And Then We Were Billionaires – The Changing Face of Finance in Cricket

Posted by on Friday, September 8th, 2017 in Cricket

 

 

Kapil Dev who changed Indian cricket

 

The year was 1983 and Indian cricket stood at the top of the world.

 

They didn’t know it yet, but recovering from 17 for 5 against Zimbabwe at tiny Tunbridge Wells, beating England in the semi-finals and the mighty West Indies at the peak of their prowess in the finals of the Prudential World Cup in England, was to trigger a paradigm shift in cricket. Not merely because the long-time minnows of world cricket were suddenly World Champions, but because the victory would completely transform the financial future of the game.

 

 

Sponsorship in the Early Years

 

It was in 1962 that the MCC reluctantly abolished the amateur status of cricket in England. This brought the realization that cricketers were grossly underpaid, and in order to amend this, finances of clubs and counties had to be looked at. To get back crowds into cricket, innovation was needed, and One Day Cricket was born. The transformation started with the Gillette Cup in 1963, was followed by the John Player League in 1969, the Benson and Hedges Competition in 1962 and culminated with the Prudential World Cup in 1983.

 

With the tournaments, came the need and emergence of sponsors. Gillette reluctantly put up £6,500 in 1963 (£20,000 or just over ₹16 lacs in today’s money). By 1969, John Player tobacco company had been forced to shell out £90,000 (£1,400,000 or just over ₹11.6 crores in today’s money) for County Cricket. In 1972 Prudential Plc agreed to pay £30,000 per year for One Day Cricket and in 1975 they became the title sponsor for the first ever World Cup by forking out a princely sum of £100,000 (£800,000 or ₹6.6 crores in today’s money). By 1979, Prudential had to increase its bid to £250,000 (£1,200,000 or ₹10 crores in today’s money) in order to continue lending its name to the World Cup.

 

 

Packer Changes the Sponsorship Game

 

But there was trouble brewing down under which would bring the most dramatic tectonic shift in Australian cricket since they carried the Ashes home for the first time in 1882 on the broad shoulders of Fred Spofforth.

 

Kerry Packer, the man who made cricket rich

 

1977 was the Centenary year of Test cricket and anticipating the hype around it, business man Kerry Packer wrote to the Australian Cricket Board asking for rights for his television company Channel Nine to cover the series against West Indies in Australia. The ACB gave the rights to the Australian Broadcasting Corporation without bothering to ask Packer for a quote. Packer then met ACB and offered A$500,000 for the series against Pakistan and Sheffield Shield matches. His bid was turned down despite the fact that the Board was at the time from the ABC getting a fraction of the amount that Packer offered. He stormed out of the meeting and told his associates who had already made the proposal to have their own One-Day cricket competition for television:  “Why don’t we go the whole way and produce our own Test series?”

 

By May of that year thirty five of the leading Test players of the world had been signed up in complete secrecy for an average of £25,000 each per year for 3 years, a substantial jump over what they were earning at the time. In response, the ICC and the TCCB banned all the cricketers who had been contracted. Packer promptly filed suit in England, and a British court overturned the ban maintaining no existing commitments had been infringed upon.

 

Cricket administrators had been put on notice about bringing professionalism in to the sport. As importantly, the game had changed. Television, and the money it could generate, was in full view for everyone to see.

 

In order to pay their £250,000 legal bill, and in recognition of the opportunity the new situation provided, that year, the TCCB signed a £1,000,000 contract with Cornhill Insurance for a 5-year period. In 1982, that amount doubled to £2,000,000 (£6,650,000 or just over ₹ 55 crores in today’s money).

 

Almost as a by-product, small value bat contracts that had been around from before Wally Hammond, Len Hutton and Don Bradman’s time and Brylcreem print commercials of the 1960’s and 70’s gave way to much larger sponsorships for major cricketers endorsing virtually any product that could be advertised on television. The money was starting to flow in for those who actually made the game what it was.

 

 

The 1983 Prudential Cup and its Impact

 

When Kapil Dev led the Indian team out after the break on the 25th of June 1983 at Lord’s to defend the small 184 run target his team had set the mighty West Indians, his thoughts could not have been farther from a potential victory. Four hours later, as the champagne rained down on him and he held the Prudential Cup high above his head on the Lord’s balcony, his team of ‘bits and pieces’ players had transformed themselves into ‘Dev’s Devil’s’ and changed the future of the sport.

 

Suresh Menon, writing in ESPN Cricinfo on the occasion of the 25th anniversary of that historic win, captured the essence of the shift when he said: “While the team was creating upsets in England, the fans back home were transfixed in their drawing rooms, before shop windows, in offices, clubs and anywhere a television could be accommodated. Colour TV had come to India the previous year with the Asian Games in Delhi. Suddenly it all came together – television and live telecast from distant fields, an audience hungry for action, a significant victory, and the awareness of the marketing possibilities – and the first steps towards India’s domination of world cricket were taken.”

 

Menon went on to say: “1983 was the turning point. Soon the World Cup moved out of England. Within a decade England and Australia lost their veto power, and after the second World Cup in the subcontinent, Jagmohan Dalmiya became the president of the ICC. When, having made 33 in 28 balls Viv Richards lofted Madan Lal in that 1983 final, the cricket world stood still. Kapil Dev took the most significant catch in India’s history. From that moment, the world rearranged itself so India would emerge as the game’s superpower.”

 

That is not mere rhetoric. The significance of that moment cannot be underestimated for it wasn’t only the World Cup that changed continents, with it moved the purse strings.

 

 

Cricket becomes a Money Spinner

 

If you went to sleep on the night of June 25th 1983 and woke up in 2014, you would not recognize the world of cricket.

 

The Lord’s balcony had lost its reputation for stiff upper lip the day Sourav Ganguly took off his shirt and waved it around after India’s Natwest Trophy win in 2002. Thanks to betting and match fixing and the likes of Hansie Cronje and Mohammad Azharuddin, the fans’ trust in the fairness of ‘The Gentleman’s Game’ had evaporated.

 

Most importantly, the advent and success of the T20 format had changed the landscape of cricket.

 

In the 1975 World Cup when Sunil Gavaskar batted through the innings to remain not out on 36 after England had made 334 for 4 (in 60 overs), it was a demonstration of India’s utter contempt and lack of understanding of what limited overs cricket was all about. The rut this caused was only overcome by the 1983 victory and India embraced the limited overs format and tasted significant success under the likes of Mohammad Azharuddin and Sourav Ganguly.

 

The biggest fan base for cricket was now not in England and Australia, but in India – a country with a billion people had embraced the sport as their unofficial national game, a country benefitting from an improving economy and a burgeoning middle class with disposable income to spend on entertainment.

 

But when the first T20 World Cup came around in 2007, the Indian response was again lackluster.

 

With a visible lack of enthusiasm, the BCCI, still smarting from a shocking team performance at the just concluded 50-over World Cup in the West Indies where India had exited in the first round, sacked Rahul Dravid and sent a team under young MS Dhoni to play this strange new format. MS Dhoni and his boys had only played one T20 till date (at any level) the previous December at Johannesburg against South Africa. India had won the match thanks to its bowlers, and Dhoni himself had been dismissed without scoring in India’s score of 127 for 4.

 

MS Dhoni, the man who dared

 

On 24th of September 2007, the past became history.

 

Two unheralded teams made it to the finals. Pakistan needed 12 runs to win the T20 World Cup in the last over of the final against arch rivals India. MS Dhoni, in the first demonstration of the unorthodox approach that would typify his captaincy style in limited overs cricket for the better of the next decade, threw the ball to unheralded medium pacer Joginder Sharma about whom little had been heard before, and not much would be thereafter.

 

Joginder’s first ball was a wide, the second a dot ball. The third was a full toss and Misbah-ul-Haq hit it for a six. Pakistan needed 6 runs off 4 balls and Indian shoulders started to droop on the ground and off it. Misbah decided to end it in style and attempted a paddle-scoop over fine leg for a six. Much like Kapil Dev’s famous catch of Viv Richards in 1983, Sreesanth ran around to take a lovely high catch leaving Pakistan 152 all out. India had won by 5 runs.

 

When MS Dhoni lifted the trophy, like Kapil Dev 24-years before, unknowingly, he had launched both Indian cricket and India’s place in the financial leaderboard of world cricket into the stratosphere.

 

The BCCI was rudely jerked awake from its stupor and took the decision the same year to launch the Indian Premier League (IPL), along the lines of football’s English Premier League (EPL) to capture the business opportunity that they saw. The rest, as they say, is history.

 

IPL captivated India, and soon the world. The two month window became the most sought after time of the year for advertisers and top players alike. Advertisement revenue hit mind numbing numbers as did player auction prices. Then Australia decided to launch its Big Bash League along similar lines, and several other countries followed suit. A generation of fans grew up associating cricket only with T20.

 

By 2014, India was being addressed as one of ICC’s Big Three, and in terms of importance and impact in world cricket, was miles ahead of the other two, England and Australia.

 

The ‘Big Three’ financial model was announced in 2014, for revenues to be shared between countries between 2015 and 2023 based on an assumed $2.5 billion (Numbers were no longer being quoted in £, in a reflection of the shift in power away from the home of cricket).

 

As ESPN Cricinfo explained: “What each Full Member earned in total from the ICC revenue was a percentage figure of the total revenues (the contribution cost, based on contributions made, and provided as compensation for playing in ICC events: the BCCI had a 20.3% share, ECB 4.4%, Cricket Australia, 2.7% and so on) plus an equal share of the surplus (which is how revenues had been divided until then). The seven non-Big Three boards also got an additional $10 million over eight years as part of the Test Cricket Fund.”

 

India’s projected share was $440 million (₹2,860 crores), the ECB’s share was $145 million and CA’s share $110 million. Rough estimates at the time put the percentage revenue earned by India at 70% of the global revenue from cricket. The BCCI presentation to the ICC claimed it was 80%. As for every other country, the percentages had no basis, and in the end all that was important was that the Big Three accepted the figure.

 

 

And then we were Billionaires

 

Three years later, in early 2017, the BCCI was under siege with their office bearers removed on orders of India’s Supreme Court and the board being run under the advice of a non-partisan Committee of Administrators (CoA). Using this opportunity and in light of broad dissatisfaction with the 2014 decision of the previous office bearers, the ICC decided to redraft its financial model. The share of the Big Three was reduced with India’s share being almost halved while ECB and CA suffered smaller cuts.

 

Even with the chaos reigning internally, the BCCI fought back and in June 2017, finally accepted the revised offer of $405 million over the 2016 to 2013 period, with the ECB getting $139 million, numbers much closer to the 2014 agreement. In a landmark agreement, the ICC also admitted Afghanistan and Ireland into the Elite list of Test teams with a share of the $240 million pool allocated to the Associate Members.

 

This week, the stakes were raised further when the media and digital rights for the IPL were auctioned by the BCCI for the next 5-years.

 

Star India won the global television and digital rights for the IPL for a mind numbing $2.55 billion (about ₹16,300 crores) for a 5-year period between 2018 and 2022. This was by far the biggest rights sale in cricket history and put the cost per game to the rights holder of $8.47 million (₹55 crores or the exact amount that the TCCB in 1982 had accepted from Cornhill Insurance for a right to sponsor cricket in England for 5-years). In comparison, the cost per game for NBA rights is $2 million. It is an interesting comparison, notwithstanding the fact that the IPL season is shorter, and hence the cost impact per game is exaggerated.

 

 

So what does that mean for the value the world attaches to cricket in general and the future of Indian cricket in particular?

 

Media rights for Australian cricket are currently worth $100 million per year. If Kerry Packer was still with us he would undoubtedly die laughing at memories of ACB refusing his A$500,000 bid. English cricket sells itself for $287 million – a nice pick up from the £6500 that Gillette got away with in 1963. And based on their IPL bid, Star India is still laughing its way to the bank despite paying the BCCI $125 million per year.

 

But the IPL changes everything.

 

Over the next 5-years, assuming that the ICC’s calculations of revenues are accurate, the BCCI will earn $691 million (₹4422 crores) per year including their share of ICC revenues and media rights from Indian cricket and the IPL.

 

That is a staggering amount of money and begs the question as to what that means for the future of the sport in India.

 

The domestic competitions in India need more money than is currently being allocated. This money needs to go not only to domestic T20 but to the grass roots to encourage and reward youth (both men and women) from taking up the sport. It also needs to go towards making domestic players more financially secure while playing the longer format of the game rather than chasing elusive IPL contracts.

 

The Women’s cricket team that just finished runners up at the Women’s World Cup in England is very poorly paid. One hears of the pathetic condition of the clothes and the kits provided to them and issues in payment to them and the officials. This is after a showing that made them instant superstars in a country which had barely heard of veterans and world record holders Mithali Raj and Jhulan Goswami in spite of  their nearly two decade long careers.

 

The Women’s game needs money injected right away and the decision to start a Women’s IPL would generate the BCCI more money immediately which could generate the extra funds to be ploughed back.

 

Given that it’s the richest sports body in the country, the BCCI could also look upon other sports that are crying for funds as a CSR opportunity. The possibilities are endless, and one hopes that BCCI and the other boards are listening.

 

While reading the tea leaves is no easier today than it was centuries ago, it is inevitable that as the popularity of the sport grows even more, the money that it attracts will also increase. The sport has already come a long way from that day in June 1983 when Kapil Dev held up the Prudential Cup, and certainly from the first £6500 crossed cheque from Gillette to the TCCB.

 

One has no doubt that the numbers in 10-years will stagger us once more. If the base of the sport by then has broadened and both genders in many more countries are playing and making a good living for it, cricket will truly be richer for it figuratively, as it is literally.

21 responses to “And Then We Were Billionaires – The Changing Face of Finance in Cricket”

  1. PC says:

    Very well written. Would like to see Women’s cricket get some financial ‘injection’

    • Anindya Dutta says:

      Thanks so much PC! So would I. Women’s cricket’s time is now and it deserves a lot of support. An i don’t understand BCCI’s reluctance about a Women’s IPL. It would be self sustaining and bring in different kinds of sponsors possibly in addition to the regular ones in order to appeal across genders.

  2. Naresh Sadasvan says:

    Good tracing of the financial history of the game. Well written as always. While BCCI is not exactly a clean organisation, it is true that they invested a lot in building infra at the district level, which is clearly paying off.

    I would be surprised if they did not transform themselves over the next decade to be the BCSI (S for Sports) given that other sports bodies are not as well funded, do not have the management calibre, and do not understand how to commercialise their own sport well enough. Yes, there are attempts in kabaddi and hockey and soccer, but they are in 1983 mode, to borrow your phrase

    • Anindya Dutta says:

      Thanks so much Naresh! BCSI would be an interesting transition indeed! The learnings they have had should be used for sure to commercialise other sports and is as important as sharing the moolah among various sports.

  3. Somasundaram V says:

    Nice article..Well written.. Cricketers like Virat Kohli and MS Dhoni charge Rs 8-10 crore a year for endorsements, which is largely due to the fact that cricket means eyeballs. This ecosystem sees money pouring in and the result is the BCCI’s numero uno status amongst the boards of cricket-playing nations…

    • Anindya Dutta says:

      Thank you very much Som for the kind words. It is indeed a two way street between the boards and the players and in this whole story both have benefitted as has the sport itself from the money coming in.

  4. Venkat says:

    Superbly written as usual… while going through the article I was reminded of the ICL, the precursor to the IPL, if I may use the term.. It was born out of among other factors, Zee Telefilms desire to create sports content…….Subhas Chandra was Kerry Packer reappearing after decades… Just look at the similarities….
    The Essel group has expressed a keen desire to help India develop cricketing talent, as well as provide lucrative sports programming for Zee Telefilms, which lost out on the rights to broadcast all BCCI-sanctioned cricket matches in India until 2011.

    Essel Group had originally launched Zee Sports earlier with the anticipation of securing at least some of the BCCI telecast rights in 2006. This was followed by Zee acquiring 50 percent in TEN Sports in November 2006 for Rs. 2.57 billion. This gave the company a few international cricket rights – West Indies, Sri Lanka and Pakistan.

    Cricket played in India generates Rs. 10 billion in advertising and subscription revenue and Subhash Chandra has been acutely aware of his company missing out on this lucrative cricket pie.

    During his battle with BCCI and ESPN Star Sports for the five-year telecast rights in August–September 2004 in the Bombay High Court, Chandra was present every day for the hearings. Despite Zee bidding the highest at $307 million, BCCI and its then president Jagmohan Dalmiya denied him the rights.

    The pain of denial has been with Chandra since 2000 when the ICC World Cup rights were sold to NewsCorp’s Global Cricket Corporation (GCC) for $550 million despite Zee bidding the highest at $650 million citing Zee’s insufficient sports marketing experience.

    In August 2005, Zee again emerged as a forerunner with a pitch of over $340 million while ESPN Star Sports, the other principal contender, is believed to have offered around $325 million. BCCI took the stance that Zee was not qualified as a specialist broadcaster and refused to consider Zee’s proposal. The matter expectedly went to court and Doordarshan emerged the beneficiary.
    Looking forward to more such, Anindya.. May your tribe increase..

    • Anindya Dutta says:

      Excellent point Venkat. I did not mention the ICL because it eventually wasn’t part of the value growth narrative but on reflection, I should perhaps have. What you have pointed out is important indeed. And thanks so much for the kind words. I thought it was important to give some perspective using history on the numbers we saw emerging out of the IPL media rights auction. Without context, those fantastic numbers in absolute terms say less about the growth of the sport.

  5. Ram Vaidyanathan says:

    Cricketers are a well paid in most countries now. Even in conservative England, where the average salary for a working class person is around £30,000 per annum, cricketers on a central contract get £700,000 as retainer in addition to match fees of £12,000 for each test, £5,000 for ODI and £2,500 for a T20. Hence, a player who plays all 3 formats will earn more than a million pounds each year.

    • Anindya Dutta says:

      Absolutely! And the money in england is actually next only to india now. But in india domestic Cricketers and women Cricketers need to get paid much more for the game to continue growing.

  6. atulkumar says:

    BCCI initially ridiculed T20 format and was officially against a T20 world cup. The then BCCI Secy Niranjan Shah asked in the ICC board meeting in March 2006 when a World T20 competition was being discussed: “T20? Why not ten-ten or five-five or one-one? India will never play T20”. Then when first T20 world cup was happening, BCCI deliberately sent a B team to sabotage the event. Earlier that year, the world Cricket administration saw how an event like World Cup loses interest in the country with largest audience base as soon as Indian team is out. BCCI wanted to teach ICC a lesson by not sending it stars. But it backfired and shamelessly, BCCI immediately took advantage of India’s good show in the tournament. The then bcci president who was also a union minister reached SA to watch the final. And players parade from mumbai airport was arranged by board to take credit for winning a tournament that they didn’t want to happen in first place and then when it happened anyway, BCCI sent a second grade Indian team so that it exits early and the tournament remains a flop in India.

    • Kk says:

      Sending B grade team became blessing in disguise

    • Anindya Dutta says:

      All valid points Atul. What Inwould say however is that opportunities must be grabbed and the BCCI have done that. They have made bad calls. But once they saw they were wrong they have quickly pounced on the opportunity. They have their faults but what Dalmiya and his successors have done for the sport financially cannot be but admired.

  7. Kk says:

    Well said….. today avg cricketer earns much more than what the top level players of yesteryears earned

  8. Ritesh says:

    Excellent piece. My sister who is also in IRS like me is Gold medallist English literature in Both BA and MA. she had told me once in one sentence how to write an essay or any piece of literature. “It should flow like a river, it has an origin , it has a purpose , it has a body and it has a destination”. Your each and every writing have all these points/aspects

  9. Shrikant says:

    Very excellently written sir and also covered all the points… Now the women IPL format is the next on BCCI’s agenda… for BCCI the whole thing is that the baiya sub she bada rupaiya..

    • Anindya Dutta says:

      Thank you Shrikant. I agree on Women’s IPL which is why I don’t think they will give up the chance to have the Women’s IPL now that they have a taste of the outrageous money that’s gone into the men’s media. A fraction of that will be enough to support the women’s game for a long time.

  10. Excellent research, Anindya. Although money in sport does not interest me I enjoyed your painstaking research.
    The word billion in sports angers me but I suppose love for MORE money is inevitable. Compared to footballers, tennis players, golfers and boxers, cricketers are still paid less. I agree that money is vitally important in life but to me too much love of money is the root of all evil. I never watched a single WSC match in Australia and so far not a single BBL match. I would not see an IPL match if I were in India.
    This is my point of view. I don’t expect readers to agree with me.

    • Anindya Dutta says:

      Thank you Kersi. I think money in cricket cannot be the reason to be a cricketer or love the sport, because in the end if you don’t enjoy it, it shows. What money does however is that it makes it viable in this day and age (and perhaps in any age) to pursue the sport when you have talent rather than do something else. I wrote this article because I wanted to myself have context on these mind numbing numbers and hence started working backwards to trace the evolution of the money trail so to speak. Once I saw it, I realised no one has really put the path in perspective, so decided to write this piece. While I have no gripe with your decision to not watch WSC, BBL or IPL, the reality is that the existence of these leagues has brought forward the talent of many players who would otherwise have languished in grade and domestic cricket and faded away. the opportunity it has provided and the talent it has unearthed makes me believe the money has some positives.

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