Most countries have a favourite sport which is celebrated no less than any religious festival. In India, it is undoubtedly cricket. The excitement during international cricket tournaments is palpable among Indian fans, and the atmosphere is highly celebratory.

However, in recent years, professional cricket tournaments like the Indian Premier League (IPL) have also been getting a lot of traction. The revenue generated by the IPL via viewership (tickets sales and streaming rights) and sponsorship has increased manifold since its inception in 2008. Duff and Phelps estimated the brand value of IPL to be $6.7 billion in 2019.

Players who participate in IPL are also compensated generously for their services. The salaries of most of the IPL players are determined in the auction. This year, the IPL auctions are taking place on February 12 1nd 13 in Bengaluru. So the following question comes to every cricket enthusiast’s mind: “What is the best way to determine a cricket player’s salary, or his value for his team?”. A franchise that values its players “appropriately” can bid properly during the auctions, assemble a better team, retain the right players, and win more matches.

Players’ valuation

It is reasonable to say that a player's value for his team should be high if his contributions are essential for his team's victory.

However, quantifying this value is a challenging task because, in a team sport like cricket, different players perform different tasks and produce different measures of individual performance that are not directly comparable. For example, a batter makes runs, whereas a bowler takes wickets, which are not directly comparable. Individual performance measures also do not take into account the synergies (complementarity and substitutability) between the players of a team.

For example, a player who can easily be substituted by other team members cannot be valuable for his franchise. In this way, a player's value for his franchise also depends on other members of the squad. Hence, a player can be valued differently by different franchises.

To deal with the complexities described above, we developed a statistical method (https://onlinelibrary.wiley.com/doi/abs/10.1111/anzs.12353) that provides a single index as the value of a player for his team. This index can be used to compare players with different specialisations. It also incorporates the synergies between players while valuing them.

Our method determines a player's value based on how his inclusion in the team affects the team's probability of victory. In simple words, if a player's inclusion in the team substantially improves his team's chances of winning, then that player is considered valuable. The method utilises runs scored and wickets taken by the player for this purpose.

Value-salary link

Using our technique, we calculated the values of all players who played in any season of IPL between 2015-19. Subsequently, we evaluated if players’ salaries are commensurate with their values. We found that the relationship between a player’s contribution and his salary is weak.

Subsequently, some popular players (superstars) are paid much more than what can be justified by their batting and bowling performances on the field. The accompanying table provides the names of the top five overpaid and underpaid players in 2019 along with the ratio of their actual and estimated salaries (estimated by our method).

The disproportionality in the salaries of the superstars need not be irrational and can be attributed to factors other than batting and bowling, for example, fielding, captaincy, wicket-keeping, etc., which were not included in our method. More importantly, superstars help their franchise generate revenue via advertisements, sale of merchandise, etc. In other words, they have a high brand value which becomes a part of their salaries.

The distribution of salaries in the IPL is consistent with other sports like soccer, wherein a few famous players earn disproportionately more than what can be justified by their performance on the field. Economist Sherwin Rosen studied this phenomenon and named it the “superstar effect”. IPL, being a sports tournament, is no exception to this rule, and we can expect famous players to continue drawing huge salaries in the upcoming IPL auctions.

Chandrakar is Assistant Professor at Mahindra University School of Management; and Das is Professor at Indian Institute of Management, Bangalore

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