DD’S stake sale a game-changing moment
The financial construct of the IPL broke the conventional mould. This was cricket’s first ever handshake with private ownership, not sponsorship. Actually, a brilliant collaboration of BCCI and corporate India in economic bhagidari for creating assets and generating wealth.
In IPL’S business model, the BCCI de-risked itself, and like a good batsman deflected potential loss towards the teams. After 10 years, the BCCI was a guaranteed winner but most teams (on annual balance sheet basis) were either in red or barely across the line.
It wasn’t meant to be like this. IPL teams should have been profitable by now but this didn’t happen. Loss-making teams comforted themselves by counting the ‘non economic’ benefits of IPL, for example the ‘money can’t buy’ bragging rights for having Virat Kohli or MSD on speed dial. And, as cricket opens doors, writing an annual cheque was treated a business expense, a line item of the marketing budget.
IPL urged teams to be patient about profits, arguing invent- ively that the league was not a T20 commercial slog but a long-term ‘valuation’ game .Franchises were told ‘brand’ would appreciate in value, like art, because of scarcity (IPL teams never to exceed 10) and ownership becoming increasingly aspirational.
But without clear evidence of profitability, and jarred by continuous controversies, potential investors refused to play ball. Another reason for disinterest was teams were not brands, like football clubs in Europe, as Indian fans respond more to players than teams.
All such misgivings disappeared with the IPL/STAR ~16000 crore, five-year mega media deal. In one stroke, this windfall erased all previous losses and guaranteed profits going forward. With clarity on numbers, the stage was set for investors to buy and owners to cash out.
After the DD deal, more transactions should follow but in this churn it’s crucial that ownership remains in capable hands. Experience of sporting leagues shows integrity and sound leadership is vital. The DD owners were model stakeholders, dignified and professional. DD is yet to win the IPL but, together with Mumbai Indians, it is the only team without any taint of controversy .Which is remarkable in a league so turbulent that the seat-belt sign is never switched off!