Righttomatch could control auction dynamics

ONE DAY TO GO Strategy of teams while using their key privilege is likely to influence the course of this year’s mega auction

One feature of the last major IPL auction in 2014 was that on average, batsmen commanded a much higher price than bowlers. Looking at the reserve prices that players have set for themselves for this weekend’s auction, it wouldn’t be surprising if a similar pattern were to emerge once again.

The 578 players registered for the auction have been split into 62 sets which will be taken up sequentially. While the first two sets consist of highly sought after “marquee players”, the other sets are organised by the player’s speciality, with further division among players who have played international cricket and those who have not.

Based on this classification, we find that the average reserve price for batsmen is far higher than that of bowlers, wicketkeepers and allrounders.

Given that players set their reserve prices based on their expectation of what they can fetch, we can expect batsmen to do better once again.

The auction itself will be a simple ascending price open outcry (“English”) auction. Starting with the reserve price, an auctioneer increases the price in predetermined intervals, with teams having to indicate their interest or lack thereof.

When only one bidder remains in the race, the player is “sold” to that team.

RIGHT TO MATCH

The only complication to the process is the “Right-to-match card”, which allows teams to retain their existing players in excess of who they retained prior to the auction. A team holding a Right-to-match card on a player can simply agree to match the player’s winning bid after the bidding for the player has been completed.

This card plays havoc with the auction process by bringing in a measure of opacity into what is otherwise an extremely transparent process.

Rather than all teams openly declaring their willingness to pay for a player by either remaining in or leaving the auction, a team with the Right-toMatch card can simply wait in eeer an ne pe r r stle Alde r lr quay m Faw un arpl ts Sp tk Bo in ee

M Ba Ro ke ic

W

Average Reserve Price (~ Lakh)

the wings and make a decision once all other teams have shown their hands.

Consequently, when a player for whom a Right-to-match card exists is being auctioned, teams have to second guess the willingness to pay of the team that holds the card and bid accordingly.

Prior to the 2014 auction, I had suggested that teams might want to continue bidding for a player even when no other team is left in the auction, just so that the right to match option may not be exercised (http://www.livemint .com/consumer/194dl4qlzuMuqmti5cvyvj/who-will-

score-big-at-iplauctions.html).

While this situation didn’t arise, there were several instances of another bizarre situation where teams that held the Rightto-match card participated in the open auction, thus increasing the price they had to pay.

It will be interesting to see what the teams have learnt from the 2014 auction, and how the Right-to-match card will influence bidding this weekend.

ORDER MATTERS

Given that players are auctioned in sequence, there is a massive element of luck that affects a player’s valuation. Since teams are uncertain about which players they might get in the future, they are likely to bid more aggressively on players who are auctioned earlier on.

As shows, players who were auctioned earlier in 2014 commanded a far higher valuation than those that came later.

While this might be influenced by the fact that the first two rounds had marquee players, shows that even when we control the round in which a player was auctioned, the player’s position in the round has some bearing on the median valuation.

From this perspective, it is interesting that the list published on the IPL website shows an interleaving of the auction of capped and uncapped players. If this order is indeed followed, it might lead to good sums being spent on uncapped players.

Apart from all this, the usual conventions will apply to this weekend’s auctions. Thanks to league rules that require each playing eleven to consist of at least seven Indians, domestic players will be at a premium at this auction.

There will be surprises — some players will go for amounts far in excess of their reserve prices — while other players with similar reputations will go unsold. Some teams’ bidding strategy will be hard to understand, while others will seem well-planned. It may not be unfair to say that the auction will be more exciting than a lot of IPL matches!