Many of those who were lucky enough to watch Rinku Singh of the Kolkata Knight Riders hit five consecutive sixes in the last over of the match to win it must have wondered why the maximum bid for him in the IPL auction was just ₹55 lakh down from ₹80 lakh in 2018.

Indeed, they may also be wondering why some other players who have been sitting in the dugout received so much more or, even when they have played, not lived up to the bid price. Two foreign players between them went for a whopping ₹36 crore.

Mistakes aside, as happened some years ago when a player received an astonishingly high amount, the IPL bidding process has always been a mystery to lay people. They think the bidding is driven as much by the vanity of the franchise as the glamour of the players. So not only have the stars received a lot of money, they also haven’t performed as expected.

This sort of thing happens in all team sports. In fact, it happens in all entertainment businesses where the highest paid persons turn in performances that are not much better than those who have received far less. Why?

David Ricardo, a 19th century economist-cum-stockbroker from England, was the first to explain it. He did it in terms of the rent paid for arable land. As the better land became scarce, he said, you had to pay more for it.

This could be broken into two parts. One part was the payment made to it to prevent it from transferring to some non-agricultural use. He called this transfer earnings. The second part was what he called “economic rent”. It’s what is paid over and above what is needed to keep it in its current use. This economic rent is what all top performers earn.

It’s what explains why a few players earn far more than their performance would warrant. Clearly, they bring some value to the team but it’s hard to see quite what that is because T20 is played on the spot and no amount of experience of the star players can make much difference on the ground.

Bowlers vs batters

There is also the interesting fact that bowlers get far less than batters even though a really good bowler controls even the best batters. So why the premium on batters? All rounders do better but only just. It’s the batters who take 70 per cent of the kitty.

However, the effort-reward ratio is heavily skewed in favour of bowlers. A bowler who plays 100 T20 matches over his career is expected to bowl only 400 overs can expect to earn at least ₹5 crore for bowling just those 2,400 balls — and, what’s more, he doesn’t have to take any wickets. All he has to do is to bowl 10 or 11 dot balls out of 24 per match. In other words, a bowler earns merely by being in the team. This, if you think about it, is exactly what Ricardo was saying about good and not-so-good land. Simply being adjacent gives the not-so-good land value.

So in the end it all boils down to the potential contribution, measured by consistency, that seems to fetch a high return, not the actual return. In betting terms the odds stay even over time. Going by that logic it would seem that the auctions got Rinku Singh’s price nearly right.

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