A cricket tour­na­ment that is in a fi­nan­cial league of its own

The Financial Express - - COMPANIES -

March 28: Many of the world’s top crick­eters will gather in In­dia next month to com­pete in a league that didn’t ex­ist 10 years ago, yet now con­trib­utes bil­lions of ru­pees to the coun­try’s econ­omy.

The VIVO In­dian Premier League 2016 fea­tures eight fran­chise teams rep­re­sent­ing cities across the coun­try com­pet­ing in 60 matches in the ex­plo­sive Twenty20 short-du­ra­tion ver­sion of the game. The IPL fol­lows on from the ICC World Twenty20, a com­pe­ti­tion fea­tur­ing na­tional teams that is cur­rently ap­proach­ing its cli­max in In­dia.

Though the IPL sea­son lasts only a few weeks -- this year’s tour­na­ment runs from April 9 to May 29 -- the top-level in­ter­na­tional play­ers tak­ing part are lav­ishly re­warded. At Fe­bru­ary’s player auc­tion, Aus­tralian Shane Wat­son at­tracted the highest bid, $1.4 mil­lion, to play for the Royal Chal­lengers Ban­ga­lore team this year.

The play­ers are not the only ones to ben­e­fit. A re­port on the eco­nomic im­pact of last year’s IPL sea­son pro­duced by KPMG Sports Ad­vi­sory Ser­vices found that the event con­trib­uted R11.5 bil­lion ($172 mil­lion) to In­dia’s GDP. An­other re­port, by the Amer­i­can Ap­praisal val­u­a­tion ser­vices com­pany, last year put the over­all value of the IPL as a busi­ness at $3.5 bil­lion, up 9 per­cent from 2014.

The au­thors of the KPMG study used an in­put-out­put model, a method that takes into ac­count the links be­tween the dif­fer­ent parts of an econ­omy. In­put-out­put mod­els in­volve the use of eco­nomic mul­ti­pli­ers, fac­tors that de­ter­mine the to­tal amount of spend­ing gen­er­ated by an in­jec­tion of money. Their use is based on the idea that in­creased spend­ing has knockon ef­fects that re­sult in even greater to­tal spend­ing.

The di­rect eco­nomic im­pact of the IPL sea­son, in­clud­ing spend­ing on travel, ac­com­mo­da­tion, food and bev­er­ages, team out­fits and equip­ment, pro­mo­tional ac­tiv­i­ties and the cost of stag­ing matches, was put at 5.7 bil­lion ru­pees.

The to­tal out­put im­pact -once the mul­ti­plier ef­fect of this spend­ing across the In­dian econ­omy was taken into ac­count — was R26.5 bil­lion. The re­port says three groups drove the eco­nomic im­pact of the com­pe­ti­tion — spec­ta­tors, the fran­chises and the or­ga­niz­ers.

"Di­rect im­pact cre­ates de­mand in the sup­ply chain of busi­nesses that are di­rectly en­gaged with stake­holder groups," says the re­port, which was com­mis­sioned by the BCCI. Bloomberg

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