Once the big number was out, there was fun to be had with calculators. Yes, every season of the IPL going forward was going to cost Rs 3269 crore (approx. US$510 million) plus some loose change. So, that equates roughly to Rs 54 crore a game every year, right? Hmm, every game features 40 overs, so that's over Rs 1.3 crore per over, correct? That would make every ball of an IPL match worth Rs 22.5 lakh, give or take a few, yes?
Many in India like doing these sorts of sums. And many of us spent Monday evening breathlessly calculating the size of this deal, grateful to our smartphones for the variety of emojis they provided to help us embellish these numbers. Some preferred the dollar eyes and dollar tongue one; others went with the wide-eyes, pupils distant from eyelids; and there were those that preferred the one conveying utter disbelief, hands by the side of the face, eyes goggling in shock.
Social-media commentary apart, the staggering bid for the rights to the next five seasons of the IPL was a collar-grabbing reminder of where cricket has come. Ten years ago, the IPL was this animal muscled into our collective mind space, seeking six weeks of indulgence. Here it is, a decade on from that leap of faith, having eviscerated all other cricket as the most valued product of its kind in modern sport.
IPL v other big leagues?
While scrutinising the skyrocketing stature of the IPL, there has been a temptation to equate it with other big-ticket sports leagues around the world that attract massive fan following, and as a direct result, huge television deals. However, it is foolish to attempt comparisons with the valuations generated by the likes of the NBA, the NHL and the EPL. Those competitions run seasons that consume a significant amount of the year, and the players are more or less full-time employees. The IPL inverts that model, offering short-term contracts to men who otherwise ply their trade for national teams or in local competitions in their home countries. To this day, it jostles for, but hasn't succeeded in, getting a clear window that ensures key players aren't whisked away midway on national duty.
Is T20 bigger than cricket?
On Monday the IPL provided not just a snapshot of its drawing power, but also a glimpse of the shape and form the game has taken. T20 has all but been divorced from cricket itself, creating its own ecosystem, where it no longer seeks attention as an alternative to the game's longer versions. That battle has been secured and settled. T20 has now convinced broadcasters that it is the only viable form of the game able to deliver consistently large audiences in this age of dipping attention spans and multiple entertainment options.
How big will digital be?
While Sony's bid of over Rs 11,000 crores was a significant mark-up on the price they paid a decade ago to acquire the rights, providing an indication that television continues to reach the largest chunk of the audience, the contest for the digital rights told of how those behind the scenes among the vying parties see the road ahead. Three years ago, Star won the IPL digital rights at Rs 100 crore a year. In this rights cycle, the highest bid received was from Facebook for Rs 3900 crore for five years period, or approximately Rs 800 crore a year. That is nearly an eight-fold increase.
Several players other than Facebook made equally robust bids for digital rights, and if it were a standalone process, this would have been the most fiercely competitive segment. Airtel offered Rs 3280 crore, Reliance Jio Rs 3075.72 crore, Times Internet Rs 1787.50 crore, and Star themselves, Rs 1443 crores (modest in hindsight). Essentially, Star assessed that the rights they held were now three times more valuable than the last time they won them, and yet ended up grossly underestimating!
That they won the digital rights anyway, on the back of their global bid, was fortuitous for them. Star's global bid was about Rs 528 crore more than Rs 15819.51 crore, the sum total of all the highest bids put together, a margin of a mere 3.2%. Star would have had to return empty-handed, without either of the two big-ticket items on the shop window - India TV rights and India digital rights - if the other bidders had collectively bid the Rs 528 crore needed to take the cumulative amount above the Rs 16347.50 crore bid by Star.
In essence, these bids for digital are an investment based on rapidly changing media-consumption habits across India. As handheld devices proliferate, connections get faster, and costs of data cheaper, the second screen is fast becoming the first port of call. Live streams of games offer viewers the opportunity to dip in at their convenience, and clips of fast-paced action produced for instant consumption are creating an eager audience, seduced into returning for more repeatedly. Star has already engaged a large digital user base in leveraging its rights over the last three years and can now expect to enhance that demand. It is a revenue stream to be exploited that may not deliver instant results, but it holds the promise of substantial returns in the future.
Star: all or nothing
The biggest learning from the bidding process was to do with Star's all-or-nothing strategy. Their officials would have known that their bid of a shade over Rs 6000 crore for the TV rights would be easily outmatched by the incumbent rights holders Sony. As pointed out above, Star also underestimated the eagerness among various parties for the digital rights. In fact, of the seven rights packages available on the day, Star's bid was the highest in only one category - the rights for the UK.
Intriguingly, they bid a mere Rs 48.75 crore for those rights, but there were no other bids in that category. This is surprising as the UK has a large Indian diaspora and IPL matches are telecast there at a reasonable viewing hour. Remarkably, the highest bid received for the Middle East was Rs 390 crore, and for Africa Rs 120.25 crore; these are markets that aren't nearly as well established as the UK for sports rights.
As Star's CEO Uday Shankar said later, they were in it for the whole pie or nothing at all. He said they were keen to create a "complete experience" for the fan, and were happy continue living "without the IPL" if they were unable to provide that experience. Hence, Star presented a global bid that was more than twice the sum total (Rs 7882.47 crore) of their other bids put together. They were the only player to have bid in each of the seven categories, but significantly, they were the only bidders for the global package, which carried them over the line with a slim margin. Of every player at the auction table, Star is the only group with a widespread worldwide presence, and so the opportunity to present an all-encompassing global bid undoubtedly worked in their favour over others who were in the room for slices of the pie.
Is Star done with the rights to Indian cricket?
With rights to ICC events locked in till 2023 and now the IPL in the bag for the next five years as well, there was immediately conjecture that Star might be lukewarm when rights to Indian cricket in India become available at the end of the current season. Shankar hinted as much in media interactions yesterday, saying that with the ICC and IPL rights in his kitty, he may have enough to run a "very good business".
However, industry insiders aren't convinced yet that Star won't make an aggressive play once those rights to Indian cricket in India do become available. There is a definite upside, an insider argues, to creating a monopoly, when dealing with advertisers. Once competition is neutralised, a broadcaster such as Star can essentially drive up prices in the marketplace for ad space and hope to extract higher revenues from subscriptions.
It is worth recalling that Star won these Indian cricket rights for a six-year period in an equally close bidding war with Sony in 2012, when Star committed Rs 3851 crore against Sony's Rs 3700 crores for 96 international matches in India. This acquisition allowed Star to get the building blocks in place for what is now a sturdy network, comprising 12 channels. Most industry experts are of the view that unlike the IPL, the value of India cricket rights is unlikely to go through the roof. In fact, some believe there may even be a downward correction. If that happens, Star can't be written off as an interested party to retain these rights as well.
Are leagues the way forward?
It is also noticeable that the acquisition of IPL rights is only the latest - albeit most high-profile - foray by Star into investing in leagues. The unexpected success of the Pro Kabaddi League in India, and of Star's similar investments in competitions for football, badminton, hockey, and most recently table tennis, point to a trend. According to an industry insider, there is a growing belief among those deciding strategy in organisations such as Star that audiences are increasingly engaging with fast-paced, quick turnaround, slickly produced dramatic events.
Even locally run competitions such as the Tamil Nadu Premier League and the Karnataka Premier League, both broadcast on Star, guarantee a faithful fan base, ensuring daily recall and returning audiences for the duration of the league. The common objectives, this insider says, are not hard to spot - to thrill, excite and entertain. Most importantly, stage your event at the right time of the day and get it done quickly. The IPL is the original guiding light for this principle, which Star appears to have embraced. As a direct consequence, they may see little value in making a strong play to retain the rights for cricket played in England or Australia, where matches are held at non-peak hours (for India).
Gobsmacked by the dizzying big bucks the IPL is able to generate, boards around the cricket globe will surely hasten efforts to upgrade their own domestic leagues. It is a product that has made considerable headway in Australia and is being pushed with gusto in South Africa, West Indies, England and Pakistan. There wasn't much doubt anyway, but unquestionably now, T20 is the proverbial goose. And it is laying the golden eggs.