Efficiency of Sports Leagues – The Economic Implications of Having Two Leagues in the Indian Cricket Market

ARUN VIG

MBA

Efficiency of Sports Leagues – The Economic Implications of Having Two Leagues 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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I wish to thank them for their invaluable support and assistance. without them this MBA would not have been a satisfying and rewarding experience.P. My sincere gratitude goes out to everyone in the MBA class of 2008. First of all I would like to thank my supervisor. Robert Hoffmann for taking the time to counsel and guide me while arranging this trip to China. 3 .Acknowledgements This dissertation would not have been possible without the help of a considerable number of people. Their encouragement towards my MBA has brought me immense joy in completing my dissertation. 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. I am truly appreciative and indebted to C. Dr. Finally I would like to thank my parents for supporting and believing in me.

3.2 PRIMARY SOURCE OF DATA 24 25 25 26 27 28 29 30 CHAPTER IV: CASE STUDY 32 4.3 CONDUCT OF THE LEAGUES 4.4 PERFORMANCE OF THE LEAGUES 32 33 34 36 37 40 42 45 4 .1.3 CONDUCTING THE RESEARCH 3.2 THE INDIAN PREMIER LEAGUE 4.2 INDIAN PREMIER LEAGUE .1.2 SECONDARY DATA 3.1 CASE STUDY APPROACH 3.1 INDIAN CRICKET LEAGUE .1 SECONDARY DATA SOURCES 3.1.1 PRIMARY DATA 3.1 PRIMARY AND SECONDARY DATA 3.1 CRICKET: AN OVERVIEW 8 CHAPTER II: LITERATURE REVIEW 10 2.Contents CHAPTER I: INTRODUCTION 6 1.1 MARKET STRUCTURE 2.1 THE INDIAN CRICKET LEAGUE 4.3 MARKET PERFORMANCE 2.2.1 STRUCTURE-CONDUCT-PERFORMANCE PARADIGM 2.2 MARKET STRUCTURE 4.1 CRICKET IN INDIA 4.1.1.2.1.BACKGROUND 4.1.2.2 FORMULATING THE RESEARCH QUESTION AND DESIGN 3.BACKGROUND 4.2 CONCLUSION 10 11 17 21 23 CHAPTER III: RESEARCH METHODOLOGY 24 3.2 FIRM CONDUCT 2.3.

4 MONOPOLY 47 48 48 49 51 53 CHAPTER VI: CONCLUSIONS AND RECOMMENDATIONS 56 6.5 LIMITATIONS OF THE STUDY 6.1 THE INDIAN CRICKET LEAGUE 6.1 PERFECT COMPETITION 5.2 SCENARIO 2 (WITHOUT THE BAN ON ICL PLAYERS) 5.3.3.2 THE INDIAN PREMIER LEAGUE 6.6 CONCLUSION 56 57 58 58 59 59 CHAPTER VII: BIBLIOGRAPHY 60 CHAPTER VIII: APPENDIX 65 APPENDIX 1 FORMS OF INTERNATIONAL CRICKET APPENDIX 2 APPENDIX 3 APPENDIX 4 APPENDIX 5 65 65 67 68 69 71 5 .3 OLIGOPOLY 5.2 MONOPOLISTIC COMPETITION 5.1 SCENARIO 1 (WITH BAN ON ICL PLAYERS) 5.3 THE BOARD OF CONTROL FOR CRICKET IN INDIA 6.4 THE CRICKET FANS 6.CHAPTER V: ANALYSIS AND DISCUSSION 47 5.

Chapter I: Introduction In today’s busy and hectic lifestyle. The English Premier League signed a three year $2. For example the acquisitions of Chelsea. But recently in India two leagues for cricket were introduced. in Europe and UK it is Football (soccer).7 billion television broadcast deal with BSkyB.5 billion from its broadcasting rights (Spiegel. sport’s has become a major part of people’s lives because it provides entertainment and excitement. the biggest sports market in the world. Manchester United. the Indian Premier League (IPL) and the Indian Cricket League (ICL). There are numerous sports that are popular in different parts of the world. Worldwide more and more money is being invested in sports teams and leagues. In the United States. American sports like (American) Football. American Football has one league called the National Football League (NFL). in international sports the feeling of belonging is towards the country. Basketball and Ice Hockey do not have an international version of the sport. In the United States the National Football League earns $3. In the USA. 6 . All these popular sports have one thing in common: they all are team sports. while in league sports it’s towards the city/state. generally there is only one major/premier league in every sport. in the Indian sub-continent and Australia it is Cricket that attracts the largest crowds. for Baseball it is Major League Baseball (MLB) and for Ice Hockey it is National Hockey League (NHL). If we study professional sporting leagues around the world. Football is one sport that is popular as an international sports as well as a league sport. for Basketball it is National Basketball Association (NBA). Liverpool and Manchester City football clubs in the United Kingdom. Baseball. 2008). Team sports gives a feeling of belonging to the spectators. American Football is the most popular sport. On the other hand Cricket is mostly popular as an international sport. In the UK. even if they do (basketball) it’s not as popular as the domestic league version. smaller leagues exist but they are usually inferior to the major or premier league (vertically aligned).

To allow for comparison. from an economic perspective. more specifically to study the professional sports leagues across the world. to have two leagues in the Indian Cricket Market? • 7 .1 English Premier League Major League Baseball English League Championship Triple 'A' League English League One Double 'A' League Indian Premier League Indian Cricket League English League Two Class 'A' Advanced League English Conference English Football Class 'A' League American Baseball Indian Cricket The purpose of this dissertation is to look at the unique nature of the economics of sports.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. both these leagues are at the same level (horizontally aligned). American Baseball and Indian Cricket: Figure 1.1) of league structures in English Football. the Indian Premier League (IPL) and the Indian Cricket League (ICL). below is a graphical representation (figure 1. In particular. 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. the main research question addressed will be as follows: Is it efficient.

only behind football (Doley. Cricket does not have rules that players follow. Cricket is mainly played by the British Commonwealth nations including UK. Currently there are three main forms of international cricket being played around the world that have been approved by the ICC and include Test Cricket. cricket is more than a game. the case study on the IPL and ICL will be presented in its current scenario. where various different scenarios in the Indian Cricket Market will be explored. 1. The author will specifically focus on the literature written around the economics of professional sports leagues. Test Cricket is played over five days and is considered the traditional form of the game. Pakistan. 2008). 8 .1 Cricket: An Overview Cricket originated in England during the 16th century and has since spread its popularity all over the world. These laws were formulated over 250 years ago by the Marylebone Cricket Club (MCC). 2008). In chapter IV. In Chapter V the author will deal with the analysis and discussion of the case study. One Day Cricket and Twent20 Cricket. In the Indian subcontinent. Sri Lanka and Bangladesh. The MCC is only concerned with the laws of cricket. (Refer to Appendix 1 for an explanation of the various forms of international cricket).The dissertation begins by providing the reader with a brief history on cricket in Chapter I. it has laws. the International Cricket Council (ICC) is the international governing body of Cricket and is responsible for organising all international cricket tournaments. it is a religion for the fans in India. and since then the MCC has been the sole authority overlooking the laws (Marylebone Cricket Club. It is the second most popular sport globally. Unlike other sports. The last chapter will include the conclusions and recommendations generated from the analysis and discussion. South Africa and West Indies. Test cricket is still very popular among the traditionalists and the diehard cricket fans. Australia. New Zealand. Chapter II includes a literature review on the economics of sports which would be structured around the Structure-Conduct-Performance (S-C-P) paradigm. The third chapter outlines the research methodology used in this dissertation. including the Cricket World Cup.

faced with decreasing spectators. but since this format was fast paced. 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. an Australian media tycoon and owner of the ‘Nine’ Television Network in Australia.In the 1970’s a shorter version of the game came into existence. the ICC decided to organise a Twenty20 World Cup in 2007. Before One Day cricket. the crowds were attracted towards it. The England and Wales Cricket Board (ECB). As a result in 2003. This version was an instant hit with the spectators and the crowds returned to the stadiums. it offers more and faster action in less time. which can be completed in one day and is therefore called One Day Cricket. Since the acceptance of the One Day Cricket format. exciting and a result was guaranteed unlike test cricket (where a match can end with a draw after five days). decided to shorten the One Day version of cricket to get it in line with other sports such as football. This format was further made popular by Kerry Packer. making it one of the most highly watched events in the world (Mitra. Spotting the commercial potential behind Twenty20 cricket. It was an immediate success among the audience with the viewership of the finals at around 1 billion people. 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. which is played every four years. the ICC has organised a Cricket World Cup. Initially the One Day Cricket format was rebuked by majority of the cricketing world. 9 . 2008). the ECB introduced Twenty20 cricket.

e. the competitive environmental features of the market (Hoffmann. which in turn depends on the market structure. 2. Labour and Capital). It states that performance of an industry is based on the conduct of firms operating in the industry. According to Hoffmann (2007) “firms are stewards of society’s resources”. Firms are entrusted with the responsibility to ensure that the society gets returns on the productive resources provided by them. change in one give rise to a change in another thing. 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. i. The relation between S (market structure) – C (firm conduct) – P (market performance) is unidirectional. i. A firm transforms factors of production into marketable products which are sold to consumers for financial returns. 10 . ‘The Organization of Sports Leagues’ by Roger Noll and ‘The Economics of Professional Football: The Football Club as a Utility Maximiser’ by Peter Sloane. 2002). moving in one direction from S -> C -> P and causal. 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. S-C-P suggests that efficiency of firms is related to the structure of the market it operates in. Land.e. 2007). The structure of an industry determines the conduct of the firms in that industry and which in turn determines the industry performance (Douma & Schreuder.e.1 Structure-Conduct-Performance Paradigm Economists are concerned with the issue of efficient use of society’s factors of production (i. A very useful tool in understanding the efficiency of firms is the Structure-Conduct-Performance (S-C-P) paradigm. Several main papers on economics of sports will be analysed. i.e. The financial returns are important to a firm because they are used to pay for the usage of the factors of production.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.

1. it only states the how competitive is the fixed environment that surrounds the firm. He used the example of large scale enterprises and their pricing & production policies stating that the size of firm influences its competitive policies in multiple ways. These range from the very competitive ‘Perfect Competition’ model to the least competitive model 11 . how conducive is that environment for competition. whose competitiveness is determined by their structural characteristics. 2. The structure does not say how hard the firms are competing.Figure 2. This means that firms exist in certain markets. Bain (1951) improved upon this concept by using a case study on the American Manufacturing industry.1 Market Structure Market Structure is the competitive environment of the firm.1: Graphical overview on Structure-Conduct-Performance S (Market Structure) The Competitive environment of the Firm (Source: Hoffmann. 2007) C (Firm Conduct) The behaviour of Firms P (Market Performance) The efficiency of the Market The following sections will explore various papers on the economics of sports according to their relevance to the different sections of the S-C-P paradigm. Market structure is the most important aspect of Industrial Economics because it eventually determines how well markets perform. He introduced the idea of four types of market structures (competitive environment) within which a firm can operate. It is the fixed environment firms operate in and it establishes the level of competition in a particular industry Mason (1939) had first put forward the idea of linking market structure with competitive environments.

which is to maximize their own individual profits.‘Monopoly’. The market power increases in the hands of the firms. 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.2) is a representation of the four types of market environment along with their characteristics: Figure 2. 2007) Many Small No No Monopolistic Competition Many Small Some Some Oligopoly Monopoly Few Large Significant Depends One Very Large Prohibitive N. giving them the ability to control prices. Rottenberg (1956) referring to the baseball league as ‘a collusive combination’ infers that leagues have an oligopolistic market structure. 1969). But also notes that joint profits will lead to a conflict with the goals of the clubs. decreasing competition Perfect Competition Number of Firms Firm Size Entry Barriers Product Differentiation (Source: Hoffmann. Below (figure 2. 2003). He was one the pioneers in the ‘peculiar’ economics of sports stating that sports leagues are natural monopolies. 12 . Kahn 2003 and Noll. 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). Various other authors have confirmed Neale’s views that sports leagues are natural monopolies (Flynn & Gilbert 2001. Moving from left to right.A. this means that the market power is being concentrated in the hands of fewer and fewer number of firms. Neale (1964) presents various economic implications of structural aspects of the markets in which professional sports leagues operate.2: Increasing concentration and market power. the market structure get more and more concentrated.

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. 2003). This challenges Neale’s (1964) ‘Louis-Schmeling Paradox’ 13 . He discovered that ‘no entrant has survived as an independent entity since the 1950’s’. If there are a number of leagues at the same level in a sport. which is equivalent to the Champions League in football. start-up leagues either merged with the dominant league or ceased to exist. One can refer to Cairns (1990) and Dobson and Goddard (2001) for further surveys of research on the demand for sports. the most important demand factor in sport is the significance of contest with respect to a championship. Therefore in American Baseball even though there are two leagues – American League and National League. this evidence is consistent with the hypothesis that a major league is a natural monopoly” (Noll. there would not be a possibility for a national champion. Thus. 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. Borland and Macdonald (2003) have studied the demand for sport and conclude that among other factors. He says even though the National League and American League do not have central management. leading to one champion of champions at the end of the season. champions from both the leagues come together to compete for the World Series of Baseball. even though the outcome of the latter game is more uncertain” (Noll. he states that “a team that has dropped out of contentions for a championship will generally draw poorly. 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. 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. they should treated as one because both come together at the end of the season to play in the World Series. 2003). Noll (2003) points out an interesting fact about demand for league sports. “No league that has been formed since 1972 has succeeded in placing even one team in the incumbent league. 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.

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. They add that to produce a product which is commercially attractive to the media. 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. transfer of team ownership or location and the financial and legal requirements for team ownership. 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. Another reason is that the most prestigious professional leagues which are called ‘major’.where the author states that demand for competition will decrease if the spectators can predict the outcome of the game. ‘premier’ or ‘first-division’ leagues are almost always monopolies. • 14 . 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.

• Players of the member teams: includes the eligibility. financing and rules applicable to team executives. determining the method for league champion and where and when to schedule the games. National Basketball Association (NBA). Flynn and Gilbert (2001) comment that member club in these leagues share income from national media contracts. intellectual property rights and the arrangement of sharing revenues among member clubs. While a single entity leagues is where teams are owned by a single economic entity which is the league itself. the National Hockey League (NHL) and the National Football League (NFL) are all governed under the joint venture organisational form. 2003). Noll (2003) confirms the fact that there are two possible from of organisational forms for leagues. • Other inputs to the production of the joint venture: covers stadium standards.• Governance of the professional sports league: covers the constitution. drafting. He says with regards to joint ventures “Member teams are independently owned and managed. teams are owned by separate economic entities and come together to form a league. transfers. Flynn and Gilbert (2001) state under joint ventures. but are operating divisions of the league” (Noll. teams are not independent organisations. licences to league name logos and other 15 . • Production of the product of the league: includes the rules for the competition. and collectively create the league as a joint venture for coordinating their league activities” (Noll. compensation and collective bargaining of players. Joint Ventures versus Single Entity ownership In the United States Major League Baseball (MLB). 2003). • Marketing of the products: covers the sale of broadcasting rights. voting and commissioner of the league. Further adding with regards to single entities “in these leagues. construction. Generally there are two organisational forms for professional sports leagues – joint ventures and single entities. bylaws.

American Basketball League (defunct) and the Women’s Professional Soccer league to confirm this trend. sponsors and trading players. NBA and NHL in antitrust controversies. A single entity league in theory should be able to achieve optimal resource utilization by simply allocating inputs like players. Flynn and Gilbert (2001) say that the trend is moving towards establishing single entity leagues because of the various cases of the NFL. a team manager gathers additional information about players and coaches that is not known to the centralised managers. Players) is carried out fairly by the league. coaches. 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. 3. NBA. In the course of day-to-day management. NHL and NFL where player contracts are held by the franchises. managers and stadiums to each team. in the MLS the player contracts are owned by the league itself. 2. They cite examples of the Women’s National Basketball Association (WNBA). Moral hazard problems also need to be controlled. Noll (2003) points out that a single entity league will only work if: 1.properties. this asymmetric information leads to sub-optimal resource allocation. Major League Soccer (MLS) is the exception in the American professional sports league industry because it is organised as a single entity ownership. gate receipts. 16 . Noll (2003) states the most important differences between the two organisational forms are the issues of resource allocation and league membership. Fans believe that the allocation of resources (esp. Centralised managers should not have asymmetric information with regards to team managers. Or the league could manipulate manager incentives and exercise firm budget controls for optimal resource utilization. The clubs also generate income on their own through merchandising. Unlike the MLB.

while economic competition is between the franchises running the business. 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. 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. Sporting competition and economic competition are not the same. This will lead to the product (competition) of a joint venture being more attractive than the equivalent product produced by the single entity. high price or low price.2 Firm Conduct Conduct of firms helps us understand how firm behave in their market environment (structure). Sporting competition is the on-field contest that franchises participate under. therefore pricing is the most important factor in determining firm conduct. Advertising also creates artificial demand which leads consumers to miss allocate their budget.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. uncertainty is what drives the revenues for the franchises.1. Neale (1964) presents the ‘Louis-Schmelling’ paradox which helps us understand the difference between sporting competition and economic competition. pricing has huge implications on consumers and on efficiency of firms. advertising. 2. In professional sports. Conduct can be determined in terms of how a firms pricing. The third most important variable in firms conduct is. Franchises produce a joint product therefore “greater the economic collusion 17 . 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. Economics of sports is a unique subject because revenues of franchise/teams depend on sporting competition and not on economic competition.

and the more the sporting competition the greater the profits” (Neale. “the theoretical conclusion is clear: each professional league is a natural monopoly.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. Once having realised that a league is a firm. 1964). schedules. 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. each of which can be and is sold separately. Using the case of American Baseball League he explains that there is a need for an organizing body. and this firm is necessarily an all-embracing firm or natural monopoly” (Neale. economic competition is restricted by the joint product . but it is also a joint and multiple yet indivisible product” (Neale. A league as a multi-plant. The several joint products which are products joint of legally separate business firms are really the complex joint products of one firm. 1964). Neale (1964) calls this phenomenon . The sporting firms produce an indivisible product from the separate process of two or more firms (in law). Sloane (1971) acknowledges this paradox is also experienced by the English Football Leagues. lays down rules for various aspects of competition. where all the franchises are affected by the decisions engaged and execute at the league level. Stating that. 18 . number of teams participating in the league. total wage bills.the spatial distribution of clubs and temporal distribution of matches. entry and exit into the league amongst various other matters. 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. 1964). As a consequence from an economic stand point the league should be the firm rather than the franchise/team. that manages a league. A league should be considered as a firm because franchises have to work together to produce competitive matches and in turn a feasible league. that the league should be treated as the firm rather than the franchise is questioned by Sloane (1971). start and end of season. Neale’s conclusion. But the product itself is a peculiar mixture: it comes divisible into parts. player transfers.

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. Sloane would much rather treat the league as a cartel rather than a firm because in cartels. 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. But the league determines the output of all the firms but fixing the number of games played by every team in the league. training players. which makes running a single league more efficient. Cost Factors Neale (1964) says that there are two cost elements associated with sports leagues: 1.they are free to conduct their own economic activities like developing stadiums. Their stated target is to make their clubs the best on field. owners for both the clubs have poured in millions of pounds to purchase the best football talent available. Quasi-rent for the players because the team pays for the ‘unreproducible’ talent of the player. 19 . 1971). which can be put in conventional analytical framework. not in the accounting books. 2. This is not applicable universally. firms collude. much like teams collude in leagues. Fixed costs include interest or rent on the capital for the stadium and also include the cost of equipment and transportation. Economists promote competition between firms because it is said to improve efficiency. The demand and costs factors of the professional sports league market do not make it conducive to have leagues compete against each other. 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. competition between leagues dose not lead to efficient use of resources. etc. Does competition between leagues also promote efficiency? According to Neale (1964) the answer is no. As mentioned earlier there is a natural monopoly created.

but this increase in costs would negated the ‘enthusiasm effect’. Citing the example of sporting leagues in both the US and 20 . which will naturally raise the player wages (increase costs for teams). This will increase the supply of players to all the levels of the sport. For media companies like televisions and newspapers the indirect utility is a source of income and indirect effect helps sell the utility.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). Demand Factors According to Neale (1964) there are a number of utilities created by sports teams. 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). Naturally. closer the competition and league standings higher will be the indirect effect. including the professional level in the long run. When there is only one league. it would lead to higher player bargaining power regarding their wages because team would not have the monopoly power when buying playing services. For example. public interest or enthusiasm will give confidence to more individuals to take up playing the sport. 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. Neale (1964) adds if there are two rival leagues in the same sport. He goes on to explain that the enthusiasm effect is when the scale of the sport increases. There is indirect utility created for people who follow the league tables. utility for – spectators who go to the stadium to watch the match and also for people following the game on television. But there can be no restriction if teams from different leagues bid for the same players. players have to negotiate directly with the teams because usually there is some kind of restriction on member teams bidding for the same player.

High profits mean that something (e.g. Kahn (2003) also has similar views on monopoly leagues. 2003).UK market he states that leagues take advantage of collective bargaining power to benefit while selling the national broadcast rights. entry barriers) is preventing new firms from 21 . market by definite peculiarities both in the structure and in the functioning of their markets” (Neale. Therefore. 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. the most commonly used and easily available data is for profits. fans in inframarginal locations will view lower quality sports entertainment as a sports league expands. By restricting membership to a league. This can include any variable relevant to the industry. 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. Monopoly leagues can also enforce restriction on member teams with regards to competition for players. Kahn (2003) concludes his paper by saying “as a sports league expands the average quality of playing talent on the field falls. Economists look at various variable of an industry to determine the efficiency of the market. the value of the existing franchises can be enhanced. The consequences of such expansions depend on the size of these losses relative to the gains the fans in new locations will realize” (Kahn. it will help improve the utility of sports fans in the city because earlier they had no live access to sports. which means resources are not used efficiently. 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.3 Market Performance Market Performance refers to the performance of the industry/market and not the individual performance of the firm. high profits are a negative for efficiency of industry because it leads to firms being uncompetitive. 2. it means the performance of the market as a whole. all else equal. 2003). 1964). “It is clear that professional sports are a natural monopoly. Performance does not mean the financial situation of a firm.1.

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.

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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.

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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.

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1.1 Primary Data There are two methods of collecting primary data – passive and active. Qualitative research is a comprehensive analysis of a few elements and often involves less structured observation or questioning of the participants. Manual 25 . by personal or non-personal ways. Care should be taken to distinguish between quantitative and qualitative research.1. The passive method includes studying characteristics of the factors under study. The researcher will benefit by looking at existing sources of data because it could lead them to uncovering related research and their research methodologies. Ticehurst and Veal (2000) state that there are two way of collecting secondary data – manual and online methods. 1999). 1999)) 3.2 Secondary Data According to Ticehurst and Veal (2000) secondary data is important in type of research undertaking. Table 3.1: Research Method Qualitative Tools: • • Personal in-depth interviews Focus groups The researcher is able to reach The researcher may have a out to a large sample of data problem if the response is poor Pros Cons Quantitative Tools: • • • • • • Telephonic interviews Personal interviews Mail interviews E-mail surveys Internet surveys Fax surveys The researcher can get the The participants may not be exact data for the required able to fully understand the information questions in a survey The researcher has full control Could be expensive and a long over the questions and design drawn process for the of the research researcher (Source: (Davis. 1999).3. often includes the use of numbers and statistics (Davis. While quantitative research involves the utilization of samples and very structured survey. Secondary data is when information collected for other research purposes is used in your research project. Active methods include questioning the participants through personal or non-personal ways (Davis.

government. financial releases and various publications released by the organisation. External sources include: research reports. directories. Pros Cons Manual Tools: • Internal source include: press releases.methods consist of reports. Internal data can be acquired from newsletter. trade associations. indexes. • Accuracy of the data collected cannot be verified because the researcher is not sure of the process of data collection 3. financial reports. etc. press releases. cheaper collecting primary data than Obtaining data from commercial sources many involve higher costs and maybe difficult to acquire. trade association newsletter. financial reports. There are two sources from where secondary data can be collected – internal and external. External data sources are unlimited and can include data published by universities. Table 3. more specifically it explores the economic implications of two leagues coexisting together in same sport. The researcher is able to save The obtained data may not a lot of time because the data have been collected for the same purpose as the is already available researchers Normally. etc. Davis (1999) lists various sources of internal and external data. etc. etc. newsletters. equity research reports. The author has chosen 26 . Online methods consist of data that can be obtained from the internet.2: Research Method Online Tools: • • • • • Internet Government websites University websites Newspaper/ Magazine websites Etc.2 Formulating the research question and design This dissertation looks at the economics of professional sports leagues. Internal data is provided by from the firm or organisation and external data is anything other than information from the firm or organisation. guides. government.

2005). Firstly the kind of research question can led to different directions. Miles and Huberman (1994) note. which were then narrowed down to more precise one following the literature review. Subsequent to this initial interest. but a small amount of quantitative research was also considered. in recent times spectator interest in sports has grown exponentially leading to large investments in the business of sports.to focus on this topic because of his strong interest in cricket. According to Yin (1994) one needs to consider three factors to appropriately select the type of research methodology. the existence of two major/premier leagues is very rare. 3. In addition. Both these factors fuelled the author’s desire to undertake this topic for his dissertation. According to Flick (2005) Qualitative research is to assess new ideas and to build empirically grounded theories based on them. various questions for research were formulated. He adds 27 . Also. In qualitative research one aims to “prove existing propositions by testing a hypothesis or an already known theory” (Silverman. The recent launch of two separate cricket leagues in India is an extraordinary event in the world of professional sports leagues. researchers have been using more of qualitative research as they are dissatisfied with the results of quantitative research. 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. If one considers various sports leagues across the world. Taking into account the fact that the research purpose was to look at the economic implications of the existence of two professional sports leagues. 1994).1 Case Study Approach A research approach is important as it will clearly outline the choice of the research tools required for this dissertation. the author considered majority of his research would focus on the qualitative approach. Once the main questions were defined it was important to choose a suitable way to tackle them in a structured manner.2. 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.

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 28 . 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. 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. the case study. “who”. like the experiment. While the research questions which have “what”. “how much” and “how many” are appropriate for statistical research and surveys.research questions which have “why” and “how” are appropriate for experiments and case studies. and the investigator’s goal is to expand and generalise theories and not to enumerate frequencies” (Yin. But there are some limitations to a case study approach. like experiments. 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. 1994). In this sense. Historical research is better suited to from researchers who have no access or control over events.3 Conducting the research The author used a combination of sources for collecting the data required for answering the research question of this dissertation. This dissertation is using the case study approach also because the focus is on current events as opposed to past ones. This is highlighted by the fact that the Board of Control for Cricket in India (BCCI) currently does not have its own website. 1994). does not represent a sample. “where”. are generalisable to theoretical propositions and not to populations or universes. An experiment can be looked at if the researcher has the chance to directly manipulate the behaviour of events. While a case study is more useful for the assessment of contemporary events. 3. “Case studies. The author wants to present an analysis that is inclusive rather than reductive therefore has chosen the case study approach. Various cricket journalists and writers have complained about such lack. Collecting any kind of internal data on the Indian Cricket market is quite difficult.

in the official website for the Indian Cricket League • • 29 . therefore there are no published financial results for both the leagues. A survey on the popularity between the IPL and ICL were also conducted to complement the data.cricinfo. 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).com the official website for the Indian Premier League www. published comments from cricket experts. 2008). Website The premier website for collecting any kind of data related to cricket is: www.iplt20.1 Secondary data sources Below is a list of the main sources of data collected and analysed for the dissertation. articles and has a complete record of all cricketing history from the 18th century to the present (for further information please refer: Appendix 5). since both the leagues were launched in 2007 and the financial year has not yet come to a close. Also. The website is the largest cricket related website in the world with a user base of 20 million people. Other websites include: www.org. It publishes all kinds of interviews with cricket officials. Equity research and Media research companies in India. 3. As a result. The author also acquired research reports on the Indian Cricket Market from top Broking.3. published interviews from IPL and ICL officials. the author used to secondary sources of data collection such as websites. the author decided to rely on data provided by several interviews and commentary given in specialised Cricket publications. In particular. newspaper and magazine articles. news.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.indiancricketleague.

2 Primary source of data The author conducted a short survey on the popularity between the IPL and ICL. The survey was conducted on the internet and the link was sent out to the participants to answer the questionnaire.1% 28 Twenty20 12.2% 4 One Day International 57.3: 1. Alchemy Share Brokers has researched the Indian Cricket market and forecasted expected returns for the IPL. 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. Below is a summary of the responses to the survey: Table 3. 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.3. to measure the performance of the leagues. Business Head for the ICL gave an interview to Indiantelevision. TAM Media research has published reports on the television viewership data for the IPL and the ICL. Modi gave another interview to. Himanshu Mody. IPL Chairman & Commissioner gave an interview on the success of the IPL’s first season and the future of Indian Cricket. on the future plans of the IPL. Ajay Shankar of Cricinfo. This survey was formulated around one of Sloane’s (1971) utility maximising factors – Attendance / Television Viewership.2% 4 Test Match 8.2% 6 Depends 14. 3. Which format of cricket do you prefer? Response Percent Response Count 8.3% 7 None 30 . The interview was conducted by Joe Leahy from the Financial Times.Interviews Lalit Modi.com on the current situation of the ICL and also provided the outlook on ICL’s future. 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.

1% 3 Indian Cricket League 59.0% 16 Can’t Say The snapshots of the above survey can be found in Appendix 4.6% 14 Can’t Say Table 3.1% 3 None 28.7: 5.0% 15 Can’t Say Table 3. This concludes the chapter.5% Indian Cricket League 68.0% 4 None 32.3% Both Response Count 2 30 12 Table 3.Table 3.2% Indian Premier League 27.0 % 18 Indian Cricket League 24.0% 3 None 30.0 % 2 Indian Cricket League 60.4: 2.0% 12 Indian Premier League 8.2% 29 Indian Premier League 6. Which league provides better entertainment? (other than cricket) Response Percent Response Count 4. Which league do you watch/support? Response Percent 4. Which league gives opportunities to players who have not played international cricket? Response Percent Response Count 36.5: 3.6: 4. The next chapter will discuss the case study of the Indian Cricket Market. Which league has better quality of cricket? Response Percent Response Count 6.0% 30 Indian Premier League 6. 31 .

4. Since the BCCI is a 32 .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.cricinfo. Below are all the tournaments and competitions that the BCCI controls in India: Figure 4.1: BCCI International Cricket Indian Premier League Ranji Trophy Irani Trophy Duleep Trophy Deodhar Trophy Challenger Series Source: Data www. the author will use the framework of the Structure-Conduct-Performance paradigm to present the case study. The BCCI uses these tournaments to assess player performances and select them for representing the national team.Chapter IV: Case Study This chapter will describe in detail the current market scenario of Indian Cricket.org The BCCI comprises 27 state cricket associations that elect the BCCI officials through a ballot system (Cricinfo. The BCCI runs a number of domestic tournaments. The BCCI is also responsible for representing India at the International Cricket Council (ICC). 2008). These state associations select players / teams that participate in the BCCI run domestic tournaments. 2008). which is the international governing body of Cricket. which act as a development ground for young players.

1. officials and players to represent India in international tournaments. Since the BCCI is 33 . Frustrated over its numerous unsuccessful bids for television rights.ICL FAQ. 2008). the BCCI (controls all cricketing activities in India) has not sanction the league and called it an unofficial league. The Indian Cricket League (ICL) is a private cricket league promoted by Zee Telefilms. 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. To date the ICL has held four tournaments as compared to IPL’s one tournament. Zee Television decided to launch the ICL. The huge potential benefits to be gained by marketing a new and exciting format of cricket to the Indian market. Himanshu Mody. As the ICL is promoted by a private body.Background The ICL’s mission statement “is to create a pool of high quality ideal cricketers with killer instinct needed to be champions. Unsatisfied by the efforts of the BCCI to develop cricket at the grass root level. it has the right to select umpires.1 Indian Cricket League . confirms such statement by adding that “They denied us the cricket content. 2008). Additional reasons to launch the ICL were: 1. so we had to create our own” (The Asian Today. Business Head for the ICL. The ICL signed up some international cricket starts like Brian Lara. 4. etc for the league which initially comprised of 6 teams. 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 . 2008). 2008). 2.member of the ICC. Zee wanted to create its own cricket content. This group of players should be able to perform under the pressures of international cricket and make India a champion side” (Indian Cricket League.ICL FAQ. Currently the ICL has 8 teams participating for a prize of $1 million. Shane Bond. “The roots of the ICL lie in the same issue as those of Kerry Packer's World Series Cricket: discontent over TV rights” (Cricinfo .

Using its influence the BCCI has also managed to get support of the other international cricket boards (Australia. The idea is to have industry leaders. 2008). the ICL have always assured the BCCI that it is free to select players that play in the ICL. For their part. celebrities and 34 .Background With the resounding success of the Twenty20 format. Sri Lanka and Bangladesh) in banning their players from International cricket if they played for the ICL. Pakistan. The IPL initiative is different because it is the first league in India that has brought significant external participation into its management. Following these restrictive trade practices the ICL has taken the BCCI to court. The railway minister also suggested that the BCCI and ICL should fight on the cricket field and not in court. 2007). where the matter is still pending. Another reason for the IPL launch was to counter the threat from the ICL which was started by Zee Telefilms.2 Indian Premier League .1. Since India is the largest market for cricket globally. 4. The BCCI has also prevented the ICL from hiring state owned stadiums to play their league matches. 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. South Africa.responsible for all cricketing activities in India. Both the parties should work together to promote cricket in the country (PTI. the BCCI is the most influential cricket authority in world cricket. 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. the BCCI also selects the players that represent the Indian National team. 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.016 million (Alchemy. The BCCI sold the televisions broadcast rights for the IPL for $1. Therefore the BCCI is in a position to ban cricketers participating in the ICL from playing international cricket.

In January 2008. 10 million international viewers. The IPL has been a success with the audience because of the following aspects: 35 . Various sources have said that the IPL was a resounding success. 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. all the eight franchises have spent huge sums of money to acquire the best talent available around the world. One of the main reasons being attributed to the success of the IPL is the participation of the top international players (Mitra. In April 2008 the first IPL tournament was held over 44 days which provided non-stop entertainment. 2008). home and away. each team plays the other twice. 2008). with Arnab Mitra of India Infoline saying “Over 200 million Indian viewers. Advertising revenue and ticket sales have exceeded all expectations. surpassing all records of viewership on ground and on media. Break-up of amounts paid for each city franchise). excitement and fast paced cricket. 2007) (refer: Appendix 2 List of franchise owners). To ensure that they have competitive teams.6 million and $3. which means a minimum of seven home games per season for every 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.5 million (refer: Appendix 2.6 million on players (refer: Appendix 3: Total amount spent by each franchise on its players). As all the franchises are guaranteed to play the full league season. Currently.companies to bid for city franchises that would compete against each other in the Twenty20 format (BCCI. broadcasters and successful team owners” (Mitra. the BCCI auctioned the eight city franchises for a total of $723. The IPL is a Twenty20 cricket tournament formed by the BCCI and sanctioned by the ICC. The franchises spent between $6. 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. making IPL highly profitable for the organisers. 4 million live spectators: the Indian Premier League (IPL) is a sports and entertainment revolution in the making.

which is a dream for any marketing team. Currently there are two cricket leagues in India: 1. 36 . The television viewership for the IPL has been the highest among all programmes in India. To put the IPL success into perspective – according to research the Indian government’s sports budget is $122 million while the overall revenues (Franchises. etc) draws from a larger audience base because even the non-cricket fans are attracted to the league. this will give the working public to watch the game after work. the league has 8 teams playing the round robin format to determine the champion. entry and exit of teams from the league.2 Market Structure In the following section. the IPL matches will be played at night. the author will look at the competitive structure of the Indian Cricket Market. Broadcasters.Zee Telefilms. The strong viewership numbers combined with excitement created by the IPL proves that the first season was a resounding success. As mentioned earlier. the BCCI has contracted the leading domestic and international cricketers to play in the IPL. The evening time is also the peak viewership time in India. Since the league is a single entity league all the decisions are taken by the league with regards to number of teams. The Indian Cricket League: is based on the single entity ownership style. The League is owned and controlled by one entity . BCCI) of the IPL for the year are $300 million. with an average TRP of 7 (Mitra. • Appearance: To make the league appealing to the audience. 2008). 4. a media company.• Prime Time: To get the highest number of audience for all the games. All this excitement combined with fast paced cricket and entertainment has lead to a huge audience for the IPL. cheerleaders. • Duration and entertainment: The shorter duration of the game combined with entertainment (music.

To find out which of the two leagues is bigger. with Reliance Industries paying $111. Together. The Indian Premier League: is based on the joint venture ownership style. all the eight IPL 37 . in partnership with Infrastructure Leasing & Finance Services (IL&FS) with an initial investment corpus of $25 million (Cricinfo . 2008). run by the Board of Control for Cricket in India (BCCI). The League. 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.1 The Indian Cricket League • Money invested / generated: Zee Telefilms (Zee) launched the Indian Cricket League (ICL) in April 2007.ICL FAQ. • 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. This initial investment in the ICL is dwarfed when compared to investment made by the IPL franchises. if the league employs more players it will lead to the league have higher number of superstars (Samiuddin. 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 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. The case study does not consider first class cricket played in India as it does not fall under the professional sports league format. auctioned rights to 8 franchises for a 10 year period.2. • Number of players participating in the leagues: Superstar players are the most important draw to a league for the public. 4. 2008). higher the ad revenues for the media company.2. Higher the number of viewers.9 million for the rights for the Mumbai franchise (most expensive IPL franchise).

now the teams can sold at a premium (Mody. but did list various revenue sources for the ICL which include ground sponsorship. revenue numbers for the ICL are not available. 38 . a media company. 2008). then all revenues belong to us. Therefore revenues from sale of television broadcast rights are not included in revenue source for the ICL. in the ICL all the participating teams are owned by one single entity. But it can be estimated that ICL revenues are inferior when compared to IPL revenues because unlike the IPL. Pakistan.com. all the matches played in the ICL are telecasted by the parent company (Zee Telefilms). player wages. Himanshu Mody. USA. We do not have to share them with anybody on a 80:20 or 60:40 basis like in the IPL” (Mody. stadium and infrastructure development are borne by Zee Telefilms the promoter of the ICL. If we incur all costs and do it ourselves. where teams owned by different franchises. 2008). The MLS was also started as a single entity league but later on sold stakes in its teams to various investors. Initially this was not done so as to build value of the teams. Australia and New Zealand. associate sponsorship. We are on track. As the current financial year has not come to a close. This fact of selling skates in a team can be related to the Major League Soccer (MLS) in the United States. Business Head of the ICL states that the league has started to strengthen as more and more tournaments are held.5 million for the right to own a team (refer: Appendix 2). Middle East. In his interview with Indiantelevision. the ICL will be selling stake in its ICL teams. 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.franchises paid $723. Since the ICL is promoted by Zee Telefilms. But Mody (2008) states the ICL earned broadcasting revenues from international television deals as it was broadcasted in various overseas countries including UK. Therefore all the expenses related to marketing the league. ticket sales sponsors. Mody (2008) states that going forward. He declined to talk about financial numbers. advertising revenues and broadband revenues.

We managed an average of 1. Royal Bengal Tigers.5. 2008). Delhi Giants. Amedabad Rockets.5 (TAM Media Research. The teams are based in various cities across India and include Chandigarh Lions. It seems that this strategy is working as “People are supporting the local team. 2008). Mody confirms this by adding “The ratings have exceeded our expectations. then the ICL becomes a strong proposition” (Mody. an average of 17 players per team (Indian Cricket League. which is more than India Test cricket and some One Day International ratings” (Mody. 2008). Mumbai Champs. currently the league has 8 teams with a total of 136 players participating in the league. The worrying factor for the ICL is that “If there is no India cricket in a certain period. 2008). In the final. 2008).Number of players: According to the ICL website. By associating cities with its teams. 2008) Television viewership: According to the Television Audience Measurement (TAM) service in India. the ICL is trying to gain popularity among the local community. Chennai Superstars. Hyderabad Heroes. the average viewership for the ICL over two tournaments was at 1. especially the finals. Kotak Institutional Equities conclude “the modest success of the ICL. At the same time support depends on performance as well. but the TAM ratings for the second ICL tournament were disappointing despite the fact that there was no cricket being played in India. Ratings peaked at 3. Hyderabad Heroes had a lot of local support. 39 . To cash in on the popularity of the India – Pakistan rivalry the ICL also has a team from Pakistan – Lahore Badshahs. 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. which is what has hampered Mumbai” (Mody.5.

“To date we (the Indian Premier League) have made $1. There could be concerns among the franchises about 40 . 2008). Since the IPL is only an administrator that sets the rules and runs the league. 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.1: TAM ratings for the second ICL tournament held in March 2008 Source: (TAM Media Research. it did not require substantial investments.75 billion” (Modi. But in the IPL. paying player wages. Arnab Mitra of IIFL says between organisers. the Indian government had a total sports budget of $11. Indian Premier League rakes in millions from franchise sale. 2008) Legend: L/T – Live Telecast ICL 20-20 CHNG-08 – Indian Cricket League Second Tournament 2008 SF: Semi Finals F: Finals 4.India's cricket board makes a cool billion dollars for doing not much’ (Economist. The teams have their Directors on the Board of the league.3 million (Mitra.Table 4. The franchise owners are responsible for marketing the league. 2008). 2008). Alchemy in its report also stated that the IPL is already a $2 billion property (Alchemy. first the league was formed and then the rights to the franchises were auctioned.2. To put this in perspective. that the IPL will bring approximately $30 million a year into cricket. broadcasters and franchises. According to Lalit Modi. investing in stadiums and infrastructure. IPL Chairman & Commissioner.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 . 2008). The franchises do not have any Directors on the IPL Board.

$71 million • • • Number of players: According to the IPL website. In his interview with Cricinfo. We will ensure we work with our partners and that's what my job is” (Modi. 2008). my city' is 41 .NA Events – NA • • • • • • He further adds the annual revenue stream for the IPL: Central Sponsors .$38 million In-stadia advertisers . the league has 8 teams with the league currently has 191 players participating in the league. Kings XI Punjab. Deccan Chargers (Hyderabad). Mumbai Indians and Rajasthan Royals. We are all on the same side. IPL Chairman and Commissioner address this fact by stating “There is no need for concern.$40 million Merchandise . Like the ICL. Again similar to the ICL the IPL wants to gain popularity by promoting its franchises as part of the local community. Lalit Modi. the IPL teams are city based and include the Bangalore Royal Challengers. “My team. an average of 24 players per team (Indian Premier League. It's not us against them. 2008).working with each other as they have no representation on the IPL Board.$95 million Team Sponsors . Arnab Mitra of India Infoline states that the IPL franchises will earn annual revenues from the following sources: Television Broadcasting and IPL Sponsorship fee .$30 million Television Broadcasting fees .$19 million Ticket Sales . The IPL is a joint venture league as it has sold the rights to run teams to various franchises. It's with their success we will achieve ours. IPL will revolutionise the game. Chennai Super Kings. Delhi Daredevils. We need to work with them. Kolkata Knight Riders.$100 million Franchises fees .

If we able to build on that over the next few years we will have something that will revolutionise cricket .500 . watched or followed” (Modi.8.as 42 . players don't have the danger of bringing their international/first-class careers to a halt . The IPL has more market power than the ICL.28 with the IPL finals achieving a rating of 9. IPL has the support of the BCCI. For the semi finals and finals the ad rates were sold for $17. international reach. 2008). According to Alchemy Research.000 for 10 seconds. “Not to mention the TRPs (TAM ratings) that we have garnered in India are quite frankly staggering. The BCCI is also a member of the International Cricket Council (ICC). 2008). And all this because we have had some of the best cricketing entertainment provided by the best cricketers from around the world” (Modi.500 .$6.000 . From the above stated facts we can conclude that the IPL is much bigger than the ICL. 2008). 4. Players participating in the ICL have been banned by the BCCI and other cricket boards around the world.750 for 10 seconds. and the requisite infrastructure by default. which is the official body to run cricket in India. “The IPL is an official sanctioned Twenty20 tournament. IPL will revolutionise the game. “the IPL surpassed expectations of media professionals and the ratings were 30-50% more than expected” (Alchemy.3 Conduct of the Leagues In the following section the author will analyse the conduct (behaviour) of the ICL and IPL. it (IPL) will have a better status. This is where we can see the real success of the IPL.$25. which is the highest rating ever for domestic cricket in India (TAM Media Research. Q&A. the average viewership for the IPL was at 6.$8. players. 2008).250 for 10 seconds to $7. Also the television broadcaster for the IPL increase its ad rates for spot sales from $5. which is not recognised by any of the national boards or the ICC.the way it's played.our final objective. which is the international governing body for cricket. and unlike the ICL. According to the Television Audience Measurement (TAM) service in India. Since the IPL is sanctioned by the ICC.

is the case with the ICL . Graeme Smith and other from joining the ICL. The quality of cricket played between the two leagues will decide which between the two will be more successful. Even though both the leagues are selling the same product – cricket competition. Ricky Ponting. Arnab Mitra (2008) has similar views “For a League to remaining competitive it has to attract the best talent across the world”. Prior to ICL commencing. there were reports that several Australians including Glenn McGrath and Shane Warne would participate in the ICL. grow the fan base. they could be expelled from the membership of the BCCI and be ineligible for any financial support from the BCCI. 2008).whose players have been banned by the various boards” (Cricinfo .IPL Faq. Product differentiation is the most important factor between the two leagues when considering the competition between them.ICL FAQ. excitement and entertainment which draws the audience to embrace the league (Samiuddin. increase gate receipts and finally attract sponsors. If the BCCI is not happy with a state association. The fear of being banned has prevented superstars like Sachin Tendulkar. the audience differentiates between the two leagues based on the quality of cricket and entertainment. 2008). 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. 43 . 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 possibility of a ban has prevented state associations from renting out their stadiums to the ICL. spectacular skills. According to Samiuddin (2008) a league needs high profile players to guarantee its success. High profile players provide the public with top class competition. The BCCI is also in a position to prevent the ICL from using state owned stadiums and infrastructure. the IPL has restricted the ICL from freely operating in the market. but changed their minds once it was clear that they would be banned by the Australian Cricket Board (ACB) for joining the ICL (Cricinfo . this would in turn help build their brand image. 2008).

Paul Nixon. We will now be setting up a central Academy for our boys” (Mody. Mody said “The Indian players come from various small towns and cities like Jammu.With the IPL being officially sanctioned by the BCCI and the ICC. they are stuck in the wilderness of first-class cricket. Inzamam-ul-Haq. The biggest crowed pullers for the ICL are Brian Lara. money or both. Had the IPL not implement a cap on player wages. Assam.6 million on players (refer: Appendix 3). But for players who do not make it to the national team earning a proper living becomes very difficult. The Indian players come from 58 cities. Hamish Marshall. Indore and Bhopal. we would have seen franchises spending more on player salaries. It is clearly positioning itself as not in the same league as the IPL. 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. therefore they did not hesitate and signed up for the league. Srinagar. We also have talent scouts in each Zone where they have gone out to find emerging talent. all the eight franchises have spent huge sums of money to acquire the best talent available around the world. 2008). The ICL saw this as an opportunity and offered these fringe players around $75. This amount is substantially more than these fringe players could have ever earned playing first-class cricket. franchises did not have a problem attracting the superstars of international cricket. the ICL had a clear strategy – it believes that players either want to play for the country. The ICL is more focused towards developing young players. On being asked about how successful the ICL has been in recruiting players. the ICL had difficulties in attracting the superstars of world cricket. 2008). It is clear that the ICL is not looking at big name players for its league. We have a diverse mix in this sense. 2008). According to Kumar & Prasad (2008) of Kotak Institutional Equities ICL never wanted to compete with the BCCI (IPL). Being an unofficial league. 44 . Vikram Solanki. They have spent between $6.6 million and $3. Dinesh Mongia and Deep Dasgupta (Indian Cricket League.000 per year (Cricinfo . To ensure that they have competitive teams. When a player plays for the country he can make large sums of money through endorsements and sponsorships.ICL FAQ.

2008). the ICL has had more time to produce competition. home and away (Indian Premier League. The summary of the survey is as follows: 45 . their utility could be saturated. This will help the IPL to distribute its costs over a larger revenue base. just because the ICL is producing more competition we should not assume that the audience will buy it or watch it. Economies of scale should also include television viewership because higher the viewership. Therefore higher the number of matches played in a league. 2008). the author conducted a survey on the popularity between the IPL and ICL. they are differentiated based on quality of cricket played. But we will also have to consider diminishing utility for the audience. 4. Using one of Sloane’s (1971) utility maximising factors (performance measurement) – Attendance / Television Viewership. The output for leagues is the competition that they produce and market to the audience. In both the league’s player and administrators are contracted for a certain number of years over which they are paid their wages.4 Performance of the Leagues Both the leagues have the same number of teams and a similar number of players participating in their matches. Wages are fixed costs for teams.Even though both the leagues sell cricket competition as a product. lower will be the fixed costs for team as they will be able to distribute the fixed costs over more produced units. As mentioned earlier the IPL has substantially higher number of television viewership when compared to the ICL. Currently. To date the ICL has organised four tournaments with a total of 76 games being played (Indian Cricket League. the IPL has only held one tournament in its first season which featured 59 matches where each team played all other teams twice. they will get their wages either way. One (IPL) is there to provide entertainment and excitement to the audience. high the revenue earned from media companies. while the other (ICL) is there to promote and develop young cricket talent in the country. Since the IPL was started after the ICL. It does not make a difference if players play or not. they are not the same product.

which league had better entertainment (other than cricket) 4% said ICL while 60% said the IPL. When asked.After being asked which league do they prefer. 36% voted for the ICL when asked which league supports young cricket talent while only 24% voted for the IPL.3% voted for both. this leads to the league providing lower quality of cricket. 4.2% people voted for the IPL and 27.1% voted for the ICL when asked which league had better quality cricket while 59. 46 . 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. From which it is clear that the IPL is much bigger and has more market power than the ICL. The performance of the leagues can also be measured from the earlier provided television viewership and revenue data. The spectators believe that the ICL only helps promote and develop younger players.2% went with the IPL. The dissertation will move to the analysis and discussion of the case study.5% people said the ICL while 68. 6. This concludes the case study.

The commodities market is an example of perfect competition. Firms take the price that is determined by demand and supply factors of the concerned market. Perfect competition as the name suggests is the most competitive model of competition. 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. monopolistic competition.Chapter V: Analysis and Discussion The following chapter deals with the analysis and discussion of the subject of this dissertation. The four competitive environments as stated by Bain (1951) (perfect competition.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. stadiums. both of which are not possible under perfect competition. 47 . oligopoly and monopoly) will be applied to the Indian Cricket Market to assess their corresponding economic implications. Under perfect competition. 5. 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. Even if there were several leagues in the market. For the above mentioned reasons perfect competition scenario is not applicable to the Indian Cricket 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. 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. firms are price takers meaning that they have no power to influence the price of products. The author will analyse the effects of different types of market structure on the Indian Cricket Market.

3 Oligopoly Oligopoly is a market structure where there are few large firms along with some smaller firms and significant entry barriers. they will be able to charge a higher price. For example. the market structure has many firms of equal and small size. In addition firms respond to competitors actions creating a strategic behaviour among them. the Indian Premier League (IPL) and the Indian Cricket League (ICL). 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. product differentiation depends on the industry. when it comes to buying petrol. Such brand loyalty creates entry barriers because new firms will face significant costs to overcome it.2 Monopolistic Competition Under monopolistic competition. There are two leagues in the market. 5. The important feature under monopolistic competition is product differentiation. 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. which allows consumers to develop brand loyalty towards certain products. Oligopoly is the current scenario in the Indian Cricket Market. 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. Currently the operations of the ICL are influenced by its unofficial status. There is some product differentiation under monopolistic competition but it is not enough to sustain a sports league. Players participating in the league are banned by cricket 48 . a condition similar to perfect competition. If firms can differentiate their products in the market. price is usually the only deciding factor for consumers. However. The large number of small leagues will spread out the talent of the players thus affecting the quality of the competition.5. Under oligopoly.

boards all across the world. affecting their ability to play in international cricket. Since the market structure (oligopoly) is already assumed. If the quality of competition is lowered the demand for sport will go down affecting the performance of the franchises (Borland & Macdonald. only the conduct and performance of the leagues will be analysed below. 5. Shortage of talent will drive up wages for the available talent. The author will analyse two scenarios under an oligopolistic market structure. managers. ii.1 The IPL franchises The ICL The Spectators The BCCI Scenario 1 (with ban on ICL players) The ICL was formed by signing up players from the Indian domestic circuit and a few international cricketers. The ICL has a pool of talented players. The first with the ban implemented on the ICL players and the second without the same ban. Every cricketer dreams to play international cricket for their country. At the time the players did not know that signing up for the ICL would me a ban on their chances for international cricket. 2003) 49 . they are not able to choose the best players which will affect the quality of competition 4. coaches and officials who cannot be signed up by the IPL franchises because of the ban imposed on them. This will artificially inflate salaries for players. iii. This has various effects on the i. coaches and officials 3. IPL franchises: 1. Restriction of the talent pool from which the IPL franchises can select their players 2. The author will consider the scenarios from the view point of four stakeholders which include: i. Since the IPL franchises are not able to select from all available players. managers. iv.3.

The ICL also does not have access to all the stadiums in India. limiting revenue sources for the ICL 6. Competition with the IPL teams may result in lowering of ticket prices to attract more spectators. as most of them are under the control of the BCCI. This would dilute the fan base for the IPL franchises 6. 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.5. Have to pay players higher wages to compensate for lack of international cricket 3. The quality of competition will decrease because the talent will be divided between the two leagues 50 . The league will mostly attract players who believe that they do not have any possibility of playing international cricket. This does not allow the ICL to reach out to its entire fan base. The ICL teams are not able to attract the best talent available because of the fear of the ban 2. Competition with the ICL teams may result in lowering of ticket prices to attract more spectators. Effects of the ban and existence of IPL on the ICL: 1. Also competition could result in lower revenues from the sale of television broadcast rights iii. Also competition could result in lower revenues from the sale of television broadcast rights ii. 2003) 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. Effects of the ban and the existence of two leagues on the Fans: 1.

which would lead to higher quality of competition and hence will increase the demand for the sport 2. Noll 2003 and Borland and Macdonald 2003) 5.3. The IPL franchises: 1. resulting in not selecting the best team possible 2. i. Lower quality of cricket would lead to lesser number of spectators resulting in lower television revenues and gate receipts 3. 2003) but they would not be able to fulfil this desire because the two leagues will have two different champions 3. This confirms the views of various academics that it is not efficient for two leagues to exist together (Cairns 1990. Free movement of players would increase their bargaining power. The main desire for fans is to see one champion at the end of the season (Noll. Neale 1964. 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. Effects of the ban and the existence of two leagues on the Board of Control for Cricket in India (BCCI): 1.2 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. Smaller number of players to choose from for the national team because of the ban. Would be able to select from all the available talent pool. Competition between the two leagues could positively lead to lower ticket prices for the fans iv. leading to higher wage bills for the franchises 51 .2.

2003) but they would not be able to fulfil this desire because the two leagues will have two different champions 52 . Competition with the IPL franchises for players would result in higher wage bills for the ICL teams 3. Competition with the IPL franchises may result in lowering of ticket prices to attract more spectators. but will have to share the fans with the IPL franchises 4. Also competition could result in lower revenues from the sale of television broadcast rights ii.3. The quality of competition the spectators watch will be of a lesser quality because the talent will be divided between the two leagues 2. Competition with the ICL teams may result in lowering of ticket prices to attract more spectators. With no ban on players the ICL would be able to attract more players to play in the league 2. leading to lower quality of cricket and higher wage demands from the players 4. The ICL will be able to use all the available stadiums which would result in reaching out to a larger fan base iii. Since the two leagues have no agreement between each other. Increase in quality of players will result in higher demand for the sport. teams from both the leagues will poach players from one another. The main desire for fans is to see one champion at the end of the season (Noll. Effects of the existence of the IPL on the ICL: 1. Existence of the ICL would dilute the fan base for the IPL franchises even though the IPL is more popular with the spectators 5. This will affect team unity and moral. Effects of the existence of both the leagues on the fans: 1. Also competition could result in lower revenues from the sale of television broadcast rights 5.

scheduling. This market structure is the least competitive with one firm controlling all the market power. For both the IPL and ICL to exist it would require co-ordination and unity between the two leagues. The conclusion again concurs with academics who state that the existence of two sports leagues is not efficient (Cairns 1990. The two leagues could work together and have a champion of champions at the end of the season. “Consider the case of a single seller. the IPL and the fans. The leagues would also have to agree on rules for player trading. the ICL and the BCCI would benefit if the ban on players was lifted. The BCCI would be able to choose players from the full talent pool available. without entry barriers such a firm has no market power because the threat of potential competition 53 . Noll 2003 and Borland and Macdonald 2003). Effects of the existence of both the leagues on the BCCI: 1. Neale 1964. 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. which would lead to the best team selected for international cricket leading to a higher quality of cricket 2. The most important feature of a monopoly market is that entry barriers are prohibitive. 5.3. laws of the competition and number of games to be played in the season. Like in American Football in the US. However the effects of having two leagues would not be positive on remaining stakeholders. otherwise new firms would enter the market and there would be no monopoly. 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. where the winners from both the leagues will play each other for the championship.4 Monopoly Monopoly is a market structure where there is only one firm and it is as large as the market. Competition between the two leagues could lead to lower ticket prices for the fans iv.

the single seller will be able to earn only normal profits” (Ferguson & Ferguson. 1994). There would be no competition for players therefore they would have no bargaining power over the IPL franchises. Under this scenario the author will consider the Indian Cricket Market with only one league. 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 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. Will have access to the entire population to include in its fan base as there would be no competition from rival leagues 5. 3. the fans and the media companies will depend on the quality of competition on field ii. The effects of a single league will be as follows: i. 2003) will also be fulfilled as the IPL winner will be the champion for the year 54 . The IPL franchises: 1.effectively replaces the market discipline imposed by actual rivals and. This would keep the wage rate in line with player talent 4. Will not have to lower ticket prices to attract spectators. 2003). The fans desire to see one champion at the end of the season (Noll. Best possible teams will result in high quality of sporting competition between franchises leading to higher demand for the sport (Borland & Macdonald. 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. in the long run. Demand from both. Also the IPL will not have to reduce its fee for television broadcast rights to attract media companies.

55 . Kahn 2003. which would lead to the best team selected for international cricket leading to a higher quality of cricket 2.3. The fans could face higher ticket prices as there would be no competition for the IPL iii. 2003). The conclusion is in line with academics who state that a sports league has a natural monopoly (Flynn & Gilbert 2001. The BCCI would be able to choose players from the full talent pool available. The effects of a single league on the BCCI: 1. 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 it is clear that a monopoly league will benefit all the four stakeholder groups. Neale 1964 and Noll.

2008). the author conducted a review on the literature available on the economics of sports which dealt with sports leagues. being a single entity organisation will find it difficult to compete with the eight financially strong IPL franchises for players. This will not help the league improve the quality of cricket played in its tournaments. The analysis and discussion chapter looked at the Indian Cricket Market under different market structures. Also. the IPL franchises. which included competitive environments like oligopoly and monopoly. The ICL.” (Modi. stadiums and infrastructure will increase because of the two leagues competing for them. 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. 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. leading to lower demand for the league. the research methodology used in the dissertation was outlined. as mentioned in the analysis and discussion chapter.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. it is difficult for the league to attract top quality players.1 The Indian Cricket League With the ban implemented by the BCCI on the ICL players. Modi threatens to ban ICL players from Twenty20 Champions League. the BCCI and the fans association. the cost of players. stadiums and infrastructures (Samiuddin. 2008). 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. No exceptions will be made under any circumstances. For an academic understanding on the subject. The league will continue to attract recently retired international cricketers and young players who cannot make it into the national teams. Following the literature review. 56 . Also. This chapter will conclude the dissertation and provide recommendations for the managers of the ICL. 6.

But for this to be possible.Given ICL’s current position in the Indian Cricket Market. 6. thereby increasing the level of competition on-field. To do this the IPL would want to have a monopoly position in the Indian Cricket Market as this will allow the franchises to choose from a wider range of players. IPL will revolutionise the game. the Indian Premier League is in a strong position to establish itself as a major player in the Indian Cricket Market. Academics have stated that demand for sport can be increased by improving on-field competitiveness of the franchises (Neale. 57 .2 The Indian Premier League Due to the support of the BCCI. 2008). Also. If the ICL is serious on accomplishing is mission statement of developing young talent in the Country. The ICL can be a feeder league where young players develop their talent and then are selected by the IPL franchises to play in the big league. the BCCI has to accept the ICL players by withdrawing its ban. But if there is only a single league then players cannot leverage themselves and can earn only the market (normal) wage. it would be in their best interest to position the league below the IPL and not compete with them. 2003). then the ICL managers should allow the IPL to have a monopoly status and be the premier/major league in the Indian Cricket Market. Players can negotiate with both the leagues and choose to join the league that payers higher wages. The IPL franchise managers would want to further strengthen their position in the Indian Cricket Market by attracting more spectators to the league. by having a monopoly position. the IPL franchises will not have to counter the bargaining power players have currently. Just like the Coca-Cola Championship League which does not compete with the English Premier League (EPL) and is positioned below the EPL. 1964 and Noll. The IPL has the world’s best cricketers playing in the league and the response from the fans during the first season has been phenomenal (Modi. When both the leagues exist simultaneously the bargaining power of the players increases because of the competition between the two leagues for the players services.

the BCCI would have to choose from all the players available in the country even the ones participating in the ICL. The cricket spectators would be able to get maximum utility from the sport if the two leagues did not compete against each other. It would be in the BCCI’s best interest to recognise the ICL and place it under the IPL.It will also be beneficial if the ICL did not compete with the IPL and positioned itself as a feeder league. To achieve this. 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. 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. It is recommended that the IPL managers try to attain a monopoly status for the league and incorporate the ICL under the IPL. All of these factors have a negative effect on the utility for the spectators and the demand for sport. divides the player talent between the two leagues and also produces two champions at the end of the season. 6. the demand for sports increases if the quality of competition on-field improves. This would help develop cricketing talent on a larger scale thereby creating a larger pool of players for international cricket. The managers should only be concerned with fielding the best possible team for the country in international competitions. The competition between the leagues reduces quality of competition.4 The Cricket Fans As mentioned earlier. But for this to work the BCCI will have to lift the ban on the ICL players. 58 .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. which would help the IPL franchises to widen the pool of players to choose from. 6.

the player talent is divided between the two leagues and the spectators do not have one champion at the end of the season.Word count: 18. The competition between the two leagues leads to negatives on both the input and output factors.The Fans would benefits if the IPL had a monopoly status in the Indian Cricket Market with the ICL acting as a feeder league to the IPL. The influence of the authors views can also be considered significant in the generation the recommendations and conclusions. On the input side the teams face higher player wages. it is not efficient for the Indian Cricket Market to have two leagues competing against each other. the quality of competition is reduced. 6.462 - 59 . increased stadium and infrastructure costs.6 Conclusion To finally conclude. 6.5 Limitations of the Study It is essential to draw attention to the limitations of this study. . The most fundamental limitation is the subjectivity in understanding and interpreting the data used for the dissertation. While on the output side. The Indian Cricket Market should structure itself in line with all other sports league markets around the world and have a single league as its premier/major league.

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Since then.played to a finish. Tests that are not finished within the allotted time are drawn” (InterCricket. over 1. during England's tour of Australia. and some have been "Timeless" . It ended on 19 March 1877 with Australia winning by 45 runs.800 Test matches have been played and the number of Test playing nations has increased to ten with Bangladesh.Chapter VIII: Appendix Appendix 1 Forms of International Cricket Test Cricket “Test cricket is a form of international cricket started in 1877 during the 1876 . Test matches have two innings per side. making its debut in 2000. matches often took place before this. In the past. over a period of up to a maximum of five days . or six days. The first Test match began on 15 March 1877 and had a timeless format with four balls per over. and nowadays. also known as one day cricket or sometimes instant cricket.1877 English cricket team's tour of Australia. 65 . One-day. The idea was taken up in the international arena in 1971. when a match was played on the scheduled fifth day of the rained-off third Test to keep the players fit and give the crowd some entertainment. four. 2008). were introduced in the English domestic season of 1963 in response to demands for a shorter and more dramatic form of cricket. One-day Cricket “Limited overs matches. the most recent nation elevated to Test status. single-innings.although matches are sometimes completed with a day or even two to spare. Tests have been played over three. but the innovation was the limiting of each side's innings to an agreed number of overs (nowadays usually 50).

hastened in part by the success of the inaugural World Cup in 1975. these have seen ODI cricket gain many supporters” (InterCricket. It has since spread to many other countries. 2008). battingfriendly pitches. Innovations have included the introduction of coloured clothing. 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. 2008). together with frequent nail-biting finishes and the impossibility of either side opting to play for a draw. a free-hit after a no-ball is bowled. and "day-night" matches (where play starts during the day under natural sunlight but extends into the night under floodlights). the first women's Twenty20 international having been between England and New Zealand in 2004. the first ever Twenty20 World Championship to be held in South Africa in 2007” (InterCricket. 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. 66 . distinct tournaments. The abbreviations ODI (One-Day International) or sometimes LOI (Limited Overs International) are used for international matches of this type. A "Twenty20 Game" consists of 20 overs for each side. Twenty20 Cricket “Twenty20 Cricket was first played in English domestic cricket in 2003 to help popularise first-class cricket and attract more spectators.The one-day game has since become a crowd-pleaser and TV-audience-generator across the globe. short boundaries.

0 84.0 76. Celebrities and Companies are backing the league Owners Reliance Industries – Mukesh Ambani UB Group – Vijay Mallya Deccan Chronicle India Cements GMR Group Preity Zinta / Ness Wadia Shah Rukh Khan / Juhi – Jay Mehta Emerging Media Source: (Alchemy.0 67.6 107.0 75.0 67 .9 111.0 91.Appendix 2 List of owners of the IPL franchise shows that Industry leaders. 2008) City Mumbai Bangalore Hyderabad Chennai Delhi Mohali Kolkata Jaipur Price paid for franchise (US$ mn) 111.

2 3.Appendix 3 Teams spending heavily to ensure on-field success in the IPL Owners Reliance Industries – Mukesh Ambani UB Group – Vijay Mallya Deccan Chronicle India Cements GMR Group Preity Zinta / Ness Wadia Shah Rukh Khan / Juhi – Jay Mehta Emerging Media Source: (Alchemy.4 5.6 68 .4 6.7 6.0 6. 2008) City Mumbai Bangalore Hyderabad Chennai Delhi Mohali Kolkata Jaipur Total Price for players (US$ mn) 5.6 6.2 6.

Appendix 4 69 .

70 .

The site also features in-depth statistics on every one of the 3000 international and 45. 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. Cricinfo's content includes news. Founded in 1993.Appendix 5 Who we are “Cricinfo is the world's leading cricket website and among the top five single-sport websites in the world.. The editor of Cricinfo is Sambit Bal. Now a wholly owned subsidiary of ESPN Inc. the world's leading multimedia sports entertainment company. Cricinfo has a thriving user community and reaches over ten million users every month. Cricinfo is available to cricket fans through the online media and on a host of mobile platforms and handheld devices.” (Cricinfo.000 first-class cricketers to have played the game. 2008) 71 .

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