In a laissez-faire economy of free demand and supply there is no such thing as a price cap or artificial man-made or mandated ceilings. It defies pure capitalism, which is exactly what IPL actually personifies. Thus, it comes as a peculiar paradox that the "recession-proof IPL" ( as vocally pronounced by their astute masters of tautology) which is based on pure market driven forces should practice double standards when it comes to franchise auctions and player pricing. Let me explain the dubious dichotomy; why did the IPL management have a MINIMUM base price for franchise bids but has a MAXIMUM cap for player salaries? In short, IPL management corners the real massive moolah for itself from burgeoning wallets of corporate owners , but denies the cricket players their actual monetary worth by placing a forced ceiling on their earnings. How is that fair and equitable? In fact, it is blatantly disingenuous.
Just look at the grotesqueness of the skewed IPL business model which actually undermines player valuations; Sahara will pay USD 370 million to IPL for its Pune purchase, but at best it will have a player expense budget of just USD 7 million per year. On a relative scale, that is a laughable allocation. From an annual perspective on an estimated average cost of the new IPL franchise operation of USD 45-50 million, the players will get a pittance of approximately 10% of that amount. Does it sound right or ridiculous?
The flagrant irony is that it is the cricket players who make the IPL brand, not its administrators or sugar-daddy owners. Sachin Tendulkar, MS Dhoni, Yusuf Pathan & co are the real gladiators, community heroes, brand owners, the raison d' etre of IPL. But in reality, they are actually being hugely short-charged in a broad daylight con-job. Franchise pay-outs have moved up from USD 111 million to a staggering USD 370 million, a rise of USD 269 million but the player budget allocations have increased by an apologetic pittance of USD 2 million. That is not just irrational, it is asinine. And if IPL defends that small-time hike from USD 5 million to USD 7 million by quoting a " massive 40% increase" it is pure humbug because on such a small base, relatively speaking, a percentage growth is a puerile exercise.
The bottom line is simple; yes, in IPL 1 the player auctions looked gigantic, like a mammoth ball going ding-dong because the base level benchmark was the BCCI annual player contract. Thus, we all felt blown by the sudden windfall for MS Dhoni& co. Even the stunned players naturally looked hugely grateful for the dramatic rise in their net worth. But things have apparently changed remarkably manifested in the statements of IPL bosses who are themselves shouting hoarse from roof-tops and TV towers that " IPL is a game-changer, recession -proof and already competing with the English Premier League on financial valuations". The logical question that follows is, how are the cricket players benefiting by this exponential growth?
A cricket players' correct valuation post- IPL 3 ought to be his free-market price totally dependent upon his current standing and perceived performance potential in a competitive bid by the franchisees. In my opinion, as an example, Sachin Tendulkar purely as a brand value ( forget his awe-inspiring on-field contributions for a while) is worth multiple times more than the amount paid to him by the owners of Mumbai Indians. Tendulkar's presence increases gate-money, team sponsorships, merchandise sales and impacts TV ratings. Is he worth just USD 1 million or whereabouts? If Sahara can pay USD 370 million for a franchise, why would they not be willing to pay USD 5 million to Sachin alone per annum? One can logically extend the same yardstick to the top performers across all franchisees and discover that the star cricketers, in particular, are all comparatively grossly underpaid.
Keeping the players remuneration restricted favors the franchise owners and violates the very essence of correct market-based pricing which IPL believes it embodies. It is double standards multiplied three times. Because the truth is that if we apply free pricing norms for players two things will completely derail IPL's covert strategy: player costs will rise exorbitantly and will make franchisees struggle for break-even, profitability being a distant dream. This will corrode the over-hyped valuation story. Secondly, some franchisees will become stronger than the others upsetting IPL's applecart which deliberately wants no " favorite" teams to emerge. It suits them. But more on that later.
For IPL , transparency may be the best policy, but it's important to remember that apparently, by elimination, zero transparency is the second-best policy.
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