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