The business of franchises

Not long after Lalit Modi claimed a top five spot for the IPL in the global sports franchises list, Forbes in an extended piece hailed it as the world’s hottest growing sports franchise.

Apropos, a clip from my recent conversation with Harsha [the full interview, which was an hour long, will appear in Rediff Monday]:

It’s almost a given that the IPL will survive and even thrive so the question is, is this the cue we need to refashion our domestic cricket?

I think so. I think the best cricket, the best results, are produced by profitable enterprises. The best product eventually – unless you are in a capitalist culture where everyone comes and forms cartels to cheat the consumer – otherwise, the best deal comes from a profit driven enterprise. My original excitement with the IPL and the idea of franchise-driven sport was, eventually the state associations go away and you only have 15 franchises in India, and the franchises produce three teams each – a four day team, a one day team and a T20 team. Just as Yorkshire County Cricket Club is responsible for producing three teams. So similarly everything is done by the franchises, which are profit driven enterprises, and the BCCI is a governing council sitting up there framing the laws, picking the teams, having a selection committee, like a center, with federations. And that is what I’d love to see even today.

Utopian, but will we ever get there?

No, because the state associations that exist have been fattened on grants. Any system where you are fattened on grants, you will not want to pursue excellence – which is the bane of all sport in India, and the bane of federations in India. Hockey for instance doesn’t take off because hockey sits back and takes money from the government; archery sits back and gets money from the government, so they don’t have to become good. Associations don’t have to become good because they sit back and get money from the BCCI. Which is why I was very excited about the franchise structure, where all Indian cricket is franchise-driven.

Currently people say the problem with Ranji Trophy for instance is that no one watches Division 2, no one watches Tripura play for instance, which is fair comment. But if you have 15 private franchises, a Mallya for instance won’t want to come 15th, so he will go around picking the best players for his franchise and so will the others, and suddenly the league becomes competitive, people come to watch, and when the spectators come, it becomes profitable.

Right. Plus, give each franchise one stadium, and each of them will vie with the others to make their stadium the best, most state of the art, and for no cost to the BCCI…

Yes, and another aspect of this is, don’t the Bulls and the Lakers for instance do road shows? They want to popularize their players – and that is what the franchises here will do in this system, because when selling jerseys becomes an important part of your financial model you want your four day players to be popular too. The BCCI will no longer have to market the sport — the franchises will do that for you. The BCCI can do what it does best – sell television rights and pick teams, in that order.

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16 thoughts on “The business of franchises

  1. Harsha’s and your faith in the franchise system as a panacea for mis-management by State boards is naive. Specially “What that brings is professionalism and a result-oriented culture, which in turn enhances the quality of competition and ensures that the domestic structure is in fact, as it is now only in theory, just one rung below the international level.” What you suggest will actually bring in the profit motive at the cost of everything else, leading to price gouging of the customers, addition of all sorts of non-Cricket related overhead to the pricing structure, and the replacement of national team primacy with franchise loyalty. Right now the state boards are beholden to the BCCI and they jump when BCCI barks. Do you see an all powerful franchise owner or league commissioner jumping when a powerless BCCI calls under your model? The amount of naivete in your love letter to the efficiency of the free market is Thatcheresque. Consider for example the NFL, which is one of the world’s most profitable sports leagues, based on the franchise model. According to your logic, the winningest franchise should be the most profitable, and the losing franchises should be struggling for revenues. In reality, the New England Patriots are not the most profitable. In reality, the league has mandated artificial “equalizer” policies which end up levelling the playing field for all franchises whereby everyone makes money. In other words its a cartel where the only loser is the consumer who buys 5$ beers, 75$ jerseys, and 1000$+ season tickets and still endures innumerable breaks for the TV audience. There has got to be a better alternative than what we have now in Indian cricket, but the answer does not lie in free market theology.

    • *LOL* Thanks for the slap on the wrists, mate. No, seriously.

      While Harsha — and by extension, I — are advocating the scrapping of the association-driven format of today and its replacement with a franchise-driven structure, it is not his case or mine either that the NFL/NBA playbook be taken in their entirety, or that a system be put in place that permits franchises to run roughshod.

      Precisely because we now have sufficient examples of franchise-driven sport worldwide, it is now possible to study both the good and the bad, and to reformat for our purposes, in ways that suit the sport, and the country. I don’t buy “holy books” in their entirety; from existing theology, I believe in taking what suits, and rejecting the rest.

  2. Sorry for being an eternal critic but … Harsha/Rediff should add a note/disclaimer stating that he is not a neutral party. he was/is an advisor to one of the franchise (mumbai indians) and hence his opinion (however fair it is!) should not be construed as a neutral voice.

    But i agree with him – indian sports associations will improve only if they have to get money from the public and not handed over fat cheques from the govt

    • Harsha stopped being an advisor, or in fact serving in any capacity, to MI or any other IPL related entity, in mid-2008. A year and a half later, surely he can voice his opinion? Besides, he is not making the case for the IPL, but for the concept of franchise-driven sport to replace the current association-based model — which is a larger argument he could IMHO have made even if he were still tied up with a franchise. Heck, pal, I’d hate to think that because I work with Rediff I am not allowed to express any opinion on website/internet revenue models and such.

      • Prem – i was afraid exactly of this reaction.

        I wasn’t trying to be critical of Harsha/Rediff/you. I just wanted that everyone knows the full picture. Harsha can (he has earned it!) provide his opinion even if he is part of IPL franchise, but needs to disclose his interests to paint a balanced picture.

        I wasn’t aware of the fact that Harsha stopped working with Mumbai Indians but when i see most western European publications, i see a disclaimer when their personal interests might even be remotely affected.

        I shouldn’t have made an issue off it but i would def. love to see a statement/disclaimer if Harsha had some interest – now that he isn’t associated, this becomes a moot point!

        To your point on Rediff/internet revenue models, i am sure you would add a disclaimer/statement when making your opinion that you work for Rediff.

        Anyways, apologize as i managed to make a mountain of a molehill.

        • Nothing to be “afraid” of — you raised a thought, I responded. Is what the comments field is for 🙂 No apology needed either.

          As to the other, if I were generally talking of business models on the Internet, say in the media space, I’d likely not even bother with a disclaimer.

          If on the other hand I was doing a piece on, say, Indian sites on the net and what works and what does not, then yes I would feel the need to point out that I work for one such.

          In any case, as you say, it’s moot: Harsha quit as advisor to MI after the first season and since then, has nothing to do with that or any other franchise. I’d suppose, since he has friends in various franchises, folks occasionally call to ask for his opinions but that is fine — I get such calls too at times, but I’d need to worry about it only if there is a discernible conflict of interest. Cheers.

  3. Prem,

    The problem with the franchise model extending beyond the IPL into the 4-Day game and hence (effectively) taking over Domestic cricket in India will be a conflict of interest with the National team.

    Look forward to whole interview to read Harsha’s solution to this problem.

    • I doubt there is such a conflict. This in fact is a thought I have had for some time, and even written a column or two about.

      The point would be that where you now have state associations, you instead have franchises. What that brings is professionalism and a result-oriented culture, which in turn enhances the quality of competition and ensures that the domestic structure is in fact, as it is now only in theory, just one rung below the international level.

      However, as with any other franchise-driven sport, players are clearly expected to play for their country when international engagements come up.

      • Prem,

        In cricket, the demand to represent your country in international engagements is much higher than other sports.

        Football has occasional weekends (not months) dedicated to the National team and the world cup/european cup every 2 years (which are played in the off season). And in the case of the American leagues, the international demand for players is non-existent unless you turn up for the Harlem Globetrotters!!!

        A solution would be to reduce the amount of international cricket (read: rid of meaningless ODI tournaments) but since most countries outside India would still depend on International matches (and that too against India) for their revenues, not sure how it could be achieved.

        • The contrary view would be, most cricket boards manage their calendars well enough to ensure that international players get to take part in domestic tournaments for at least a good part of the time.

          If you only have ten franchises, you can construct a domestic schedule that will take two months. Since it is franchise driven, revenues are pretty much a given. Hence the BCCI has less need to fill every available date with no account games simply for the sake of revenue.

          It makes sense any way you look at it — except, as Harsha points out, the associations will never let it happen.

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