charge monopoly rents and frequently go on nice, long vacations. Then there must be a proven business model to maximize revenue and profits without having to suffer travails, trials and errors in arriving at the optimum model. The enterprise must then be adequately resourced to build the business. Finally, success demands focused, determined execution, a judicious mix of short-term performance and long-term planning.

If the first four work out to the advantage of the company, it affords a wide margin of error in matters of execution. If you enjoy a huge opportunity, no competition, proven business model and adequate resources, it doesn’t really take a genius to manufacture success. One still needs to be smart and work hard...it’s just that one doesn’t need to be extraordinarily gifted or lucky to triumph.

While IPL sure is a raging success, far too much credit is given to Lalit Modi for its success than he deserves. Even a Dimpy or Rahul Mahajan could not have messed it up too badly. Let us think this through a bit.

India has a voracious, insatiable appetite for cricket. We Indians are so stupid we will watch a 5-day test match, complete with tea and tedium, only to find it has ended in a draw…an activity that is only slightly more exciting than watching grass grow or paint dry or an RGV movie. In the small school playground opposite my house, there are about six different cricket matches going on simultaneously among local kids and adults. Such is our love for the game that finding Tendulkar among the pantheon of Gods in the puja room of a friend or relative doesn’t evoke much surprise. So the market opportunity for a more exciting, more localized, shorter game of cricket was a given. It was there on the table, nicely wrapped with glitter foil and red ribbon, waiting to be picked up.

IPL, from the start, enjoyed double firewall monopoly. Not only did it enjoy the monopoly cricket has as a sport in India, it also enjoyed the monopoly BCCI has over cricket in India. Indians care only about cricket and can’t tell the difference between Sania and Saina. In the US, for example, there is wide and comparable following for professional football, professional basketball, professional baseball, college basketball and college football…each sport has to compete with others for a share of the audience. Further, in India BCCI rules cricket with an iron fist, snuffing out any competition, however nascent, by withholding grounds and spots on the national team from players who cross the line (see Chandra, Subhash). Ask any businessman what causes the most grief and plummeting margins…it is persistent, pestering competition that drives down prices and eat into his market share: it is competition. IPL, thanks to the iron grip of BCCI on the sport and the monopoly cricket enjoys in the mind of the Indian had zero competition.

Crediting Lalit Modi with the innovation of local franchise-driven league business model is like crediting Tatas with innovating the automobile. The concept of local sporting franchises owned by businesspeople is more than 100 years old, devised and honed to perfection by the Major League Baseball (MLB), National Football League (NFL), National Basketball Association (NBA), and English Premier League (EPL). The business model with its various nuances such as revenue sharing, national/local sponsorships, TV rights, player auctions, salary caps, free agent trading, controlled expansion (to create artificial scarcity, driving up prices bid for new franchises) has been tweaked to maximize revenues at different levels and ensure a competitive, exciting league. Nothing that was done with respect to IPL is either new or ground-breaking.

When it comes to resources, the super-rich BCCI was the sugar daddy of IPL, willing to fund and bankroll it with whatever money is needed, eliminating the need for Modi to go and pitch to hundred different skeptical VCs to raise funding for this greenfield venture.

And that leaves execution for which Lalit Modi was extolled by many to high heavens. But recent revelations indicate even when the deck was heavily loaded in IPL’s favor, Modi couldn’t do a good job of executing. Allegations of missing documents, corrupted bidding process, secret kickbacks, sweetheart deals, sleaze, wealth and flash incommensurate with known sources of income and poor governance…all point to a person who is not fit to build an enduring enterprise with systems, processes, transparency and professionalism.

Modi is neither a founder nor an entrepreneur as many erroneously paint him to be. An entrepreneur takes risks and struggles to found a company against steep odds, and suffers endless syncopated rhythm of tribulations and triumphs. Modi was a political appointee assigned to the post and bankrolled by people in power whose favor he curried. He supervised a new business unit of the mega-corp BCCI which enjoyed unimaginably favorable odds. It shouldn’t, therefore, come as a surprise that he is fired from the same job to which he was appointed when he falls out of favor with the same dons that perched him there.

With or without Modi, IPL is set to continue its roaring success.

Satya Prabhakar is the Founder and CEO of Sulekha.com. He can be reached at satyaprabhakar@gmail.com

A blast from the past

My last post was an article I had written way back in 1994, in a university student magazine. That very same magazine had another, altogether more remarkable article -- a piece of fiction that, in hindsight, is remarkably close to today's reality! It talks about a city-based cricket league, and the business around it -- thus anticipating the IPL about 12-13 years before it started! It was written by Satya Prabhakar, who is now the CEO (and founder) of the popular Indian portal sulekha.com, and was then with Honeywell in Minneapolis. I'm reproducing the article below, with his permission. It's written in the form of a feature article for the New York Times, although it is of course fiction. While reading this, pinch yourself once in a while, and recall that it was written in 1994!

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"Hyderabad beats Sydney in nail-biting World Cup Cricket Finals"
How India cultivated a mega corporation -- The Authority

Satya Prabhakar (Eden Gardens, Calcutta, 23 October 1998)
Special to the New York Times
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As a record audience all over the world sat transfixed to their TV sets, Khaleel Ahmed of Hyderabad stylishly flicked a pacer on the leg side soaring over the boundaries of the lovely Eden Gardens. Had he failed to connect, he would have been declared out since he failed to score any runs on the previous three balls, and Sydney would have emerged the winner by 5 runs. And with that shot he crowned Hyderabad the winner of the highly prestigious and bitterly fought championship, organized by the Sports Authority Worldwide, a Bombay-based company. The two teams will split a total prize money of Rs. 883 million (equivalent of $3,258 million).

A BRILLIANT VISION FULFILLED

A record 680 million people from all over the world watched the final event and it is estimated that a totel of over 1.92 billion people watched various matches of this championship, which is a culmination of a 6-month-long playing season. A total of 12 teams from 10 countries participated in the event that stretched slightly over 4 weeks. (The US teams, along with 32 others, were disqualified in the qualifying rounds). The championship was held concurrently in 6 metropolitan cities of India, the permanent host of this magnificently successful annual event.

So successful that it eclipsed the World Cup Soccer, Summer Olympics and Wimbledon as the premier sporting event for the entire world. Television rights for the 1998 championship were sold for an estimated Rs. 12.1 billion. Janaranjan Network of India led a consortium of 20 networks worldwide to beat a BBC-led consortium, to telecast live and then to supply digital recordings of the match to worldwide audience over WorldNet. Merchandise sales exceeded Rs. 1.2 billion worldwide. Ticket sales for different matches totaled Rs. 5.6 billion. Calcutta paid Rs. 2.1 billion to host the championship this year. So on. The kind of turnout and cash inflow that dwarf Olympics, not to speak of events such as the American Super Bowl.

But for the Sports Authority Worldwide (known popularly as The Authority), the primary beneficiary of this championship, this is just another step in its spectacular evolution. Formed in 1994 by a group of Indian investors to fan the interest of cricket fans by organizing a championship of cricket-playing countries worldwide, the Authority showed remarkable initiative and marketing genius in turning this event into this wildly popular gala. Ms. Divya Prabhakar (not related to the reporter of this article), the self-effecting Chairman CEO of the Authority, and perhaps the most powerful woman in the world today, took the helm of the Authority in 1994 when she was 29. Since then Prabhakar has been displaying prodigious ability to visualize opportunities, convince scores of influential people and manage far-flung resources effectively. Pushed further, she gets closer to the truth: "Most people don't think, they just try to be logical. We were lucky in being able to visualize an opportunity and take risks. The best thing about this is that governments are not involved, meddling and fuddling things".

That is ironic, though, given that the Authority owes its existence to the brilliant vision of Prime Minister P.V. Narasimha Rao who, following tradition, opened the finals yesterday in Eden Gardens. Consistent with the trail of visionary economic reforms he blazed in the early 1990s, Rao, without any discussion or debate, stunned the country one breezy morning in New Delhi by scrapping the BCCI and various state cricket boards and declared Cricket a very important national treasure that must be freed from the clutches of government bureaucracy. Following that announcement, the private industry displayed remarkable alacrity in forming the Authority within four months of the announcement. The rest is recorded in history as one of the superlative corporate achievements of this decade. The stock of the Authority is now traded on over 25 exchanges worldwide and is owned by about 50 million people from Mexico to Malaysia, giving investors an average return of over 163% per year. Thanks to the Authority's phenomenal worldwide advertising and marketing campaign, cricket has now become the most popular and exciting sport in the world today from Boston to Baghdad to Berlin to Bombay. Soccer is a very distant second.

CHANGING THE MECHANICS OF CRICKET

However, it was not always like that. Cricket has traditionally been an intensely soporific game, complete with the trappings of English tea, tradition and tedium. A typical Test match stretched on for 5 days, most often to end in a pathetic and irritating draw. The form of one-day cricket evolved from that, but still demanded day-long attention; this proved too onerous to most Indians who suddenly got very busy as the Indian economy took off perpendicular in 1994. When the Authority assumed control of the game, it cut down the play time to an average of 3 hours with a slight rule change: If you cannot score a run in 4 consecutive balls, you are out! That single rule change had a profound and electrifying effect on the game, its mechanics and its strategy. Further, it captured the consciousness of audience worldwide and held them in its thrall as it now combined the unparalleled elegance, skill, variation and finesse of cricket with rat-a-tat-tat shoot-from-the-hip action. The combination was potent and intoxicating.

Capitalizing on the raging trend towards privatization in India, the Authority in 1995 sold participation franchises to wealthy individuals who bought domains of control all over the world. For example, Dr. Alan Merchant shelled out Rs. 390 million to the Authority to purchase the province of Sydney. Expensive!, you say? Look at this: the franchisees and the Authority together reaped a phenomenal return of 135% per year on their investment over the last 3 years. Ms. Prabhakar, who is reputed to run the Authority with strong philosophical underpinnings of equity and fairness, adds, "When you care deeply for all of your constituents, you are bound to do well. If you have any questions, read Sam Walton's autobiography. Often, the most astounding successes are based on the simplest of truths".

Philosophy and profound quotes aside, the stakes are huge and the chips are stacked really high on the Authority's side of the blackjack table. And the Authority, like a many-sectioned rocket that keeps boosting itself up and up, has now turned its sights on soccer and has organized 35 teams from Boston to Bangkok. After the stunning success of this Cricket endeavour, organizing soccer teams was an easy affair. 2000 is slated to be the first year of the Soccer Championship to be held in, you guessed it, India, the acknowledged Mecca of sport in the world today.

However, there will come a time -- tick-tock, tick-tock -- when the Authority can no longer squeeze any more out of the world population for sports. It then will have to figure out what to do next. Says Prabhakar, "That day is still far away. But come that day, we will be prepared". Based on the phenomenal success of this young lady, it may be foolish to dismiss that claim casually.

-- Satya Prabhakar is a Principal at the Honeywell Technology Center. His main interests are digital multimedia management, distributed database access and investment strategy. Quite often, Satya and his 2-year-old daughter have fun playing hide-and-seek at home. Oh, BTW, his daughter goes by the name Divya Prabhakar.

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The End of an Era?

No, forgive me, this has nothing to do with the current shenanigans in the cricketing / political world, although currently we might be on the verge of ending an era as well, of innocence, of cricket as a sport, a fine art.

As I indicated way back when, this blog is about cricketing ruminations and reminiscences. What follows is an article I wrote when Kapil Dev retired, 16 years ago! It appeared in the Fall 1994 issue of "Baat Cheet", a quarterly magazine of the Indo-Am Association, a student association at the University of Minnesota, where I was studying then. Reproducing it here for nostalgia sake...

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An Indian cricket team without Kapil Dev?! That's hard for many of us to envisage, isn't it? Well, it's happened -- Kapil Dev recently announced his retirement from international cricket, somewhat prematurely according to some, too late according to others! But what's undeniable is the enormous service he has done to the game of cricket in India. Single-handedly, he shattered the conception that India could not produce pace bowlers worthy of a Test cap. Perhaps most importantly, his influence on the country's youth as a sporting idol resulted in the development of good fast bowling prospects in India. Till Kapil's emergence, the selectors had trouble finding two pace bowlers to open the bowling -- today, there's terrific competition for the Test place vacated by him.

Kapil made his Test debut in 1978 in Pakistan as a 19 year old. The raw young Haryanvi from Chandigarh immediately showed his promise, taking seven wickets in the three Tests, and troubling the batsmen with his pace and bounce. From then on, it was a meteoric ascent t othe top, breaking the record for number of wickets in a year, in his very first full year on the world stage. He leaves now as the top wicket-taker in the history of Test cricket -- he took 434 wickets in 131 Tests at an average of 29.64. Besides, he scored 5248 Test runs, with 8 centuries, a record worthy of a specialist batsman. Until recently, he was also the highest wicket-taker in one-day internationals (Wasim Akram recently passed him). He took 253 wickets and scored more than 3700 runs in one-dayers. Well and truly, an all-round performer. As a bowler, he relied on controlled swing and nagging accuracy -- plus considerable pace in the first half of his career. As a batsman, he was an explosive stroke-maker, capable of annihilating the best bowling attacks.

However, more than the statistics, Indian cricket fans will remember Kapil for his amazing feats on the cricket field. He leaves behind so many thrilling memories -- who can forget that beaming face holding aloft the Prudential World Cup in 1983? The spectacular catch to dismiss Viv Richards in the final? Or the astounding innings of 175* in the same tournament, coming in with the score at 9 for 4? Remember the 1981 Melbourne Test, when he took 5 wickets to rout Australia for 83? Or the Bombay Test against England in 1981, when Madan Lal and Kapil got England all-out for 102 to win the Test for India? Or that Ahmedabad Test against the Windies, when he recorded his career-best figures of 9-83? Then there was the 1985 WCC series semi-final, in which he thrashed Hadlee's bowling in the company of Vengsarkar, and took India into the final (where his bowling set up in Indian win). Another piece of Kapil magic was during the 1990 Lord's Test -- India needed 24 to save the follow-on; the last pair of Kapil and Hirwani was at the crease. Kapil proceeded to dispatch spinner Eddie Hemmings over the fence for four consecutive sixes! As recently as 1991, Kapil defied the critics and took 25 wickets in 5 Tests in Australia, troubling the Aussie batsmen constantly.

That however, was to be his last impressive series as a bowler. Since then, Kapil's pace slackened, his control wavered, and his batting was rarely reliable. Despite the occasional brilliant performance, critics started sharpening their knives, questioning his place in the team in the face of competition from younger fast bowlers like Srinath and Ankola. In recent Tests, India's spinners came to the forefront as wicket-takers, and reduced Kapil's role as a bowler even further. Kapil reached the historic milestone of 431 wickets (equalling Hadlee's record) against Sri Lanka last year, and broke it in the next Test. It was widely expected that Kapil would then retire, having reached the pinnacle. However, he decided to play on, setting himself a target of 500 Test wickets. That however, was not to be. An injury forced him to miss the three-nation Wills tournament recently, and Kapil decided to hang up those famous boots. Kapil had never missed a single Test match due to injury in 16 years, an astounding achievement for a pace bowler.

Kapil now takes up a new job as a television commentator for DoorDarshan. He is already a successful businessman, with a hotel in Chandigarh among his many investments. He intends to take some time off cricket to be with his family, and later, perhaps we'll see him back on the cricket scene as an administrator or coach. Whatever he does, the best wishes of millions of fans will be with him! Sachmuch, Kapil Dev da jawab nahin!

Book review: "SMG" -- a biography of, well, SMG

A new biography on my childhood hero -- I just simply had to own it, of course! I'm something of a collector of books on Sunil Gavaskar, so "SMG" was a natural addition to my collection. It's quite possibly the most comprehensive, deeply researched biography on Gavaskar yet.

"SMG" is written by Devendra Prabhudesai, a PR manager with the BCCI. Turns out that Devendra is from the same school in Mumbai as myself -- IES -- although *ahem* a few years junior to me. Also, rather late in the book itself he reveals that he was employed with Gavaskar's PMG (Professional Management Group) -- that really should've been stated on the jacket cover itself in the author's bio. But I can forgive a fellow worshipper of SMG and a schoolmate this one indiscretion!

What really sets this book apart from the multitude of Gavaskar biographies that came before it? I think it's the quotes and opinions of many, many contemporaries of Gavaskar, and Gavaskar himself, sprinkled at the appropriate points in the narrative. The author has done a phenomenal job of interviewing people who knew Gavaskar well, played with or against him, or worked with him. People, in other words, who had the opportunity to really get to know the man behind the cricketing automaton the rest of us saw on TV and other media. As a biography, the book proceeds predictably and chronologically through Sunny's life and times, but these quotes really add spice to the story. There are also many quotes from Gavaskar's own extensive writings on the game.

The book divides the "story" into five aptly and alliteratively named sections:

1. Advent
   
2. Ascent
3. Achiever
4. Apogee
5. All-rounder

The "Advent" section sets up the context to Gavaskar's arrival, talking about Bombay cricket, the social context in which it thrived, early stars like Ranji and P.Baloo, etc. It then brings us numerous stories and anecdotes from Gavaskar's school days, growing up in Chikhalwadi, with inputs from Sunny's father Manohar, his neighbour and cricketing colleague Milind Rege, uncle Madhav Mantri (who also played for India), other neighbours and friends, etc. We have of course heard the story before, in Gavaskar's own "Sunny Days". But this version is more detailed, and remains an interesting read. It then follows Gavaskar's cricketing exploits in domestic cricket, leading to his selection for the West Indies tour of 1970-71. It covers that tour, and subsequent ones to England etc. in lingering detail.... those really were historic days for Indian cricket.

The "Ascent" section covers what were really Gavaskar's most productive years as a batsman -- from 1975 through 1980 or so. Towards the end of that phase, Gavaskar at one point had scored 20 Test centuries from 50 Tests -- a phenomenal rate, comfortably better than anyone before him bar Bradman. This really was Gavaskar's "ascent" to the title of the best batsman in the world. The "Achiever" section then chronicles the subsequent turbulent years -- with fluctuating form, captaincy squabbles, the spat with Kapil Dev, etc., mixed with super achievements like the 1983 World Cup win, the counterattack against the West Indies in 1983, his high-score of 236* (coming in at 0-2), and so on.

In "Apogee", Prabhudesai describes the climactic final years of Sunny's career, when he rediscovered superb form and piled on the runs against all comers. It includes the 1985 World Championship of Cricket, where Sunny's leadership really stood out as India went unbeaten in the tournament. That was really the climax of India's one-day run in the 1980s. Through that tournament, India bowled out all teams in under 50 overs (except one -- the final, when Pak ended 9 down!) and kept their opponents under 200 (except one -- New Zealand, who scored 206!). Even in those relatively low-scoring days, these were phenomenal achievements especially for a team that didn't have any deadly strike bowlers bar Kapil Dev. Even after this, Gavaskar went out of international cricket in a blaze of glory, scoring big centuries and culminating in that phenomenal 96 against Pakistan at Bangalore.

The final "All Rounder" section is about Gavaskar's non-cricketing interests, achievements and influence. This includes his massive role in the professionalization of Indian cricket, the setting up of PMG and the CHAMPS foundation, his writings on the game, and his influence on India's modern set of world-beating cricketers -- Sachin, Dravid, Laxman, Kumble, etc. Towards the end, the author does get defensive with regard to the criticisms of Gavaskar's cricket and writings. But overall, the tone is hardly ever hagiographical, and the writing is of good quality. The prose is interspersed with numerous photographs -- some familiar to old Gavaskar fans, but many that I'd never seen before. And of course there is the obligatory, comprehensive, statistical review in the appendix.

Overall the book is a must-have for the Gavaskar fan, but also a good read for the youngsters of today whose cricket-watching started with the Sachin Tendulkar or Dravid-Ganguly generation. They see Sunny on TV, and the awe and respect with which he's treated by the cricketers' fraternity, but they may not know the scale of his achievements, and just how much they mattered to the India of the 1970s and 80s. They may not appreciate why, even today, many Indian cricket fans still believe Gavaskar, and not Tendulkar, is the greatest Test batsman India's ever produced. Books like "SMG" help lay out the case for that assertion!