Cricket - The Game of Money - Praxis
Cricket – The Game of Money

Cricket – The Game of Money

Would anyone now believe that in the 1983 Prudential World Cup, Indian players received a daily allowance of INR 200 and a match fee of INR 1500 per game? This financial evolution mirrors the sport’s exponential growth in popularity, infrastructure, and marketability

 

Indian cricket has burgeoned into a global phenomenon. Today, it stands as a testament to India’s sporting prowess and economic vibrancy, driven by its premier governing body, the Board of Control for Cricket in India (BCCI) – and boosted by the double wings of Twenty20 (T20) and 50-over’s One-Day International (ODI) formats. But would anyone now believe that in the 1983 Prudential World Cup, Indian players received a daily allowance of INR 200 and a match fee of INR 1500 per game? Yet, Kapil’s Mendid win that Cup – and that singular event sparked a cricket explosion throughout the country, eventually changing the face of the game forever.

Genesis of the Game

India’s cricket journey from its humble beginnings to the current stature as a global powerhouse is marked by significant milestones. In the early days, players earned meagre allowances, contrasting sharply with today’s scenario where top cricketers command salaries ranging between INR 1–7 crore. This financial evolution mirrors the sport’s exponential growth in popularity, infrastructure, and marketability.

Cricket today is played across three main formats: Test cricket, One-Day Internationals, and Twenty20, each contributing uniquely to the sport’s appeal. Test cricket, the oldest format, emphasises endurance and technique over five days of play. ODIs introduced limited-overs cricket, enhancing its accessibility and popularity. Finally, T20 cricket revolutionised the game with its fast-paced, high-scoring matches, spawning leagues, which has reshaped cricket’s economic landscape.

The rise of the Indian Premier League (IPL)

The Indian Premier League (IPL) is a franchise-based T20 cricket league that was launched in 2008. Since its inception, the IPL has become one of the richest and most-watched cricket leagues globally. The brainchild of now-maligned entrepreneur Lalit Modi, it has transcended traditional notions of cricket leagues. Valued at a staggering US$10.7 billion, it exemplifies the fusion of sports and commerce. It attracts top international talent, boosts the careers of young regional Indian players, and has been a financial windfall for players, team owners, sponsors, BCCI, and the nation’s economy alike. The league not only entertains millions but also fuels India’s economy through multiple channels. Its impact extends far beyond the boundary ropes, influencing tourism, infrastructure development, and employment generation.

Economic impact and growth catalyst

The IPL’s economic footprint is substantial. Annually injecting billions into India’s economy, it generates revenue from broadcasting rights, sponsorships, and ticket sales. Compared to other major sports leagues, the IPL is extraordinarily lucrative. Each IPL game is worth more than US$15 million, while each NBA game in the United States is worth around US$2 million. The IPL’s economic impact extends beyond cricket, as this global phenomenon runs for two months – featuring 10 competing franchises, 74 matches, and over 600 million views.

The first IPL auction in 2008 garnered around US$724 million, and the 2022 media auction reached approximately US$5.64 billion, underscoring its financial clout. One of the major sources of revenue for the IPL, and cricket in general in India, is broadcasting rights. Television rights and online streaming (OTT) rights form a substantial part of the cricket economy. The BCCIauctions these rights, resulting in massive revenues. From a modest INR 236 crores in 2008, the media rights had already touched a phenomenal INR 4087 crores as far back in 2019. The consolidated sum for 2019-2022 is estimated to be around INR 3065 crores. Such massive revenues benefits the entire ecosystem of cricket, including players and associated businesses. The league’s seasonality also spurs temporary job creation, particularly in sectors like hospitality and event management, benefitting local businesses during match seasons.

ODI World Cup 2023 was a never-before money churner too

Riding on the euphoria of the IPL wave, the bigger format of the shorter version of the game – the 50-over One-Day International World Cup – attained a new high in 2023. Hosted by India in October–November last year, Rohit Sharma and his men in blue bulldozed through the league table as well as the knock-out stages undefeated, only to be beaten by Australia in the finals. Despite the final being a big disappointment, the 10-country 48-matches event garnered massive mileage – the maximum amongst all the 13 ODI World Cups played till date. Even before the World Cup started, economists were busy rattling off numbers.

Economists at the Bank of Baroda estimated that the event could potentially boost India’s economy by close to INR 220 billion (US$ 2.6 billion). They calculated the projected TV rights and sponsorship revenue to be INR 105–120 billion “on a conservative basis.” Coinciding with the festive season in India, the fixture pushed up overall retail demand and also drove the inflation rate upwards. Travel and hospitality costs surged for the period, and service charges in the informal sector in all the ten host Indian cities indicated substantial increases over and above the usual festive-season impact.

Figure 1:2023 World Cup Push to Indian economy; Source: Bank of Baroda

The Macquarie Group had pointed out to the media that room tariffs at all three-star hotels had doubled during that period. And as highlighted in the Bloomberg graph below, the stock market correspondingly reflected this spike:

Figure 2: Indian hotel stocks spiked during the 2023 World Cup season; Source: Bloomberg

Long-term socio-economic impacts of big cricketing events

  • Government and Societal Contributions:

From a governmental perspective, tournaments like the IPL and the World Cup act as catalysts for economic growth. They enhance tax revenues, boost tourism, and foster infrastructure development in host cities. The IPL’s global reach also showcases India’s organisational capabilities, attracting international investments and promoting the nation’s image as a favourable destination for major sporting events.

  • Foreign Investment and Global Appeal:

The global appeal extends to foreign investors, who participate through various avenues like broadcasting rights, franchise ownership, sponsorships, and merchandise. The league’s popularity has drawn investors from diverse backgrounds, contributing to its economic resilience and global stature.

  • Technological and Media Influence:

Digital platforms have played a crucial role in amplifying the IPL’s reach. Social media engagement and online streaming cater to a global audience, enhancing brand visibility and marketing opportunities for sponsors. The league’s strategic media rights deals further consolidate its financial attractiveness, securing substantial revenues over extended periods.

  • Empowerment and Innovation:

Beyond economics, the IPL and the World Cup foster entrepreneurship and innovation. Start-ups in fantasy sports, media production, and digital content creation find fertile ground within the league’s ecosystem. Such ventures not only create employment but also drive technological advancements, bolstering India’s standing in the digital economy.

Convergence of sportsmanship and entrepreneurship

Cricketing extravaganzas like the IPL and the World Cup epitomise the convergence of sportsmanship and economic dynamism. The profound impact of the game on India’s economy through job creation, infrastructure development, and tax contributions underscores its role as a cornerstone of national pride and commercial success. As business around the game continues to evolve, its influence on global cricket and India’s broader economic landscape remains a phenomenon both on and off the field.

 

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