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Efficiency of Sports Leagues – TheEconomic Implications of Having TwoLeagues in the Indian Cricket Market

ARUN VIG

MBA



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Efficiency of Sports Leagues – TheEconomic Implications of Having TwoLeagues in the Indian Cricket Market

BY

ARUN VIG

2008

A Management project presented in part consideration for the degree of

"MBA"



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Abstract

Worldwide more and more money is being invested in sports teams and professional sports leagues.

There are numerous sports that are popular in different parts of the world. In the United States, its

American Football, in Europe and UK it is Football (soccer); in the Indian sub-continent and Australia

it is Cricket that attracts the largest crowds.

If we study the professional sporting leagues around the world usually there is only one

major/premier league in every sport. Smaller leagues exist but they are inferior to the major or

premier league. In the USA, American Football has one major league called the National Football

League (NFL); while in the UK, soccer has one major league called the English Premier League (EPL).

The situation with single major leagues existing for every sport is similar across the world, except in

India where cricket has two leagues, the Indian Premier League and the Indian Cricket League. Both

these leagues compete against each other.

This dissertation tries to find out if it is efficient, from an economic perspective, to have two leagues

in the Indian Cricket Market?

The dissertation begins by providing the reader with an introduction and a brief history on cricket in

Chapter I. Chapter II covers the literature review on the economics of sports which would be

structured around the Structure-Conduct-Performance (S-C-P) paradigm. The author will specifically

focus on the literature written around the economics of professional sports leagues. The Third

Chapter outlines the research methodology used for the dissertation. In Chapter IV, the case study

on the IPL and ICL will be presented in its current scenario. In Chapter V the author will deal with the

analysis and discussion of the case study, where various different scenarios in the Indian Cricket

Market will be explored. The last Chapter will include the conclusions and recommendations

generated from the analysis and discussion.



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Acknowledgements

This dissertation would not have been possible without the help of a considerable number of people.

I wish to thank them for their invaluable support and assistance.

First of all I would like to thank my supervisor, Dr. Robert Hoffmann for taking the time to counsel

and guide me while arranging this trip to China.

My sincere gratitude goes out to everyone in the MBA class of 2008, without them this MBA would

not have been a satisfying and rewarding experience.

I am truly appreciative and indebted to C.P. for putting up with my ‘flexible wisdom’ while helping

me during the dissertation. Without the help this dissertation would not have been in its present

form.

Finally I would like to thank my parents for supporting and believing in me. Their encouragement

towards my MBA has brought me immense joy in completing my dissertation.



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Contents

CHAPTER I: INTRODUCTION 6

1.1 CRICKET: AN OVERVIEW 8

CHAPTER II: LITERATURE REVIEW 10

2.1 STRUCTURE-CONDUCT-PERFORMANCEPARADIGM 10

2.1.1 M ARKETSTRUCTURE 11

2.1.2 F IRM CONDUCT 17

2.1.3 M ARKETPERFORMANCE 212.2 CONCLUSION 23

CHAPTER III: RESEARCH METHODOLOGY 24

3.1 PRIMARY ANDSECONDARYDATA 24

3.1.1 P RIMARYDATA 25

3.1.2 S ECONDARYDATA 25

3.2 FORMULATING THE RESEARCH QUESTION AND DESIGN 26

3.2.1 CASESTUDYAPPROACH 27

3.3 CONDUCTING THE RESEARCH 28

3.3.1 S ECONDARY DATA SOURCES 29

3.3.2 P RIMARY SOURCE OF DATA 30

CHAPTER IV: CASE STUDY 32

4.1 CRICKET ININDIA 32

4.1.1 I NDIANCRICKETLEAGUE- BACKGROUND 33

4.1.2 I NDIANPREMIERLEAGUE- BACKGROUND 34

4.2 MARKETSTRUCTURE 36

4.2.1 THE INDIANCRICKETLEAGUE 37

4.2.2 THE INDIANPREMIERLEAGUE 40

4.3 CONDUCT OF THELEAGUES 42

4.4 PERFORMANCE OF THELEAGUES 45



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CHAPTER V: ANALYSIS AND DISCUSSION 47

5.1 PERFECTCOMPETITION 47

5.2 MONOPOLISTICCOMPETITION 48

5.3 OLIGOPOLY 48

5.3.1 S CENARIO1 (WITH BAN ONICLPLAYERS) 49

5.3.2 S CENARIO2 (WITHOUT THE BAN ONICLPLAYERS) 51

5.4 MONOPOLY 53

CHAPTER VI: CONCLUSIONS AND RECOMMENDATIONS 56

6.1 THE INDIANCRICKETLEAGUE 56 6.2 THE INDIANPREMIERLEAGUE 57

6.3 THE BOARD OFCONTROL FORCRICKET ININDIA 58

6.4 THE CRICKETFANS 58

6.5 LIMITATIONS OF THESTUDY 59

6.6 CONCLUSION 59

CHAPTER VII: BIBLIOGRAPHY 60

CHAPTER VIII: APPENDIX 65

APPENDIX1 65

FORMS OFINTERNATIONALCRICKET 65

APPENDIX2 67

APPENDIX3 68

APPENDIX4 69 APPENDIX5 71



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Chapter I: Introduction

In today’s busy and hectic lifestyle, sport’s has become a major part of people’s lives because it

provides entertainment and excitement. There are numerous sports that are popular in different

parts of the world. In the United States, the biggest sports market in the world, American Football is

the most popular sport, in Europe and UK it is Football (soccer), in the Indian sub-continent and

Australia it is Cricket that attracts the largest crowds. All these popular sports have one thing in

common: they all are team sports. Team sports gives a feeling of belonging to the spectators, in

international sports the feeling of belonging is towards the country, while in league sports it’s

towards the city/state.

Worldwide more and more money is being invested in sports teams and leagues. For example the

acquisitions of Chelsea, Manchester United, Liverpool and Manchester City football clubs in the

United Kingdom. The English Premier League signed a three year $2.7 billion television broadcast

deal with BSkyB. In the United States the National Football League earns $3.5 billion from its

broadcasting rights (Spiegel, 2008).

Football is one sport that is popular as an international sports as well as a league sport. American

sports like (American) Football, Baseball, Basketball and Ice Hockey do not have an international

version of the sport; even if they do (basketball) it’s not as popular as the domestic league version.

On the other hand Cricket is mostly popular as an international sport. But recently in India two

leagues for cricket were introduced, the Indian Premier League (IPL) and the Indian Cricket League

(ICL).

If we study professional sporting leagues around the world, generally there is only one

major/premier league in every sport, smaller leagues exist but they are usually inferior to the major

or premier league (vertically aligned). In the USA, American Football has one league called the

National Football League (NFL), for Basketball it is National Basketball Association (NBA), for Baseball

it is Major League Baseball (MLB) and for Ice Hockey it is National Hockey League (NHL). In the UK,



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IndianPremierLeague

IndianCricketLeague

soccer has one major league called the English Premier League (EPL). The situation with single major

league is similar across the world, except in India where cricket has two leagues, the Indian Premier

League (IPL) and the Indian Cricket League (ICL); both these leagues are at the same level

(horizontally aligned). To allow for comparison, below is a graphical representation (figure 1.1) of

league structures in English Football, American Baseball and Indian Cricket:

Figure 1.1

The purpose of this dissertation is to look at the unique nature of the economics of sports; more

specifically to study the professional sports leagues across the world. Using the case study of the

Indian Cricket Market, the author will assess the economic implications of having both the Indian

Premier League (IPL) and Indian Cricket League (ICL) running simultaneously. In particular, the main

research question addressed will be as follows:

• Is it efficient, from an economic perspective, to have two leagues in the Indian Cricket

Market?

English PremierLeague

English LeagueChampionship

English LeagueOne

English LeagueTwo

EnglishConference

Major LeagueBaseball

Triple 'A' League

Double 'A'League

Class 'A'Advanced League

Class 'A' League

English Football American Baseball Indian Cricket





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In the 1970’s a shorter version of the game came into existence, which can be completed in one day

and is therefore called One Day Cricket. Initially the One Day Cricket format was rebuked by majority

of the cricketing world, but since this format was fast paced, exciting and a result was guaranteed

unlike test cricket (where a match can end with a draw after five days), the crowds were attracted

towards it. This format was further made popular by Kerry Packer, an Australian media tycoon and

owner of the ‘Nine’ Television Network in Australia. Since the acceptance of the One Day Cricket

format, the ICC has organised a Cricket World Cup, which is played every four years. Before One Day

cricket, the ICC could not organise a Cricket World Cup based on Test Cricket as it took five days to

finish a game and a result was not always certain.

The England and Wales Cricket Board (ECB), faced with decreasing spectators, decided to shorten

the One Day version of cricket to get it in line with other sports such as football. As a result in 2003,

the ECB introduced Twenty20 cricket. This is quicker and more exciting than Test cricket and One

day cricket because it is a three hour game played with the traditional team size of 11 players; it

offers more and faster action in less time. This version was an instant hit with the spectators and the

crowds returned to the stadiums. Spotting the commercial potential behind Twenty20 cricket, the

ICC decided to organise a Twenty20 World Cup in 2007. It was an immediate success among the

audience with the viewership of the finals at around 1 billion people, making it one of the most

highly watched events in the world (Mitra, 2008).



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Chapter II: Literature Review

The purpose of this chapter is to provide an overview of the relevant literature applicable to the

topic of this dissertation. First a brief overview on the Structure-Conduct-Performance (S-C-P)

paradigm will be presented in order to provide a classification base for the literature on the

economics of sports leagues. Several main papers on economics of sports will be analysed, among

them: ‘ The Peculiar Economics of Professional Sports: A Contribution to the Theory of the Firm in

Sporting Competition and in Market Competition ’ by Walter Neale, ‘The Organization of Sports

Leagues’ by Roger Noll and ‘ The Economics of Professional Football: The Football Club as a Utility

Maximiser ’ by Peter Sloane.

2.1 Structure-Conduct-Performance Paradigm

Economists are concerned with the issue of efficient use of society’s factors of production (i.e. Land,

Labour and Capital). Firms are entrusted with the responsibility to ensure that the society gets

returns on the productive resources provided by them. According to Hoffmann (2007) “firms are

stewards of society’s resources”. A firm transforms factors of production into marketable products

which are sold to consumers for financial returns. The financial returns are important to a firm

because they are used to pay for the usage of the factors of production. A very useful tool in

understanding the efficiency of firms is the Structure-Conduct-Performance (S-C-P) paradigm. It

states that performance of an industry is based on the conduct of firms operating in the industry,

which in turn depends on the market structure, i.e. the competitive environmental features of the

market (Hoffmann, 2007). S-C-P suggests that efficiency of firms is related to the structure of the

market it operates in. The relation between S (market structure) – C (firm conduct) – P (market

performance) is unidirectional , i.e. moving in one direction from S -> C -> P and causal , i.e. change in

one give rise to a change in another thing. The structure of an industry determines the conduct of

the firms in that industry and which in turn determines the industry performance (Douma &

Schreuder, 2002).





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‘Monopoly’. Below (figure 2.2) is a representation of the four types of market environment along

with their characteristics:

Figure 2.2:Increasing concentration and market power, decreasing competition

Perfect Competition

MonopolisticCompetition

Oligopoly Monopoly

Number of Firms Many Many Few One

Firm Size Small Small Large Very Large

Entry Barriers No Some Significant Prohibitive

Product Differentiation No Some Depends N.A.

(Source: Hoffmann, 2007)

Moving from left to right, the market structure get more and more concentrated, this means that

the market power is being concentrated in the hands of fewer and fewer number of firms. The

market power increases in the hands of the firms, giving them the ability to control prices.

Neale (1964) presents various economic implications of structural aspects of the markets in which

professional sports leagues operate. He was one the pioneers in the ‘ peculiar ’ economics of sports

stating that sports leagues are natural monopolies. Various other authors have confirmed Neale’s

views that sports leagues are natural monopolies (Flynn & Gilbert 2001, Kahn 2003 and Noll, 2003).

Rottenberg (1956) referring to the baseball league as ‘a collusive combination’ infers that leagues

have an oligopolistic market structure. While Jones (1969) also mentions that leagues are oligopolies

by stating that the goals of a league are to maximise the joint profits for its members (clubs). But

also notes that joint profits will lead to a conflict with the goals of the clubs, which is to maximize

their own individual profits. The equilibrium for the league is when “ clubs are earning profits that

are sufficient to keep them in the league and so preserve the viability of that organization ” (Jones,

1969).



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Neale explains the implications of having two leagues participating in the same sport and the

resulting economic competition with an example of the National League and American League in

baseball. He says even though the National League and American League do not have central

management, they should treated as one because both come together at the end of the season to

play in the World Series, which is equivalent to the Champions League in football. Noll (2003) proves

the unfeasibility of having two leagues in the same sport by looking at the past survival record of

start-up leagues in various American sports over the last 60 years. He discovered that ‘ no entrant

has survived as an independent entity since the 1950’s ’; start-up leagues either merged with the

dominant league or ceased to exist. “ No league that has been formed since 1972 has succeeded in

placing even one team in the incumbent league. Thus, this evidence is consistent with the hypothesis

that a major league is a natural monopoly ” (Noll, 2003). Noll concludes by stating that one of the

main reasons for a natural monopoly for a league is that people want to see only one national

champion during a year. Neale (1964) confirms that the level of sporting competition and the desire

to see a champion crowned at the end of the season is what drives the spectator demand for sports.

If there are a number of leagues at the same level in a sport, there would not be a possibility for a

national champion. Therefore in American Baseball even though there are two leagues – American

League and National League, champions from both the leagues come together to compete for the

World Series of Baseball, leading to one champion of champions at the end of the season. Borland

and Macdonald (2003) have studied the demand for sport and conclude that among other factors,

the most important demand factor in sport is the significance of contest with respect to a

championship. One can refer to Cairns (1990) and Dobson and Goddard (2001) for further surveys of

research on the demand for sports. Noll (2003) points out an interesting fact about demand for

league sports, he states that “ a team that has dropped out of contentions for a championship will

generally draw poorly, but it is likely to sell more tickets if it is playing a team that is at or near that

top of the standings that if it is playing another weak team, even though the outcome of the latter

game is more uncertain ” (Noll, 2003). This challenges Neale’s (1964) ‘Louis-Schmeling Paradox’



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where the author states that demand for competition will decrease if the spectators can predict the

outcome of the game.

There are numerous decisions that have to be taken in order to setup a sports league because the

choice of league format will affect the demand for the sport. Noll (2003) states that the organisation

of leagues is interesting because the incentive effect of league rules is subtle and not properly

understood by fans journalists and sometimes team owners. Another reason is that the most

prestigious professional leagues which are called ‘ major ’, ‘ premier ’ or ‘ first-division ’ leagues are

almost always monopolies. Hence leagues have an incentive to structure leagues in such a way that

they reduce horizontal competition between them for inputs (players) and outputs (competitive

games). Noll (2003) adds that the following types of decision are required to setup a league:

• Format – how does the league schedule the contests that determine the eventual

champion? Do they go with Round robin or elimination tournament?

• Hierarchy – what is the relationship between leagues of different qualities (English Premier

League and the Championship League)?

• Multiplicity – how many leagues can exist at the same horizontal level of the sport?

• Membership – what are the terms and conditions of when and how a team can enter and

exit the league?

• Governance – how can the league implement its policies and rules?

Flynn and Gilbert (2001) also provide a structure to follow while setting up a league. They add that

to produce a product which is commercially attractive to the media, sponsors and fans a league

should has to decide on the following factors:

• Membership in the professional sports league: this includes number and location of teams

in a league, transfer of team ownership or location and the financial and legal requirements

for team ownership.



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• Governance of the professional sports league: covers the constitution, bylaws, voting and

commissioner of the league.

• Production of the product of the league: includes the rules for the competition,

determining the method for league champion and where and when to schedule the games.

• Marketing of the products: covers the sale of broadcasting rights, intellectual property

rights and the arrangement of sharing revenues among member clubs.

• Players of the member teams: includes the eligibility, drafting, transfers, compensation and

collective bargaining of players.

• Other inputs to the production of the joint venture: covers stadium standards,

construction, financing and rules applicable to team executives.

Generally there are two organisational forms for professional sports leagues – joint ventures and

single entities. Flynn and Gilbert (2001) state under joint ventures, teams are owned by separate

economic entities and come together to form a league. While a single entity leagues is where teams

are owned by a single economic entity which is the league itself. Noll (2003) confirms the fact that

there are two possible from of organisational forms for leagues. He says with regards to joint

ventures “ Member teams are independently owned and managed, and collectively create the league

as a joint venture for coordinating their league activities ” (Noll, 2003). Further adding with regards to

single entities “ in these leagues, teams are not independent organisations, but are operating

divisions of the league ” (Noll, 2003).

Joint Ventures versus Single Entity ownership

In the United States Major League Baseball (MLB), National Basketball Association (NBA), the

National Hockey League (NHL) and the National Football League (NFL) are all governed under the

joint venture organisational form. Flynn and Gilbert (2001) comment that member club in these

leagues share income from national media contracts, licences to league name logos and other



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properties. The clubs also generate income on their own through merchandising, gate receipts,

sponsors and trading players.

Major League Soccer (MLS) is the exception in the American professional sports league industry

because it is organised as a single entity ownership. Unlike the MLB, NBA, NHL and NFL where player

contracts are held by the franchises, in the MLS the player contracts are owned by the league itself.

Flynn and Gilbert (2001) say that the trend is moving towards establishing single entity leagues

because of the various cases of the NFL, NBA and NHL in antitrust controversies. They cite examples

of the Women’s National Basketball Association (WNBA), American Basketball League (defunct) and

the Women’s Professional Soccer league to confirm this trend.

Noll (2003) states the most important differences between the two organisational forms are the

issues of resource allocation and league membership. A single entity league in theory should be able

to achieve optimal resource utilization by simply allocating inputs like players, coaches, managers

and stadiums to each team. Or the league could manipulate manager incentives and exercise firm

budget controls for optimal resource utilization. Noll (2003) points out that a single entity league will

only work if:

1. Fans believe that the allocation of resources (esp. Players) is carried out fairly by the league.

2. Centralised managers should not have asymmetric information with regards to team

managers. In the course of day-to-day management, a team manager gathers additional

information about players and coaches that is not known to the centralised managers, this

asymmetric information leads to sub-optimal resource allocation.

3. Moral hazard problems also need to be controlled; incentives between line employees of a

team and team managers should not be so large that it negates the benefits of a centralised

resource allocation.



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Flynn and Gilbert (2001) state the joint venture form of league management maybe more efficient

economically because competition on the playing field between separately owned teams will be

seen as more convincing than competition between teams under the same ownership. This will lead

to the product (competition) of a joint venture being more attractive than the equivalent product

produced by the single entity.

2.1.2 Firm Conduct

Conduct of firms helps us understand how firm behave in their market environment (structure).

Conduct can be determined in terms of how a firms pricing , high price or low price; pricing has huge

implications on consumers and on efficiency of firms, therefore pricing is the most important factor

in determining firm conduct. The next most important variable in conduct of a firm is its Research &

Development activities, R & D is vital for a firms conduct as it helps the firm develop new and

improve their technology. The third most important variable in firms conduct is, advertising .

Economists believe that advertising is a waste of resources because if firms keep on advertising they

cancel out each other’s advantage gained by the advertising and the consumer starts to ignore the

advertising efforts. Advertising also creates artificial demand which leads consumers to miss allocate

their budget. But advertising also has its advantages for the economy as it provides consumers with

information on products which helps them allocate their budget efficiently and avoid buying

products that they may not need.

In professional sports, uncertainty is what drives the revenues for the franchises. Economics of

sports is a unique subject because revenues of franchise/teams depend on sporting competition and

not on economic competition. Neale (1964) presents the ‘Louis-Schmelling’ paradox which helps us

understand the difference between sporting competition and economic competition. Sporting

competition and economic competition are not the same. Sporting competition is the on-field

contest that franchises participate under, while economic competition is between the franchises

running the business. Franchises produce a joint product therefore “ greater the economic collusion



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and the more the sporting competition the greater the profits ” (Neale, 1964). Sloane (1971)

acknowledges this paradox is also experienced by the English Football Leagues. Stating that,

economic competition is restricted by the joint product - the spatial distribution of clubs and

temporal distribution of matches.

A league should be considered as a firm because franchises have to work together to produce

competitive matches and in turn a feasible league. A single franchise is not in a position to supply to

the whole market because if it were to it would have no one to play against. Neale (1964) calls this

phenomenon - The Inverted Joint Product or the Product Joint by stating “ We have been used to the

ides of a firm producing several products from an indivisible process. The sporting firms produce an

indivisible product from the separate process of two or more firms (in law). But the product itself is a

peculiar mixture: it comes divisible into parts, each of which can be and is sold separately, but it is

also a joint and multiple yet indivisible product ” (Neale, 1964). Using the case of American Baseball

League he explains that there is a need for an organizing body, that manages a league, lays down

rules for various aspects of competition, player transfers, start and end of season, schedules,

number of teams participating in the league, entry and exit into the league amongst various other

matters. As a consequence from an economic stand point the league should be the firm rather than

the franchise/team. A league as a multi-plant, where all the franchises are affected by the decisions

engaged and execute at the league level. Once having realised that a league is a firm, “ the

theoretical conclusion is clear: each professional league is a natural monopoly. The several joint

products which are products joint of legally separate business firms are really the complex joint

products of one firm, and this firm is necessarily an all-embracing firm or natural monopoly ” (Neale,

1964).

Neale’s conclusion, that the league should be treated as the firm rather than the franchise is

questioned by Sloane (1971). He uses the case of English Football where the English Premier League

only sets the rules that clubs follow. The clubs have no restrictions on salary caps, total wage bills;



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they are free to conduct their own economic activities like developing stadiums, training players, etc.

But the league determines the output of all the firms but fixing the number of games played by

every team in the league. Sloane would much rather treat the league as a cartel rather than a firm

because in cartels, firms collude, much like teams collude in leagues. Quoting Sloane “ The fact that

clubs together produce a joint product is neither a necessary nor a sufficient condition for analysing

the industry as though the league was a firm ” (Sloane, 1971). Sloane (1971) acknowledges that in US

professional sports one maybe able to consider the league as a firm because normally US

professional sports teams have a track record of profitability, which can be put in conventional

analytical framework. This is not applicable universally, analyzing at the history of English Football it

is clear that profit making is not the main objective of the majority of football clubs. Take for

example the recent acquisition of Chelsea and Manchester City, owners for both the clubs have

poured in millions of pounds to purchase the best football talent available. Their stated target is to

make their clubs the best on field, not in the accounting books.

Economists promote competition between firms because it is said to improve efficiency. Does

competition between leagues also promote efficiency? According to Neale (1964) the answer is no,

competition between leagues dose not lead to efficient use of resources. The demand and costs

factors of the professional sports league market do not make it conducive to have leagues compete

against each other. As mentioned earlier there is a natural monopoly created, which makes running

a single league more efficient.

Cost Factors

Neale (1964) says that there are two cost elements associated with sports leagues:

1. Fixed costs include interest or rent on the capital for the stadium and also include the cost of

equipment and transportation.

2. Quasi-rent for the players because the team pays for the ‘unreproducible’ talent of the

player.



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According to Neale (1964) the long run average cost curve is horizontal but average cost can rise due

to increase in production which will result in hiring of less efficient inputs (players), but this increase

in costs would negated the ‘ enthusiasm effect ’. He goes on to explain that the enthusiasm effect is

when the scale of the sport increases, public interest or enthusiasm will give confidence to more

individuals to take up playing the sport. This will increase the supply of players to all the levels of the

sport, including the professional level in the long run. The enthusiasm effect suggests that demand

and supply are interrelated because if higher the number of people who play a sport (supply), higher

will be the interest of people to watch the match at the stadium (demand) or on television

(demand). Neale (1964) adds if there are two rival leagues in the same sport, it would lead to higher

player bargaining power regarding their wages because team would not have the monopoly power

when buying playing services. When there is only one league, players have to negotiate directly with

the teams because usually there is some kind of restriction on member teams bidding for the same

player. But there can be no restriction if teams from different leagues bid for the same players,

which will naturally raise the player wages (increase costs for teams).

Demand Factors

According to Neale (1964) there are a number of utilities created by sports teams. For example,

utility for – spectators who go to the stadium to watch the match and also for people following the

game on television. There is indirect utility created for people who follow the league tables.

Naturally, closer the competition and league standings higher will be the indirect effect. For media

companies like televisions and newspapers the indirect utility is a source of income and indirect

effect helps sell the utility. The degree of indirect effect is directly related to the scale and far

reaching the league is among the public.

Noll (2003) has similar views when it comes to the efficiency of leagues when competing against

each other. He says that monopoly leagues benefit from utilising their market power in both the

input (cost) and output (demand) markets. Citing the example of sporting leagues in both the US and



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UK market he states that leagues take advantage of collective bargaining power to benefit while

selling the national broadcast rights. Monopoly leagues can also enforce restriction on member

teams with regards to competition for players. By restricting membership to a league, the value of

the existing franchises can be enhanced.

Kahn (2003) also has similar views on monopoly leagues. He states that if there is a monopoly league

it will enhance consumer welfare by implementing rules on the allocation of players which will help

in improving the quality of entertainment. In his paper Kahn (2003) studies the impact of sports

league expansion on the quality of play. If the league allows a franchise to enter a new city, it will

help improve the utility of sports fans in the city because earlier they had no live access to sports.

But will have a negative on the utility of sports fans in existing cities because the entertainment they

now see will be watered down (Kahn, 2003). Kahn (2003) concludes his paper by saying “ as a sports

league expands the average quality of playing talent on the field falls. Therefore, fans in infra-

marginal locations will view lower quality sports entertainment as a sports league expands, all else

equal. The consequences of such expansions depend on the size of these losses relative to the gains

the fans in new locations will realize ” (Kahn, 2003).

“It is clear that professional sports are a natural monopoly, market by definite peculiarities both in

the structure and in the functioning of their markets ” (Neale, 1964).

2.1.3 Market Performance

Market Performance refers to the performance of the industry/market and not the individual

performance of the firm. Performance does not mean the financial situation of a firm; it means the

performance of the market as a whole. Economists look at various variable of an industry to

determine the efficiency of the market. This can include any variable relevant to the industry, the

most commonly used and easily available data is for profits , high profits are a negative for efficiency

of industry because it leads to firms being uncompetitive, which means resources are not used

efficiently. High profits mean that something (e.g. entry barriers) is preventing new firms from



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claiming a share in the profits of existing firms. The basic economic argument is that high profits are

not a fair reward for the factors of production; they are more than the fair reward for the firm.

Economists want to fairly reward firms for using the factors of production, which means a firm

should make normal profits. If firms are making supernatural profits, it means that they are earning

more money than required and keeping it for themselves without sharing with society.

During his literature review the author came across very limited research on the market

performance of sports leagues. One of the reasons for this could be that performance for sports

leagues can be measured by regular performance factors used by other industries. These factors

include revenues, profits, market capitalisation, market share, production capacity, etc.

Authors like Neale (1964) recommend that the performance of a league should be solely measured

on the basis of the profits they generated. Sloane (1971) rejected the idea of measuring

performance only on profits of a league because according to him various stakeholders within a

league have different goals. For example team mangers would be concerned with fielding a

successful team on the playing field, instead of the financial stability of the team. To measure

performance of a league he suggested that one should look at utility maximization instead of profit

maximizing. He lists some quantifiable objectives for measuring utility, these include:

• Security: Survival for existence could lead to clubs selling their players for monetary gains.

• Attendance/ Television Viewership: A full house would improve the atmosphere and create

a sense of occasion. Higher television viewership will lead to the club having more fans.

• Playing success: One of the most important factors for a football club and subscribed by all

the stakeholders including fans, directors, managers and players.

• Profits: Sloane states that profit is not the sole objective of a club, but it should still be

considered as a utility function.



23

Sloane (1971) suggests that the utility maximisation factor should be used with a financial viability

constraint because without it managers would not think that they have unlimited resources to spend

on building the on-field team. The two variables, utility maximisation factor and the financial viability

constraint will have to be traded off.

2.2 Conclusion

The literature review shows that the economics of professional sports leagues is unique and unlike

regular economics. As mentioned by various academics, a monopoly sports league market will be

more efficient than an oligopoly sports league market. The competition between leagues in an

oligopoly market will drive up input and output costs while delivering lower utility to the spectators.

The demand for sports is directly related to the quality of competition, higher the quality higher the

demand. Spectators also want to see only one champion team in a season, if there are two leagues

competing there will be two champions which will lower demand for sport.



24

Chapter III: Research Methodology

This chapter will provide an explanation on the research methodology used and will also outline how

the data was gathered and analysed for this dissertation.

Research is the process of finding or discovering and involves collecting information and description.

Cooper and Schindler (2001) define research as “ a systematic inquiry which provides information to

guide decisions ”. For conducting a comprehensive research one requires the combination of

research ability and knowledge on existing research methods. Saunders, Lewis and Thornhill (2007)

list various research methods which can be used by a researcher, these include – surveys, grounded

theory, experiment, case study, action research, exploratory descriptive & explanatory studies.

Surveys are the most popular research tool and falls under the category of a deductive method. In a

survey it is easy to compare data because the data collection is in a standardised format. Initially

designing the questionnaire for the survey and analysing the data can be time consuming, but the

researcher has much better control over the whole research process. Another useful tool for

research is the Case Study method. It helps the researcher to gain a deep understating of

background of the research and the process needed to be carried out. Case studies can also be used

to effectively question existing theory by providing an example of practical life.

The various research methods and tool mentioned above do not have to be used separately; they

can be combined and used together for a better, richer research approach. There are various studies

that use both, quantitative and qualitative research methods. Also one can use primary or secondary

data or a combination of both for their research.

3.1 Primary and Secondary Data

According to Ticehurst and Veal (2000) it is important to decide on whether to collect new (primary)

data or use existing (secondary) data to answer the research question. But most of the time it is

essential to collect both primary and secondary data for the research process.



25

3.1.1 Primary Data

There are two methods of collecting primary data – passive and active. The passive method includes

studying characteristics of the factors under study, by personal or non-personal ways. Active

methods include questioning the participants through personal or non-personal ways (Davis, 1999).

Care should be taken to distinguish between quantitative and qualitative research. Qualitative

research is a comprehensive analysis of a few elements and often involves less structured

observation or questioning of the participants. While quantitative research involves the utilization of

samples and very structured survey, often includes the use of numbers and statistics (Davis, 1999).

Table 3.1:

Research Method Pros Cons

Qualitative Tools:

• Personal in-depthinterviews

• Focus groups

Quantitative Tools:

• Telephonicinterviews

• Personalinterviews

• Mail interviews• E-mail surveys• Internet surveys• Fax surveys

The researcher is able to reachout to a large sample of data

The researcher can get theexact data for the requiredinformation

The researcher has full controlover the questions and designof the research

The researcher may have aproblem if the response is poor

The participants may not beable to fully understand thequestions in a survey

Could be expensive and a longdrawn process for theresearcher

(Source: (Davis, 1999))

3.1.2 Secondary Data

According to Ticehurst and Veal (2000) secondary data is important in type of research undertaking.

The researcher will benefit by looking at existing sources of data because it could lead them to

uncovering related research and their research methodologies. Secondary data is when information

collected for other research purposes is used in your research project. Ticehurst and Veal (2000)

state that there are two way of collecting secondary data – manual and online methods. Manual



26

methods consist of reports, guides, directories, indexes, etc. Online methods consist of data that can

be obtained from the internet. There are two sources from where secondary data can be collected –

internal and external. Internal data is provided by from the firm or organisation and external data is

anything other than information from the firm or organisation. Davis (1999) lists various sources of

internal and external data. Internal data can be acquired from newsletter, financial reports, press

releases, financial releases and various publications released by the organisation. External data

sources are unlimited and can include data published by universities, government, equity research

reports, trade association newsletter, etc.

Table 3.2:

Research Method Pros Cons

Online Tools:

• Internet • Government

websites• University

websites• Newspaper/Magazine websites• Etc.

Manual Tools:

• Internal sourceinclude: pressreleases, financialreports,newsletters, etc.

• External sourcesinclude: researchreports, tradeassociations,government, etc.

The researcher is able to savea lot of time because the datais already available

Normally, cheaper thancollecting primary data

The obtained data may nothave been collected for thesame purpose as theresearchers

Obtaining data fromcommercial sources manyinvolve higher costs andmaybe difficult to acquire.

Accuracy of the data collectedcannot be verified because theresearcher is not sure of the

process of data collection

3.2 Formulating the research question and design

This dissertation looks at the economics of professional sports leagues; more specifically it explores

the economic implications of two leagues coexisting together in same sport. The author has chosen



27

to focus on this topic because of his strong interest in cricket. The recent launch of two separate

cricket leagues in India is an extraordinary event in the world of professional sports leagues. If one

considers various sports leagues across the world, the existence of two major/premier leagues is

very rare. In addition, in recent times spectator interest in sports has grown exponentially leading to

large investments in the business of sports. Both these factors fuelled the author’s desire to

undertake this topic for his dissertation.

Subsequent to this initial interest, various questions for research were formulated, which were then

narrowed down to more precise one following the literature review. Once the main questions were

defined it was important to choose a suitable way to tackle them in a structured manner. Taking into

account the fact that the research purpose was to look at the economic implications of the existence

of two professional sports leagues, the author considered majority of his research would focus on

the qualitative approach, but a small amount of quantitative research was also considered. A Case

study method was used in this dissertation as the author believes it can illustrate in detail the

description of the current market scenario of the Indian cricket.

3.2.1 Case Study Approach

A research approach is important as it will clearly outline the choice of the research tools required

for this dissertation. In qualitative research one aims to “ prove existing propositions by testing a

hypothesis or an already known theory” (Silverman, 2005). According to Flick (2005) Qualitative

research is to assess new ideas and to build empirically grounded theories based on them.

Miles and Huberman (1994) note, researchers have been using more of qualitative research as they

are dissatisfied with the results of quantitative research. Also, quantitative research is not

appropriate while studying society as its methods have a tendency to produce “superficial data”

disconnected from the field of research (Dawson, 1994).

According to Yin (1994) one needs to consider three factors to appropriately select the type of

research methodology. Firstly the kind of research question can led to different directions. He adds



28

research questions which have “ why ” and “ how ” are appropriate for experiments and case studies.

While the research questions which have “ what ”, “where ”, “who ”, “how much ” and “ how many ” are

appropriate for statistical research and surveys. Yin’s (1994) other factors deal with the degree of

control exerted by researcher over the actual behaviours and the level of attention on historical

events as opposed to contemporary events. Historical research is better suited to from researchers

who have no access or control over events. While a case study is more useful for the assessment of

contemporary events. An experiment can be looked at if the researcher has the chance to directly

manipulate the behaviour of events.

The author wants to present an analysis that is inclusive rather than reductive therefore has chosen

the case study approach. This dissertation is using the case study approach also because the focus is

on current events as opposed to past ones. But there are some limitations to a case study approach.

“Case studies, like experiments, are generalisable to theoretical propositions and not to populations

or universes. In this sense, the case study, like the experiment, does not represent a sample, and the

investigator’s goal is to expand and generalise theories and not to enumerate frequencies” (Yin,

1994). With case studies there is also a question of reliability “ Too many times the case study

investigator has been sloppy and has allowed equivocal evidence or biased views to influence the

direction of the findings and conclusions ” (Yin, 1994). According to Yin (1994) if the researcher has

conducted a suitable level of groundwork it is possible to rise above these limitations of a case study.

3.3 Conducting the research

The author used a combination of sources for collecting the data required for answering the

research question of this dissertation. Collecting any kind of internal data on the Indian Cricket

market is quite difficult. This is highlighted by the fact that the Board of Control for Cricket in India

(BCCI) currently does not have its own website. Various cricket journalists and writers have

complained about such lack, quoting one of them “ an issue which has been rubbing In Sport up the

wrong way: why on earth has the richest sporting body in cricket not got its own website? So where



29

can you find history of its Stadiums? Where do the BCCI outline its objectives? And where can you

search for stats on Indian domestic cricket and the Ranji Trophy? Not on its website ” (Gilmor, 2008).

Numerous unsuccessful attempts were made by the author to requests interviews with officials of

both the Indian Premier League (IPL) and Indian Cricket League (ICL). As a result, the author decided

to rely on data provided by several interviews and commentary given in specialised Cricket

publications. Also, since both the leagues were launched in 2007 and the financial year has not yet

come to a close, therefore there are no published financial results for both the leagues.

In particular, the author used to secondary sources of data collection such as websites, newspaper

and magazine articles, published interviews from IPL and ICL officials, published comments from

cricket experts. The author also acquired research reports on the Indian Cricket Market from top

Broking, Equity research and Media research companies in India. A survey on the popularity

between the IPL and ICL were also conducted to complement the data.

3.3.1 Secondary data sources

Below is a list of the main sources of data collected and analysed for the dissertation.

Website

The premier website for collecting any kind of data related to cricket is: www.cricinfo.org . The

website is the largest cricket related website in the world with a user base of 20 million people. It

publishes all kinds of interviews with cricket officials, news, articles and has a complete record of all

cricketing history from the 18th

century to the present (for further information please refer:

Appendix 5).

Other websites include:

• www.iplt20.com the official website for the Indian Premier League

• www.indiancricketleague.in the official website for the Indian Cricket League



30

Interviews

Lalit Modi, IPL Chairman & Commissioner gave an interview on the success of the IPL’s first season

and the future of Indian Cricket. The interview was conducted by Joe Leahy from the Financial Times.

Modi gave another interview to, Ajay Shankar of Cricinfo, on the future plans of the IPL.

Himanshu Mody, Business Head for the ICL gave an interview to Indiantelevision.com on the current

situation of the ICL and also provided the outlook on ICL’s future.

Research Reports

The author acquired research reports from India Infoline which has researched some of the IPL

franchises and provides the financial projecting for the IPL and its franchises, Alchemy Share Brokers

has researched the Indian Cricket market and forecasted expected returns for the IPL, Kotak

Institutional Equalities has look at the business models of the IPL franchises and also projected the

expected returns for the media companies involved with the IPL. TAM Media research has published

reports on the television viewership data for the IPL and the ICL.

3.3.2 Primary source of data

The author conducted a short survey on the popularity between the IPL and ICL. This survey was

formulated around one of Sloane’s (1971) utility maximising factors – Attendance / Television

Viewership, to measure the performance of the leagues. The survey was sent out to 118 carefully

selected participants who were familiar with cricket and had watched either the IPL or the ICL or

both. The survey was conducted on the internet and the link was sent out to the participants to

answer the questionnaire. Below is a summary of the responses to the survey:

Table 3.3:

1. Which format of cricket do you prefer?Response Percent Response Count

Test Match 8.2% 4One Day International 8.2% 4Twenty20 57.1% 28

Depends 12.2% 6None 14.3% 7



31

Table 3.4:

2. Which league do you watch/support?Response Percent Response Count

Indian Cricket League 4.5% 2

Indian Premier League 68.2% 30Both 27.3% 12

Table 3.5:

3. Which league has better quality of cricket?Response Percent Response Count

Indian Cricket League 6.1% 3Indian Premier League 59.2% 29None 6.1% 3Can’t Say 28.6% 14

Table 3.6:

4. Which league provides better entertainment? (otherthan cricket)

Response Percent Response CountIndian Cricket League 4.0 % 2Indian Premier League 60.0% 30

None 6.0% 3Can’t Say 30.0% 15

Table 3.7:

5. Which league gives opportunities to players whohave not played international cricket?

Response Percent Response CountIndian Cricket League 36.0 % 18Indian Premier League 24.0% 12

None 8.0% 4Can’t Say 32.0% 16

The snapshots of the above survey can be found in Appendix 4.

This concludes the chapter. The next chapter will discuss the case study of the Indian Cricket Market.



32

Chapter IV: Case Study

This chapter will describe in detail the current market scenario of Indian Cricket; the author will use

the framework of the Structure-Conduct-Performance paradigm to present the case study.

4.1 Cricket in India

Cricket in India has been governed by the Board of Control for Cricket in India (BCCI) since it was first

created in 1928 (Cricinfo, 2008). The BCCI runs a number of domestic tournaments, which act as a

development ground for young players. The BCCI uses these tournaments to assess player

performances and select them for representing the national team. Below are all the tournaments

and competitions that the BCCI controls in India:

Figure 4.1:

The BCCI comprises 27 state cricket associations that elect the BCCI officials through a ballot system

(Cricinfo, 2008). These state associations select players / teams that participate in the BCCI run

domestic tournaments. The BCCI is also responsible for representing India at the International

Cricket Council (ICC), which is the international governing body of Cricket. Since the BCCI is a

BCCI

Ranji Trophy Irani Trophy Duleep Trophy DeodharTrophy

ChallengerSeries

InternationalCricket

Indian PremierLeague

Source: Data www.cricinfo.org



33

member of the ICC, it has the right to select umpires, officials and players to represent India in

international tournaments.

4.1.1 Indian Cricket League - Background

The ICL’s mission statement “ is to create a pool of high quality ideal cricketers with killer instinct

needed to be champions. This group of players should be able to perform under the pressures of

international cricket and make India a champion side ” (Indian Cricket League, 2008). Unsatisfied by

the efforts of the BCCI to develop cricket at the grass root level, Zee Television decided to launch the

ICL. Additional reasons to launch the ICL were:

1. The huge potential benefits to be gained by marketing a new and exciting format of cricket

to the Indian market.

2. Frustrated over its numerous unsuccessful bids for television rights, Zee wanted to create its

own cricket content. “ The roots of the ICL lie in the same issue as those of Kerry Packer's

World Series Cricket: discontent over TV rights ” (Cricinfo - ICL FAQ, 2008). Himanshu Mody,

Business Head for the ICL, confirms such statement by adding that “ They denied us the

cricket content, so we had to create our own ” (The Asian Today, 2008).

During its launch the ICL specifically stated that it was not in conflict with the BCCI and the BCCI were

free to choose players from the ICL (Cricinfo - ICL FAQ, 2008). To date the ICL has held four

tournaments as compared to IPL’s one tournament.

Zee’s launch of the Indian Cricket League can be compared to Channel Nine’s launch of the World

Series in Australia in the 1970’s. The Indian Cricket League (ICL) is a private cricket league promoted

by Zee Telefilms. The ICL signed up some international cricket starts like Brian Lara, Shane Bond, etc

for the league which initially comprised of 6 teams. Currently the ICL has 8 teams participating for a

prize of $1 million. As the ICL is promoted by a private body, the BCCI (controls all cricketing

activities in India) has not sanction the league and called it an unofficial league. Since the BCCI is



34

responsible for all cricketing activities in India, the BCCI also selects the players that represent the

Indian National team. Therefore the BCCI is in a position to ban cricketers participating in the ICL

from playing international cricket. Since India is the largest market for cricket globally, the BCCI is the

most influential cricket authority in world cricket. Using its influence the BCCI has also managed to

get support of the other international cricket boards (Australia, South Africa, Pakistan, Sri Lanka and

Bangladesh) in banning their players from International cricket if they played for the ICL. The BCCI

has also prevented the ICL from hiring state owned stadiums to play their league matches. Following

these restrictive trade practices the ICL has taken the BCCI to court, where the matter is still

pending. For their part, the ICL have always assured the BCCI that it is free to select players that play

in the ICL.

The ICL has got support from certain parts of the Indian Government with the railway minister

allowing the ICL to use any of the stadiums controlled by the Indian Railways. The railway minister

also suggested that the BCCI and ICL should fight on the cricket field and not in court. Both the

parties should work together to promote cricket in the country (PTI, 2007).

4.1.2 Indian Premier League - Background

With the resounding success of the Twenty20 format, the Indian national team winning the

inaugural Twenty20 World Cup the BCCI launched the Indian Premier League in October 2007 to gain

from marketing Twenty20 cricket in the largest cricket market in the world. Another reason for the

IPL launch was to counter the threat from the ICL which was started by Zee Telefilms. The BCCI sold

the televisions broadcast rights for the IPL for $1,016 million (Alchemy, 2008). There had been

attempts in the past to launch private leagues in India which were not successful due to the fact that

they were the efforts of single organisation deciding which teams or clubs could participate in them.

The IPL initiative is different because it is the first league in India that has brought significant

external participation into its management. The idea is to have industry leaders, celebrities and



35

companies to bid for city franchises that would compete against each other in the Twenty20 format

(BCCI, 2007) (refer: Appendix 2 List of franchise owners).

The concept of the IPL is based on the franchise model of sports management and is similar to the

National Football League (NFL) in the USA. The IPL is a Twenty20 cricket tournament formed by the

BCCI and sanctioned by the ICC. In January 2008, the BCCI auctioned the eight city franchises for a

total of $723.5 million (refer: Appendix 2, Break-up of amounts paid for each city franchise). The

franchises will own rights for the city based teams for a 10 year period after which they would have

to renew them with BCCI. Currently, each team plays the other twice, home and away, which means

a minimum of seven home games per season for every franchise. As all the franchises are

guaranteed to play the full league season, there is low marketing risk associated with early

elimination from the tournament.

Once the franchises were decided all the leading international players were up for auction to be part

of the franchises teams. One of the main reasons being attributed to the success of the IPL is the

participation of the top international players (Mitra, 2008). To ensure that they have competitive

teams, all the eight franchises have spent huge sums of money to acquire the best talent available

around the world. The franchises spent between $6.6 million and $3.6 million on players (refer:

Appendix 3: Total amount spent by each franchise on its players).

In April 2008 the first IPL tournament was held over 44 days which provided non-stop

entertainment, excitement and fast paced cricket. Various sources have said that the IPL was a

resounding success, with Arnab Mitra of India Infoline saying “ Over 200 million Indian viewers, 10

million international viewers, 4 million live spectators: the Indian Premier League (IPL) is a sports and

entertainment revolution in the making, surpassing all records of viewership on ground and on

media. Advertising revenue and ticket sales have exceeded all expectations, making IPL highly

profitable for the organisers, broadcasters and successful team owners ” (Mitra, 2008).

The IPL has been a success with the audience because of the following aspects:



36

• Prime Time: To get the highest number of audience for all the games, the IPL matches will

be played at night; this will give the working public to watch the game after work. The

evening time is also the peak viewership time in India.

• Duration and entertainment: The shorter duration of the game combined with

entertainment (music, cheerleaders, etc) draws from a larger audience base because even

the non-cricket fans are attracted to the league.

• Appearance: To make the league appealing to the audience, the BCCI has contracted the

leading domestic and international cricketers to play in the IPL.

The strong viewership numbers combined with excitement created by the IPL proves that the first

season was a resounding success. To put the IPL success into perspective – according to research the

Indian government’s sports budget is $122 million while the overall revenues (Franchises,

Broadcasters, BCCI) of the IPL for the year are $300 million. All this excitement combined with fast

paced cricket and entertainment has lead to a huge audience for the IPL, which is a dream for any

marketing team. The television viewership for the IPL has been the highest among all programmes in

India, with an average TRP of 7 (Mitra, 2008).

4.2 Market Structure

In the following section, the author will look at the competitive structure of the Indian Cricket

Market.

Currently there are two cricket leagues in India:

1. The Indian Cricket League: is based on the single entity ownership style. The League is

owned and controlled by one entity - Zee Telefilms, a media company. As mentioned earlier,

the league has 8 teams playing the round robin format to determine the champion. Since

the league is a single entity league all the decisions are taken by the league with regards to

number of teams, entry and exit of teams from the league.



37

2. The Indian Premier League: is based on the joint venture ownership style. The League, run

by the Board of Control for Cricket in India (BCCI), auctioned rights to 8 franchises for a 10

year period. The 8 teams play each other in the round robin format to determine the

champion for the season. The IPL has set a cap on the number of teams that can participate

in the league. For the first three years only 8 teams will be allowed to compete in the league

after which the IPL can decide to auction more teams to be added to the league.

The case study does not consider first class cricket played in India as it does not fall under the

professional sports league format.

To find out which of the two leagues is bigger, the author will measure the size of the two leagues

based on the following aspects:

• Money invested / generated by the two leagues: Success of any business venture

eventually depends on the money generated by it.

• Number of players participating in the leagues: Superstar players are the most important

draw to a league for the public, if the league employs more players it will lead to the league

have higher number of superstars (Samiuddin, 2008).

• Television viewership of the league: The television revenues are the most important source

of income for any league and media companies bid for television rights based on audience

viewership. Higher the number of viewers, higher the ad revenues for the media company.

4.2.1 The Indian Cricket League

Money invested / generated: Zee Telefilms (Zee) launched the Indian Cricket League (ICL) in April

2007, in partnership with Infrastructure Leasing & Finance Services (IL&FS) with an initial investment

corpus of $25 million (Cricinfo - ICL FAQ, 2008). This initial investment in the ICL is dwarfed when

compared to investment made by the IPL franchises, with Reliance Industries paying $111.9 million

for the rights for the Mumbai franchise (most expensive IPL franchise). Together, all the eight IPL



38

franchises paid $723.5 million for the right to own a team (refer: Appendix 2). As the current

financial year has not come to a close, revenue numbers for the ICL are not available. But it can be

estimated that ICL revenues are inferior when compared to IPL revenues because unlike the IPL,

where teams owned by different franchises, in the ICL all the participating teams are owned by one

single entity. Therefore all the expenses related to marketing the league, player wages, stadium and

infrastructure development are borne by Zee Telefilms the promoter of the ICL.

In his interview with Indiantelevision.com, Himanshu Mody, Business Head of the ICL states that the

league has started to strengthen as more and more tournaments are held. He declined to talk about

financial numbers, but did list various revenue sources for the ICL which include ground sponsorship,

associate sponsorship, ticket sales sponsors, advertising revenues and broadband revenues. Since

the ICL is promoted by Zee Telefilms, a media company, all the matches played in the ICL are

telecasted by the parent company (Zee Telefilms). Therefore revenues from sale of television

broadcast rights are not included in revenue source for the ICL. But Mody (2008) states the ICL

earned broadcasting revenues from international television deals as it was broadcasted in various

overseas countries including UK, USA, Pakistan, Middle East, Australia and New Zealand.

Mody (2008) also addressed the issue of a single entity having to incur all the expenses relegated to

running the league by stating “ We knew what the marketing plan would be and what would be

enough to cover the country. We are on track. If we incur all costs and do it ourselves, then all

revenues belong to us. We do not have to share them with anybody on a 80:20 or 60:40 basis like in

the IPL” (Mody, 2008). Mody (2008) states that going forward, the ICL will be selling stake in its ICL

teams. Initially this was not done so as to build value of the teams, now the teams can sold at a

premium (Mody, 2008). This fact of selling skates in a team can be related to the Major League

Soccer (MLS) in the United States. The MLS was also started as a single entity league but later on

sold stakes in its teams to various investors.



39

Number of players: According to the ICL website, currently the league has 8 teams with a total of

136 players participating in the league, an average of 17 players per team (Indian Cricket League,

2008). The teams are based in various cities across India and include Chandigarh Lions, Chennai

Superstars, Delhi Giants, Hyderabad Heroes, Royal Bengal Tigers, Mumbai Champs, Amedabad

Rockets. To cash in on the popularity of the India – Pakistan rivalry the ICL also has a team from

Pakistan – Lahore Badshahs. By associating cities with its teams, the ICL is trying to gain popularity

among the local community. It seems that this strategy is working as “ People are supporting the local

team. In the final, Hyderabad Heroes had a lot of local support. At the same time support depends on

performance as well, which is what has hampered Mumbai ” (Mody, 2008)

Television viewership: According to the Television Audience Measurement (TAM) service in India,

the average viewership for the ICL over two tournaments was at 1.5 (TAM Media Research, 2008).

Mody confirms this by adding “ The ratings have exceeded our expectations. We managed an

average of 1.5. Ratings peaked at 3.5, which is more than India Test cricket and some One Day

International ratings ” (Mody, 2008). The worrying factor for the ICL is that “ If there is no India cricket

in a certain period, then the ICL becomes a strong proposition ” (Mody, 2008), but the TAM ratings for

the second ICL tournament were disappointing despite the fact that there was no cricket being

played in India. Kotak Institutional Equities conclude “ the modest success of the ICL, especially the

finals, indicates the presence of a large set of cricket fans in India who will watch the game solely for

the quality of cricket on display ” (Kumar & Prasad, 2008).



40

Table 4.1: TAM ratings for the second ICL tournament held in March 2008

Source: (TAM Media Research, 2008)

Legend: L/T – Live TelecastICL 20-20 CHNG-08 – Indian Cricket League Second Tournament 2008SF: Semi FinalsF: Finals

4.2.2 The Indian Premier League

Money invested / generated: The BCCI did not have to invest a considerable amount of money to

launch the IPL which is clear from the article titled ‘ Jiminy Cricket - India's cricket board makes a cool

billion dollars for doing not much ’ (Economist, 2008). Since the IPL is only an administrator that sets

the rules and runs the league, it did not require substantial investments. The franchise owners are

responsible for marketing the league, paying player wages, investing in stadiums and infrastructure.

According to Lalit Modi, IPL Chairman & Commissioner, “ To date we (the Indian Premier League)

have made $1.75 billion ” (Modi, Indian Premier League rakes in millions from franchise sale, 2008).

Alchemy in its report also stated that the IPL is already a $2 billion property (Alchemy, 2008). Arnab

Mitra of IIFL says between organisers, broadcasters and franchises, that the IPL will bring

approximately $30 million a year into cricket. To put this in perspective, the Indian government had

a total sports budget of $11.3 million (Mitra, 2008). The structure of the IPL is slightly different from

the other professional sporting leagues across the world where various existing teams come

together and form a league. The teams have their Directors on the Board of the league. But in the

IPL, first the league was formed and then the rights to the franchises were auctioned. The franchises

do not have any Directors on the IPL Board. There could be concerns among the franchises about



41

working with each other as they have no representation on the IPL Board. In his interview with

Cricinfo, Lalit Modi, IPL Chairman and Commissioner address this fact by stating “ There is no need for

concern. We need to work with them. It's with their success we will achieve ours. It's not us against

them. We are all on the same side. We will ensure we work with our partners and that's what my job

is” (Modi, IPL will revolutionise the game, 2008). The IPL is a joint venture league as it has sold the

rights to run teams to various franchises.

Arnab Mitra of India Infoline states that the IPL franchises will earn annual revenues from the

following sources:

• Television Broadcasting and IPL Sponsorship fee - $95 million

• Team Sponsors - $38 million

• In-stadia advertisers - $19 million

• Ticket Sales - $40 million

• Merchandise - NA

• Events – NA

He further adds the annual revenue stream for the IPL:

• Central Sponsors - $30 million

• Television Broadcasting fees - $100 million

• Franchises fees - $71 million

Number of players: According to the IPL website, the league has 8 teams with the league currently

has 191 players participating in the league, an average of 24 players per team (Indian Premier

League, 2008). Like the ICL, the IPL teams are city based and include the Bangalore Royal

Challengers, Chennai Super Kings, Delhi Daredevils, Deccan Chargers (Hyderabad), Kings XI Punjab,

Kolkata Knight Riders, Mumbai Indians and Rajasthan Royals. Again similar to the ICL the IPL wants

to gain popularity by promoting its franchises as part of the local community. “ My team, my city' is



42

our final objective. If we able to build on that over the next few years we will have something that

will revolutionise cricket - the way it's played, watched or followed ” (Modi, IPL will revolutionise the

game, 2008).

According to the Television Audience Measurement (TAM) service in India, the average viewership

for the IPL was at 6.28 with the IPL finals achieving a rating of 9.8, which is the highest rating ever for

domestic cricket in India (TAM Media Research, 2008). This is where we can see the real success of

the IPL. According to Alchemy Research, “the IPL surpassed expectations of media professionals and

the ratings were 30-50% more than expected ” (Alchemy, 2008). Also the television broadcaster for

the IPL increase its ad rates for spot sales from $5,000 - $6,250 for 10 seconds to $7,500 - $8,750 for

10 seconds. For the semi finals and finals the ad rates were sold for $17,500 - $25,000 for 10

seconds. “ Not to mention the TRPs (TAM ratings) that we have garnered in India are quite frankly

staggering. And all this because we have had some of the best cricketing entertainment provided by

the best cricketers from around the world ” (Modi, Q&A, 2008).

From the above stated facts we can conclude that the IPL is much bigger than the ICL. The IPL has

more market power than the ICL.

4.3 Conduct of the Leagues

In the following section the author will analyse the conduct (behaviour) of the ICL and IPL.

IPL has the support of the BCCI, which is the official body to run cricket in India. The BCCI is also a

member of the International Cricket Council (ICC), which is the international governing body for

cricket. Players participating in the ICL have been banned by the BCCI and other cricket boards

around the world. “ The IPL is an official sanctioned Twenty20 tournament, and unlike the ICL, which

is not recognised by any of the national boards or the ICC, it (IPL) will have a better status,

international reach, players, and the requisite infrastructure by default. Since the IPL is sanctioned by

the ICC, players don't have the danger of bringing their international/first-class careers to a halt - as



43

is the case with the ICL - whose players have been banned by the various boards ” (Cricinfo - IPL Faq,

2008). The fear of being banned has prevented superstars like Sachin Tendulkar, Ricky Ponting,

Graeme Smith and other from joining the ICL. Prior to ICL commencing, there were reports that

several Australians including Glenn McGrath and Shane Warne would participate in the ICL, but

changed their minds once it was clear that they would be banned by the Australian Cricket Board

(ACB) for joining the ICL (Cricinfo - ICL FAQ, 2008). The BCCI is also in a position to prevent the ICL

from using state owned stadiums and infrastructure. If the BCCI is not happy with a state

association, they could be expelled from the membership of the BCCI and be ineligible for any

financial support from the BCCI. This possibility of a ban has prevented state associations from

renting out their stadiums to the ICL.

As a result of being in a position to implement a ban on plays joining the ICL and preventing the ICL

from using state owned stadiums, the IPL has restricted the ICL from freely operating in the market.

Product differentiation is the most important factor between the two leagues when considering the

competition between them. Even though both the leagues are selling the same product – cricket

competition, the audience differentiates between the two leagues based on the quality of cricket

and entertainment. The quality of cricket played between the two leagues will decide which

between the two will be more successful. According to Samiuddin (2008) a league needs high profile

players to guarantee its success. High profile players provide the public with top class competition,

spectacular skills, excitement and entertainment which draws the audience to embrace the league

(Samiuddin, 2008). Arnab Mitra (2008) has similar views “ For a League to remaining competitive it

has to attract the best talent across the world ”. It is natural that the franchises (IPL) / teams (ICL)

would want the best players to play for them as they would provide top quality cricket, this would in

turn help build their brand image, grow the fan base, increase gate receipts and finally attract

sponsors.



44

With the IPL being officially sanctioned by the BCCI and the ICC, franchises did not have a problem

attracting the superstars of international cricket. To ensure that they have competitive teams, all the

eight franchises have spent huge sums of money to acquire the best talent available around the

world. They have spent between $6.6 million and $3.6 million on players (refer: Appendix 3). Had

the IPL not implement a cap on player wages, we would have seen franchises spending more on

player salaries.

Being an unofficial league, the ICL had difficulties in attracting the superstars of world cricket.

According to Kumar & Prasad (2008) of Kotak Institutional Equities ICL never wanted to compete

with the BCCI (IPL), the ICL had a clear strategy – it believes that players either want to play for the

country, money or both. When a player plays for the country he can make large sums of money

through endorsements and sponsorships. But for players who do not make it to the national team

earning a proper living becomes very difficult, they are stuck in the wilderness of first-class cricket.

The ICL saw this as an opportunity and offered these fringe players around $75,000 per year (Cricinfo

- ICL FAQ, 2008). This amount is substantially more than these fringe players could have ever earned

playing first-class cricket, therefore they did not hesitate and signed up for the league. To attract

audiences to its league the ICL also signed up international players who had recently retired and

Indian cricketers who had lost hopes for playing for India again. The biggest crowed pullers for the

ICL are Brian Lara, Inzamam-ul-Haq, Vikram Solanki, Paul Nixon, Hamish Marshall, Dinesh Mongia

and Deep Dasgupta (Indian Cricket League, 2008).

On being asked about how successful the ICL has been in recruiting players, Mody said “ The Indian

players come from various small towns and cities like Jammu, Srinagar, Assam, Indore and Bhopal.

The Indian players come from 58 cities. We have a diverse mix in this sense. We also have talent

scouts in each Zone where they have gone out to find emerging talent. We will now be setting up a

central Academy for our boys ” (Mody, 2008). It is clear that the ICL is not looking at big name players

for its league. It is clearly positioning itself as not in the same league as the IPL. The ICL is more

focused towards developing young players.



45

Even though both the leagues sell cricket competition as a product, they are not the same product,

they are differentiated based on quality of cricket played. One (IPL) is there to provide

entertainment and excitement to the audience, while the other (ICL) is there to promote and

develop young cricket talent in the country.

4.4 Performance of the Leagues

Both the leagues have the same number of teams and a similar number of players participating in

their matches. The output for leagues is the competition that they produce and market to the

audience. Currently, the IPL has only held one tournament in its first season which featured 59

matches where each team played all other teams twice, home and away (Indian Premier League,

2008). Since the IPL was started after the ICL, the ICL has had more time to produce competition. To

date the ICL has organised four tournaments with a total of 76 games being played (Indian Cricket

League, 2008). In both the league’s player and administrators are contracted for a certain number of

years over which they are paid their wages. It does not make a difference if players play or not, they

will get their wages either way. Wages are fixed costs for teams. Therefore higher the number of

matches played in a league, lower will be the fixed costs for team as they will be able to distribute

the fixed costs over more produced units. But we will also have to consider diminishing utility for the

audience, just because the ICL is producing more competition we should not assume that the

audience will buy it or watch it, their utility could be saturated. Economies of scale should also

include television viewership because higher the viewership, high the revenue earned from media

companies. As mentioned earlier the IPL has substantially higher number of television viewership

when compared to the ICL. This will help the IPL to distribute its costs over a larger revenue base.

Using one of Sloane’s (1971) utility maximising factors (performance measurement) – Attendance /

Television Viewership, the author conducted a survey on the popularity between the IPL and ICL. The

summary of the survey is as follows:



46

After being asked which league do they prefer, 4.5% people said the ICL while 68.2% people voted

for the IPL and 27.3% voted for both. 6.1% voted for the ICL when asked which league had better

quality cricket while 59.2% went with the IPL.

When asked, which league had better entertainment (other than cricket) 4% said ICL while 60% said

the IPL. 36% voted for the ICL when asked which league supports young cricket talent while only 24%

voted for the IPL.

From the survey it is quite visible that the fans support the IPL when it comes to watching higher

quality of cricket and being entertained. The spectators believe that the ICL only helps promote and

develop younger players, this leads to the league providing lower quality of cricket.

The performance of the leagues can also be measured from the earlier provided television

viewership and revenue data. From which it is clear that the IPL is much bigger and has more market

power than the ICL.

This concludes the case study. The dissertation will move to the analysis and discussion of the case

study.



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Chapter V: Analysis and Discussion

The following chapter deals with the analysis and discussion of the subject of this dissertation. The

author will analyse the effects of different types of market structure on the Indian Cricket Market.

The four competitive environments as stated by Bain (1951) (perfect competition, monopolistic

competition, oligopoly and monopoly) will be applied to the Indian Cricket Market to assess their

corresponding economic implications.

5.1 Perfect Competition

Perfect competition is a market structure where there are many small firms of equal size operating

in a market with no entry barriers or product differentiation. The commodities market is an example

of perfect competition. Perfect competition as the name suggests is the most competitive model of

competition. Under perfect competition, firms are price takers meaning that they have no power to

influence the price of products. Firms take the price that is determined by demand and supply

factors of the concerned market.

In the author’s opinion this scenario is not realistic in the Indian Cricket Market because a sports

market with many leagues is not practical. Small firms cannot start leagues either as joint ventures

or single entities because the firms would need substantial market power or require prohibitive

investment costs, both of which are not possible under perfect competition. Even if there were

several leagues in the market, their survival would not be possible because fans will find it difficult to

support a particular team over the other as there would be no product differentiation. In addition

there are significant entry barriers in the sports league market with regards to players, stadiums,

officials and other infrastructure required to stage competitive matches. Player talent would be

distributed across all the small leagues and the quality of competition would be affected severely.

For the above mentioned reasons perfect competition scenario is not applicable to the Indian Cricket

Market.



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5.2 Monopolistic Competition

Under monopolistic competition, the market structure has many firms of equal and small size, a

condition similar to perfect competition. However, monopolistic competition differs from perfect

completion as it has some degree of entry barriers and product differentiation. An example of

monopolistic completion could be the ‘Baked Beans’ industry where Heinz has differentiated its

baked beans on better quality when compared to competition. The important feature under

monopolistic competition is product differentiation, which allows consumers to develop brand

loyalty towards certain products. Such brand loyalty creates entry barriers because new firms will

face significant costs to overcome it.

According to the author this scenario is also not realistic in the Indian Cricket Market due to similar

reasons applied to the perfect competition situation. There is some product differentiation under

monopolistic competition but it is not enough to sustain a sports league. The large number of small

leagues will spread out the talent of the players thus affecting the quality of the competition.

5.3 Oligopoly

Oligopoly is a market structure where there are few large firms along with some smaller firms and

significant entry barriers. Under oligopoly, product differentiation depends on the industry. For

example, when it comes to buying petrol, price is usually the only deciding factor for consumers. If

firms can differentiate their products in the market, they will be able to charge a higher price. One

way to achieve product differentiation is to advertise (behaviour or conduct of firms). Oligopoly is

very different from the other forms of competition because its firms are big and they interact with

each other. In addition firms respond to competitors actions creating a strategic behaviour among

them.

Oligopoly is the current scenario in the Indian Cricket Market. There are two leagues in the market,

the Indian Premier League (IPL) and the Indian Cricket League (ICL). Currently the operations of the

ICL are influenced by its unofficial status. Players participating in the league are banned by cricket





50

5. Even though the IPL provides higher quality of competition and most of the fans follow

the IPL some of the cricket fans may follow the ICL. This would dilute the fan base for the

IPL franchises

6. Competition with the ICL teams may result in lowering of ticket prices to attract more

spectators. Also competition could result in lower revenues from the sale of television

broadcast rights

ii. Effects of the ban and existence of IPL on the ICL:

1. The ICL teams are not able to attract the best talent available because of the fear of the

ban

2. Have to pay players higher wages to compensate for lack of international cricket

3. The league will mostly attract players who believe that they do not have any possibility

of playing international cricket. Which means only players with lesser talent will sign up

for the league leading to poor quality of competition

4. If the quality of competition is lower the demand for sport will go decrease affecting the

performance of the league (Borland & Macdonald, 2003)

5. The ICL also does not have access to all the stadiums in India, as most of them are under

the control of the BCCI. This does not allow the ICL to reach out to its entire fan base,

limiting revenue sources for the ICL

6. Competition with the IPL teams may result in lowering of ticket prices to attract more


broadcast rights

iii. Effects of the ban and the existence of two leagues on the Fans :

1. The quality of competition will decrease because the talent will be divided between the

two leagues



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2. The main desire for fans is to see one champion at the end of the season (Noll, 2003) but

they would not be able to fulfil this desire because the two leagues will have two

different champions

3. Competition between the two leagues could positively lead to lower ticket prices for the

fans

iv. Effects of the ban and the existence of two leagues on the Board of Control for Cricket inIndia (BCCI):

1. Smaller number of players to choose from for the national team because of the ban,

resulting in not selecting the best team possible

2. Lower quality of cricket would lead to lesser number of spectators resulting in lower

television revenues and gate receipts

3. Could be sued by some players for using restrictive trade practices

From the above analysis it is clear that the ban is restricting player movement and the existence of

two leagues is not efficient for any of the stakeholders. This confirms the views of various academics

that it is not efficient for two leagues to exist together (Cairns 1990, Neale 1964, Noll 2003 and

Borland and Macdonald 2003)

5.3.2 Scenario 2 (without the ban on ICL players)

This scenario will consider the effect on the four stakeholders without the ban on ICL players and the

existence of both the leagues.

i. The IPL franchises:

1. Would be able to select from all the available talent pool, which would lead to higher

quality of competition and hence will increase the demand for the sport

2. Free movement of players would increase their bargaining power, leading to higher

wage bills for the franchises



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3. Since the two leagues have no agreement between each other, teams from both the

leagues will poach players from one another. This will affect team unity and moral,

leading to lower quality of cricket and higher wage demands from the players

4. Existence of the ICL would dilute the fan base for the IPL franchises even though the IPL

is more popular with the spectators

5. Competition with the ICL teams may result in lowering of ticket prices to attract more


broadcast rights

ii.

Effects of the existence of the IPL on the ICL:

1. With no ban on players the ICL would be able to attract more players to play in the

league

2. Competition with the IPL franchises for players would result in higher wage bills for the

ICL teams

3. Increase in quality of players will result in higher demand for the sport, but will have to

share the fans with the IPL franchises

4. Competition with the IPL franchises may result in lowering of ticket prices to attract

more spectators. Also competition could result in lower revenues from the sale of

television broadcast rights

5. The ICL will be able to use all the available stadiums which would result in reaching out

to a larger fan base

iii. Effects of the existence of both the leagues on the fans :

1. The quality of competition the spectators watch will be of a lesser quality because the

talent will be divided between the two leagues

2. The main desire for fans is to see one champion at the end of the season (Noll, 2003) but

they would not be able to fulfil this desire because the two leagues will have two

different champions



53

3. Competition between the two leagues could lead to lower ticket prices for the fans

iv. Effects of the existence of both the leagues on the BCCI:

1. The BCCI would be able to choose players from the full talent pool available, which

would lead to the best team selected for international cricket leading to a higher quality

of cricket

2. Higher quality of cricket would lead to increase in demand for cricket and result in

higher revenues from sale of television broadcast rights

From the above analysis the author concludes that two stakeholders, the ICL and the BCCI would

benefit if the ban on players was lifted. However the effects of having two leagues would not be

positive on remaining stakeholders, the IPL and the fans. The conclusion again concurs with

academics who state that the existence of two sports leagues is not efficient (Cairns 1990, Neale

1964, Noll 2003 and Borland and Macdonald 2003). The two leagues could work together and have a

champion of champions at the end of the season, where the winners from both the leagues will play

each other for the championship. Like in American Football in the US, the champions for the

American Football League and the National Football League come together at the end of the season

to play for the Super-Bowl. For both the IPL and ICL to exist it would require co-ordination and unity

between the two leagues. The leagues would also have to agree on rules for player trading,

scheduling, laws of the competition and number of games to be played in the season.

5.4 MonopolyMonopoly is a market structure where there is only one firm and it is as large as the market. The

most important feature of a monopoly market is that entry barriers are prohibitive, otherwise new

firms would enter the market and there would be no monopoly. This market structure is the least

competitive with one firm controlling all the market power. “ Consider the case of a single seller;

without entry barriers such a firm has no market power because the threat of potential competition



54

effectively replaces the market discipline imposed by actual rivals and, in the long run, the single

seller will be able to earn only normal profits ” (Ferguson & Ferguson, 1994).

Under this scenario the author will consider the Indian Cricket Market with only one league. The IPL

is considered as it is the larger of the two leagues and it is more realistic to assume that the IPL will

be the only existing league since it has the official status and the support of the BCCI. The effects of a

single league will be as follows:

i. The IPL franchises:

1. The IPL franchises would be able to choose from the full talent pool which would lead

the IPL franchises to assembling the best possible teams

2. Best possible teams will result in high quality of sporting competition between

franchises leading to higher demand for the sport (Borland & Macdonald, 2003).

3. There would be no competition for players therefore they would have no bargaining

power over the IPL franchises. This would keep the wage rate in line with player talent

4. Will have access to the entire population to include in its fan base as there would be no

competition from rival leagues

5. Will not have to lower ticket prices to attract spectators. Also the IPL will not have to

reduce its fee for television broadcast rights to attract media companies. Demand from

both, the fans and the media companies will depend on the quality of competition on

field

ii. The effects of a single league on the fans :

1. The quality of competition the spectators watch will be the best quality available

because the franchises will be able to choose from all the players possible and all the

best players would be playing in the same league

2. The fans desire to see one champion at the end of the season (Noll, 2003) will also be

fulfilled as the IPL winner will be the champion for the year





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Chapter VI: Conclusions and Recommendations

The aim of this dissertation was to find out if having two leagues in the Indian Cricket Market was

efficient from an economic perspective. For an academic understanding on the subject, the author

conducted a review on the literature available on the economics of sports which dealt with sports

leagues. Following the literature review, the research methodology used in the dissertation was

outlined. The author then presented a case study which described the current scenario of the Indian

Cricket Market with both the ICL and the IPL existing simultaneously. The analysis and discussion

chapter looked at the Indian Cricket Market under different market structures, which included

competitive environments like oligopoly and monopoly. This chapter will conclude the dissertation

and provide recommendations for the managers of the ICL, the IPL franchises, the BCCI and the fans

association.

6.1 The Indian Cricket League

With the ban implemented by the BCCI on the ICL players, it is difficult for the league to attract top

quality players. The league will continue to attract recently retired international cricketers and young

players who cannot make it into the national teams. This will not help the league improve the quality

of cricket played in its tournaments, leading to lower demand for the league. Also, it is not likely that

the ban will be removed by the BCCI as it is getting more determined to ban all ICL players from any

form of cricket. This is evident from Lalit Modi’s quote in the Guardian “ Any ICL player playing for

any team automatically disqualifies that team from participating in the Champions League. No

exceptions will be made under any circumstances .” (Modi, Modi threatens to ban ICL players from

Twenty20 Champions League, 2008).

The ICL, being a single entity organisation will find it difficult to compete with the eight financially

strong IPL franchises for players, stadiums and infrastructures (Samiuddin, 2008). Also, as mentioned

in the analysis and discussion chapter, the cost of players, stadiums and infrastructure will increase

because of the two leagues competing for them.





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It will also be beneficial if the ICL did not compete with the IPL and positioned itself as a feeder

league, which would help the IPL franchises to widen the pool of players to choose from. This will

enhance the on-field competitiveness of the IPL teams and motivate the ICL players to improve their

performance in order to impress the IPL franchises. But for this to work the BCCI will have to lift the

ban on the ICL players.

It is recommended that the IPL managers try to attain a monopoly status for the league and

incorporate the ICL under the IPL.

6.3 The Board of Control for Cricket in India

The BCCI is responsible for cricket played in India and selects the players to represent the Country at

the international stage. The managers should only be concerned with fielding the best possible team

for the country in international competitions. To achieve this, the BCCI would have to choose from

all the players available in the country even the ones participating in the ICL. It would be in the

BCCI’s best interest to recognise the ICL and place it under the IPL. This would help develop

cricketing talent on a larger scale thereby creating a larger pool of players for international cricket.

The BCCI should still try to push for the IPL to have a monopoly status in the Indian Cricket Market as

this would reduce the competition between the two leagues.

6.4 The Cricket Fans

As mentioned earlier, the demand for sports increases if the quality of competition on-field

improves. The cricket spectators would be able to get maximum utility from the sport if the two

leagues did not compete against each other. The competition between the leagues reduces quality

of competition, divides the player talent between the two leagues and also produces two champions

at the end of the season. All of these factors have a negative effect on the utility for the spectators

and the demand for sport.





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The one-day game has since become a crowd-pleaser and TV-audience-generator across the globe,

hastened in part by the success of the inaugural World Cup in 1975. The abbreviations ODI (One-Day

International) or sometimes LOI (Limited Overs International) are used for international matches of

this type. Innovations have included the introduction of coloured clothing, distinct tournaments, and

"day-night" matches (where play starts during the day under natural sunlight but extends into the

night under floodlights); together with frequent nail-biting finishes and the impossibility of either side

opting to play for a draw, these have seen ODI cricket gain many supporters ” (InterCricket, 2008).

Twenty20 Cricket

“Twenty20 Cricket was first played in English domestic cricket in 2003 to help popularise first-class

cricket and attract more spectators. It has since spread to many other countries. A "Twenty20 Game"

consists of 20 overs for each side, a free-hit after a no-ball is bowled, short boundaries, batting-

friendly pitches, and other rules designed to attract crowds that would not be willing to sit through

the slower-paced one-day games or test matches.

The first men's Twenty20 international was between Australia and New Zealand in 2005, the first

women's Twenty20 international having been between England and New Zealand in 2004. The ICC

announced after its Executive Board meeting in March 2006 that beginning from 2007 to 2015, the

Twenty20 World Championship would be held every two years, the first ever Twenty20 World

Championship to be held in South Africa in 2007 ” (InterCricket, 2008).



67

Appendix 2

List of owners of the IPL franchise shows that Industry leaders, Celebrities and Companies are

backing the league

Owners City Price paid for franchise (US$ mn)

Reliance Industries – Mukesh Ambani Mumbai 111.9

UB Group – Vijay Mallya Bangalore 111.6

Deccan Chronicle Hyderabad 107.0

India Cements Chennai 91.0

GMR Group Delhi 84.0

Preity Zinta / Ness Wadia Mohali 76.0

Shah Rukh Khan / Juhi – Jay Mehta Kolkata 75.0

Emerging Media Jaipur 67.0

Source: (Alchemy, 2008)



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Appendix 3

Teams spending heavily to ensure on-field success in the IPL

Owners City Total Price for players (US$ mn)Reliance Industries – Mukesh Ambani Mumbai 5.4

UB Group – Vijay Mallya Bangalore 5.7

Deccan Chronicle Hyderabad 6.0

India Cements Chennai 6.2

GMR Group Delhi 6.4

Preity Zinta / Ness Wadia Mohali 6.6

Shah Rukh Khan / Juhi – Jay Mehta Kolkata 6.2Emerging Media Jaipur 3.6

Source: (Alchemy, 2008)



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Appendix 4



70



Appendix 5

Who we are

“Cricinfo is the world's leading cricket website and among the top five single-sport websites in the

world.

Founded in 1993, Cricinfo's content includes news, live ball-by-ball coverage of all Test and one-day

international matches and features written by some of the world's best cricketers and cricket writers.

The site also features in-depth statistics on every one of the 3000 international and 45,000 first-class

cricketers to have played the game.

Now a wholly owned subsidiary of ESPN Inc., the world's leading multimedia sports entertainment

company, Cricinfo is available to cricket fans through the online media and on a host of mobile

platforms and handheld devices.

Cricinfo has a thriving user community and reaches over ten million users every month.

The editor of Cricinfo is Sambit Bal. ” (Cricinfo, 2008)

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