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If you
think “getting Bangalored” is still a metaphor for the
loss of Western computer-software and
network-maintenance jobs to cheaper workers in India,
then you aren’t following the Washington Redskins
cheerleaders.
Twelve
of the “First Ladies of Football,” as they like to call
themselves, are in India’s code-writing capital on work.
Yes,
this is outsourcing in reverse; and no, India hasn’t
taken to playing American football. The National
Football League in India refers to a domestic soccer
competition; and even that has recently undergone a name
change. The cheerleaders are supporting the Royal
Challengers Bangalore, one of the teams participating in
India’s
newly born cricket league.
The
Indian Premier League (IPL), a 44-day, 59-match annual
fixture, has already emerged as one of the largest and
most promising new business opportunities in India in
recent years.
Commentators have mostly focused on how lucrative the
league is for the players and the Indian cricket board;
cricket enthusiasts have considered the pros and cons of
the game’s condensed format: It finishes within three
hours; a test match, the classical version, can take
five days.
More
financially oriented analysts have wondered if it would
make a profit for the owners of the teams, including
billionaire industrialist Mukesh Ambani, spirits tycoon
Vijay Mallya and Bollywood actor Shah Rukh Khan.
To me,
what’s striking about the IPL is just how global it is.
That openness of the teams—rather than the short-term
economics of what they pay the players or earn from
ticket sales—will determine the competition’s success.
Different ethos
The
international character isn’t limited to having Redskins
cheerleaders in a stadium in
Bangalore. Cricketers from Australia, Bangladesh, Pakistan, Sri
Lanka,the West Indies, Zimbabwe, South Africa and New
Zealand have already signed up for the Indian league,
while those from the UK are disappointed with the
England and Wales Cricket Board, which isn’t allowing
them to play.
In most
other businesses, it’s usually India that’s erecting
walls to keep foreigners out. For instance, overseas
companies can’t own more than a 26-percent stake in
Indian insurance, defense-production or
newspaper-publication companies.
Similarly, the Indian central bank is rather stingy
about letting foreign banks open new branches.
The
premier league is just the opposite.
Every
team is allowed to have as many as four overseas players
in the 11-member contingent that it fields in any match.
Contrast
this with a heavily regulated industry such as
telecommunications where the Indian government prohibits
any foreigner from holding a key position in a local
company.
To be
sure, the Indian cricket league, too, has a “mandate.”
One of the goals behind starting a domestic competition
is to discover new, domestic talent.
Lure of
lucre
But the
planners have been astute enough to keep reserved slots
for local lads to a minimum and to allow operational
flexibility to the owners of the teams. They’re free to
do what they need to do to make the league successful.
And this
is undoubtedly the better approach. A thriving franchise
that’s open to the world will do more to unearth
globally competitive local talent than a moribund
domestic league that’s open only to sons of the soil.
The
Board of Control for Cricket in India, which governs the
sport, has already earned about $2 billion from selling
media rights for 10 years and from franchise fees.
The
eight teams—or franchises—have, in turn, contracted
players at huge salaries. Ishant Sharma, a 19-year-old
from
New Delhi,
will earn $1 million a year, or $2,500 for every ball
that he may end up bowling at a batsman.
How good
is the money, really? Ask Paul Collingwood, the captain
of the English cricket team for one-day matches who
can’t play because of the England Board’s restrictions.
Parker’s
equation
“I’d be
lying if I said I hadn’t thought about the IPL,”
Collingwood told the Sun newspaper. “If you had the
chance to earn four times your normal money in the next
six weeks, would you take it?”
Collingwood is perhaps being forced to pass up as much
as $640,000, according to a report by David Parker, an
analyst at Frontier Economics. Parker has worked out a
regression equation, which he claims predicts as much as
72 percent of the amount that players ultimately
commanded at the Indian auction.
Among
the variables that can’t be modeled is “marketing
value,” which probably explains why Australian cricketer
Andrew Symonds, who recently made headlines after
accusing an Indian player of racism, got a $1.35-million
bid, more than double the amount predicted by Parker’s
equation.
Whether
teams end up making a profit will depend partly on
sustaining the initial enthusiasm shown by television
audiences.
Google
trends
The
other determinant will be the price at which a young,
unproven player, bought on the cheap, can be flipped
over to another team. That market will take time to
develop.
We don’t
yet have a measure of the IPL’s potential as a business.
There is, however, a rough gauge of its popularity. I
took the help of Google Trends to rank the web searches
globally in the past 30 days on four words: “IPL,” “Obama,”
“Clinton” and “Tibet.”
The
Indian league was trailing the others until last week;
and now—after the start of the series—it’s a very close
second to Barack Obama, the Democratic US presidential
hopeful. The Redskin cheerleaders, who are auditioning
girls in India to set up a permanent local presence, may
be on to a good thing. |
