Business, Economics and Jobs

The business of sports: Cue the cricket


BANGALORE, India — Anjali Rai Hamilton, a realtor based in Bangalore, is hooked on cricket, specifically the Indian Premier League (IPL). She follows the matches, conveniently scheduled in the late evenings. Many of Hamilton’s friends are recent cricket fans, and together they root for the home team Royal Challengers.

India’s IPL cricket league, a heady mix of sport and entertainment, grew to a gravity-defying $4 billion in valuation since its inception just three years ago. But the ambitious league, forecast to outgrow the NFL and NBA and become the world’s top revenue-earning brand in the next few years, has been recently ambushed by allegations of scandal and sleaze.

Now captivated fans are wondering if the world’s flashiest cricket brand can survive all the problems.

"The explosive brand which built a worldwide following in a short span of time is now facing questions of credibility,” said Nandan Kamath, a sports lawyer whose firm manages brand protection for IPL.

In a country where cricket equals religion and its stars are living gods, the high-flying IPL certainly faces a deep crisis. But cricket-crazy India rules the game worldwide, accounting for three-quarters of game revenue. The impact of the scandal will be felt globally and experts say reform is essential for the game's glory to be restored.

The IPL scandal peaked last week when Lalit Modi, the flamboyant, high-flying creator of IPL’s Twenty20 version of cricket, was suspended and charged with 22 counts of corruption.

The dynamic Modi, feted until recently as the brain behind the brand, was charged with manipulating team auctions, favoring his family and friends who were proxies of his holdings, and accepting kickbacks for advertising deals.

The parent cricketing body, the Board of Cricket Control in India (BCCI), which quickly moved to name a successor to Modi, alleged that Modi had awarded franchises to several people, including a Bollywood star, who were fronting shadowy owners and routing investments through tax havens like Mauritius and British Virgin Islands.

Modi is also alleged to have received a big split of an $80 million "facilitation fee" for handing over the television rights of IPL. He is accused of holding a substantial stake in the IPL team Rajasthan Royals, whose consortium was expanded to allegedly include Modi’s son-in-law, as well as Lachlan Murdoch, the older son of media mogul Rupert Murdoch, and Raj Kundra, the London-based husband of the Bollywood actress Shilpa Shetty.

The IPL fiasco ensnared India’s politicians too.

Modi is said to be the protege of Sharad Pawar, whose Congress Nationalist Party supports the ruling Congress government. Shashi Tharoor, a former U.N. deputy director general and a junior minister in the government, quit after Modi’s tweets led to a disclosure that the minister’s girlfriend had received a $15 million “sweat equity” in a newly auctioned IPL team.

But the scandal may end up having a bright side, said Sambit Bal, editor of leading global cricket website, ESPNcricinfo. “IPL grew too big too quickly in its single-minded desperation to become the world’s biggest sports league." Only professional management and full transparency could save the brand, he explained.

The gaudy commercialism of the IPL game has clearly appealed to India’s masses, and offended others. Crowds have thronged IPL Nights, $1,000-a-piece pay-and-party evenings where international and domestic cricket stars mixed with local celebrities and assorted Bollywood stars. Imported cheerleaders dressed in skimpy costumes raised the hackles of conservative Indians. IPL also enforced several "strategy breaks" in the game, in a boon for television advertisers.

Modi has undoubtedly taken a slow-moving game and converted it into a crowd puller. Stealing cricket’s epicenter away from rich countries such as England and Australia, he spun IPL into a money machine by compressing games into a three–hour window, and spicing it up with big business and Bollywood glamour.

“The IPL is exactly what young India was looking for, a mass entertainer that enthralled the average person every evening,” said Kamath, the sports lawyer. Meanwhile, the future of IPL hangs in balance with Modi continuing to tweet that he is still the IPL chief while threatening a "tell-all."

Fans that are still buying the team merchandise and watching the addictive matches over television are hoping to see more IPL action on field, rather than off it.

Editor's note: This story has been updated to correct the reference to the IPL's valuation. The league is valued at $4 billion, it did not bring in $4 billion in revenues. The story was also updated to correct the size of Lalit Modi's stake in the Rajasthan Royals.