For the best part of the last decade, I have always found the Indian Premier League’s player auction to be the most exciting part of the T20 league. Even greater than AB de Villiers versus Dale Steyn in the final over with 23 runs to get, which remains amongst the high points of watching the league for me.

On September 4, that changed. It turns out, any auction in the IPL can be compelling, whether players are under the hammer or media rights are. Of course, like most of the rest of the cricketing world, the figure of Rs 16,347.5 crore didn’t make any real sense to me. I mean, I know the amount of zeroes involved (I think), but it could have as well been 50,000 crore or 160,000 crore. It was just a whole lot of money, the likes of which has never been seen before in one go in cricket.

But despite the remote, Everest-like quality of the sums involved, what made the auction fascinating was following the strategies that several major corporations adopted to win, the structure of the auction itself, and the after-effect it would have on the game’s soul.

Structure

The fact that companies could make a ‘global’ bid and, at the same time, make individual bids meant a layer of complexity was added which had to be accounted for. So companies could just bid across the individual categories comprising India and the Rest of the World – Indian subcontinent TV, Indian subcontinent digital, Australia, New Zealand & Rest of the World (ROW A); the Middle East (ROW B), South Africa (ROW C), United Kingdom (ROW D), and the United States of America (ROW E). Obviously, the Indian rights were the biggies and would have fetched the most.

Was it fair to allow splitting of the rights as well as global bids? Of course, the whole process had the sanction of the Supreme Court and the Committee of Administrators – and it was quite transparent. But there can still be some debate about this in a non-legal sense. Star India were realistically the only ones who could make a global bid with their number of channels and their HotStar platform. Sure, Sony has Sony LIV, but that is far from being as well developed as HotStar. The advantage of being in a position to make the sole global bid is significant. Star could afford to go bold and go high, because if you own the entire rights package, there is a better chance of recouping a higher investment. Facebook, for example, could only realistically bid for the digital rights. They don’t own TV channels (yet!). If the number of categories you can bid on are constrained, the amount of risk you can take with your bid is similarly constrained. Thus the highest bids that a Facebook or a Sony could make had perforce an upper limit that was qualitatively lower than what Star could go to.

It’s not Star’s fault, of course. They had the advantage of breadth and depth, and they had the gumption to make a bid big enough to outstrip the cumulative highest offers in every other category. And all of it was done under several watchful eyes so we can safely assume it was scrupulously above board. But the structure did give Star a small advantage. Again, it was an advantage that needed some amount of outrageous thinking to seize – and Star did that and seized it.

The whole process of bidding for the media rights of the IPL had the sanction of the Supreme Court and the Committee of Administrators. © IPL

The whole process of bidding for the media rights of the IPL had the sanction of the Supreme Court and the Committee of Administrators. © IPL

Strategy

Once it was clear that Star would realistically be the only player in the global bid category, they took a gamble that paid off handsomely and put every egg in the global bid basket. But to do that, they had to play a fine line in not bidding too much in every individual category, with the caveat that they could possibly go a little high in one or two because otherwise there was the risk of ending up with nothing at all. Witness how they topped the bid only for the UK and that at a fairly low Rs 48.75 crore because surprisingly enough, no one else bid for those individual rights.

The thing about the sum of the highest individual rights in each category being pitted against what Star would bid for the global rights meant that if Star bid aggressively in any of the individual categories, they would undercut their own global bid. It was in Star’s interest to keep the highest in each category as low as possible – and that interest wouldn’t be served by they themselves bidding high in any individual category. The flipside was that if those competing with Star for the rights went high enough, the total from the combined bids could outstrip Star’s global bid – in which case Star would be left with nothing.

Like I said, risky – but it paid off. And only just. Star bid Rs 16,347.5 crore and the combined highest in each individual category came to Rs 15819.51 crore. The difference was just Rs 527.99 crore, or 3.34%.

Hindsight is a beautiful thing and it makes you wonder if, for example Sony had allied with Facebook unofficially before the auction, could they have walked away with the TV and digital rights respectively? They could have pushed a little harder in the main categories, and made decent bids in the others – after all it was a matter of spreading 528 crore among seven categories. But Sony bid only for the Indian TV rights and nothing else, and Facebook bid only for the Indian digital rights and nothing else (as did Airtel and Reliance Jio). Each one of the main companies in the fray in fact, put all eggs in one basket if you study the bids chart.

But only Star walked away being able to count the chickens the eggs had hatched.

Apart from the sums involved, the strategies adopted to win, the structure, and the after effect made the auctions fascinating. © BCCI

Apart from the sums involved, the strategies adopted to win, the structure, and the after effect made the auctions fascinating. © BCCI

 

Soul

There are two aspects to this. The first is what these obscene amounts of money mean for cricket beyond the IPL. The second is what the fact that Star owns a monopoly on cricket in India for now, and has paid through its nose for it, means for the consumer.

Tackling the second one first, naturally a monopoly is not a desirable state of affairs for the end consumer, in this case the average cricket fan. But one thing the fan can take heart from is that over the years, the coverage provided by Star for cricket in India has been easily the best in terms of overall quality. Can they continue it when they have now paid so much more, and will it mean more intrusive ads because they need to recover their money and will thus stuff more advertisements in? Or god forbid, a third strategy break? The hope is, it won’t come to that.

On the other point, Star focussing on the IPL can reasonably be expected to mean they might not focus as much on international cricket. And with a huge chunk already tied up, can they even afford to bid aggressively when the rights come up for sale in March 2018? Remember that Sony is empty of a cricket portfolio now and they are likely to want to go hard. But there is a school of thought that holds Star could also go equally hard because the downside (paying rather more than they want to and even incurring losses ) would be offset by the upside (holding the rights to all cricket and leaving their main competitor with nothing).

The more likely scenario remains that for the Indian viewer, there is just a flip. What was previously seen on Sony will now come on Star. What used to be watched on Star will soon be watched on Sony.

Either way, we’ll know in the next few months, when it will be auction time again.