The Hindu Business Line : ‘IPL is an idea whose time has come’

The hype and hoopla over the Indian Premier League cricket continues and only gets more strident. High-profile team owners ranging from liquor baron Vijay Mallya to the country’s top industrialist, Mukesh Ambani; some of the world’s top cricketers to play in the league, and multi-crore rupee bidding has all made for some heady brew. One of the men behind the whole process of the IPL is 42-year-old Balu Nayar, Managing Director of global sports and celebrity management group IMG, who has been calmly strategising behind the scenes. “IPL is an idea whose time has come, and it will find its rightful position in the cricketing programme,” says Nayar. Nayar, an engineer from IIT, Kharagpur, and an MBA from IIM, Bangalore, was earlier the Regional Director for Yahoo in the Asia-Pacific region, before he took over the reins of IMG from Ravi Krishnan. In this interview to BrandLine over the mail and phone, an excited Nayar expounds on the whole concept of the IPL and how its contours will shape out. Excerpts:

What’s the core concept behind the IPL? How did IMG arrive at the structure? How similar or dissimilar is it to such formats the world over?

The IPL was designed after an intensive study of the primary sporting leagues around the world such as the NHL, NBA, NFL and EPL. We had not only examined the theoretical models, but the result and impact of each of these leagues before arriving at the final blueprint. As in most other areas, there were at least as many learnings from the shortcomings and weaknesses as there were in the strengths and benefits — mapped to the individual market contexts. What has finally emerged as the IPL design is one that has been meticulously refined to work for cricket. As importantly, the league structure has been modelled so as to flourish in the uniquely Indian context, and drive the development of grassroots talent in Indian cricket. Any such concept can only be successful if all stakeholders’ interests are safeguarded, and I’d say that we’ve gone to extraordinary depth to address this optimisation exercise.

Did you or the BCCI expect this kind of a response to the IPL from the corporate world? Considering that in most cases bidders have bid far in excess of the reserve price, was the response overwhelming?

We did expect to create a revolution, but it has been gratifying to look at the results. While the numbers have got a lot of publicity, what hasn’t got as much mention is the quality of team owners that the IPL has managed to attract. This is a key factor in the long-term success of the IPL, and we believe that we’ve got a powerful dream team to partner with here.

The bids from the eight franchisees for IPL rights across eight cities on the face of it seem quite high — in the revenue model, do team owners stand to make money in a realistic time-frame? Where would the bulk of revenues come from for each team owner? How does this work internationally?

To start with, I think we’ve got to acknowledge the fact that the successful team owners have put in more research and analysis into the bidding process than any external observer. Each team owner has arrived at their own business model after factoring in the unique variables that are relevant to their own business situation — in the context of auction theory, this is linked to the factor of private values. The business model that each individual team owner arrives at could be derived from a number of distinct objectives such as to use a powerful marketing platform, to create an EBITDA-generating financial entity, to build capital appreciation to exit at an attractive valuation — the list continues. If the focus is on the second objective, we believe that team owners can, through intelligent management of resources, get to generating robust profits pretty soon.

The proportion of revenues would depend on the approach and context of each team owner - but in a general sense, local revenue streams can, if managed well, surprise the team owners themselves with their size and growth. The final answer to this question — there have already been two carte blanche offers from interested buyers to the team owners, and that’s an indication of the value perception in the market.

Some bidders have said the IPL could be overleveraged and want to wait and see how it delivers before putting down more money – your opinion?

I haven’t heard of this, and will need to understand more before commenting. We have interacted with all the team owners, and have discussed their plans - in a group as well as individually, and we have only seen an overriding enthusiasm to invest and grow their teams.

Do you intend to take this league concept to other sports in India as well?

I would tend to rule that out in the short-term.

With IPL is there a danger of cricket oversaturation, both from the audience point of view, TRPs and for advertisers?

IPL will actually help strengthen cricket by growing television audiences — you will see a clear increase in TRPs as the IPL is designed to expand the overall franchise for cricket by attracting younger viewers to the game, as well as the female audience in general. The recent title sponsorship rights value of $10 million per year, far higher than the reserve price, provides an indication of advertiser interest.

Why do you have certain ‘iconic’ players play for certain regions only?

The concept has been brought in to help create and preserve team identities, so crucial to building brands. Accordingly, four players, Sachin Tendulkar, Rahul Dravid, Sourav Ganguly and Yuvraj Singh, have been pre-alloted to Mumbai, Bangalore, Kolkata and Mohali respectively. We have put in a mechanism to ensure that they will be valued at a significant premium. This concept is a refinement that we’ve incorporated in view of the Indian psyche, as well as the position of the IPL relative to the life cycle stage of cricket in India.

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‘IPL is an idea whose time has come’