by the time many scoffed at what I wrote. I guess now people are finally
getting wiser as to the threat that IPL poses not just to Indian
cricket but world cricket as well.
At the time I wrote that for IPL to be a true success (considering the
vast amounts of sums the franchise owners were putting in) it would
have to eat into a BIG PORTION of not just Indian crickets pie but
world crickets as well.
Already we are seeing the dangers of how IPL is affecting certain
cricket boards all over the world as players would much rather play
just 6 to 7 weeks in a year and earn multiple times of what they would
have earned playing for their country for the entire year. Of course
not all players have been seduced by the "dark side" but eventually as
IPL continues young and impressionable players may not be as
"patriotic" as some of their predecessors.
Still, this is only part of the problem. There are many other problems
that IPL has raised. If one remembers I was skeptical of how IPL could
return the investments of its owners EVEN IF IT BECAME A BIG SUCCESS.
Consider this. Some of the 8 original franchise owners are still
hurting as far as their considerable huge investments in terms of
return on their equity. Take Reliance Industries (the country's
biggest private company) where the approximately 500 crores invested
by Reliance Industries has resulted in them earning barely 25 crores a
year. That's about a 5% return on equity. Pathetic by any business
standards where the return on a risky investment should be a minimum
20 to 25 percent and should be around 35 to 40 percent. But we are not
even seeing a return of 7 to 8 percent WHICH IS WHAT A BANK PAYS ON
INTEREST. So, the only way these people can make any money is if the
BRAND VALUE GOES UP. That way their equity is worth double or triple
withing 8 to 10 years and thereby their net gain on their return
becomes justified. Here also things have become quite suspect.
Consider the following.
In order to boost up the equity (by just falsely increasing the
perceptive brand value) Mr. Lalit Modi just shot up the bids for the
last two new franchises. The most expensive franchises were bought by
Reliance Industries and Vijay Mallaya for approximately 500 crores
each. They are still hurting as far as return on their equity on those
amount. Now the two new franchises made a bid for 1500 CRORES EACH.
This gives them a return on equity of LESS THAN TWO PERCENT. Just how
stupid is that. Even if we take a stupendous increment in net profit
by 4 to 5 times current earnings, thier net return after an increase
in brand value would amount to not very much. Just about 7 percent at
best. The less than two percent return on equity plus the (probable
increase in their brand equity in terms of share value which may
average out to 5 percent a year on a 8 to 10 year period. 7 percent is
less than the current bank rate interest being offered. So, just where
is the logic in taking this kindn of a risk.
The explanations are quite simple. IPL is a money laundering machine.
There are quite a few super rich individuals in India (politicians,
mafia etc.) who earn hundreds of crores a year. These people have no
way of showing even a fraction of this money as it has been illegally
earned. Unlike a businessman who can pay tax and a penalty on his
black money to make it white money (as the mode of earning is legal
but the illegality is in avoiding taxes), these mafia and dirty
politicians cannot declare this income as it has been earned due to
illegal and corrupt means. Just admitting having it would mean a jail
sentence. Therefore, the only way to make this white legal money is by
investing this black money into legitimate businesses. The object here
is not so much a return on their equity as it is to convert their
illgotten and illegal gains into legal white money. Here even if the
business venture is making a loss people invest in such ventures. If
the business ends up making a profit as well its a bonus.
In this whole mess there are also allegations of match fixing and
betting. Now consider this. An enterprise like IPL is defintely ripe
grounds for the betting mafia which may result in match fixing. Paul
Condon of the ICC anti corruption unit has already written on how IPL
is a powderkeg waiting to explode in terms of the match fixing that
may be taking place. He suggested that the anti corruption unit of the
ICC should oversee all the IPL matches. The fees for this was a mere
1.2 million dollars or about 5.3 crores. This is peanuts when you take
the staggering amounts involved in IPL. IF IPL WAS INDEED AN
ORGANISATION ON THE UP AND UP AND WANTED TO PROJECT ITSELF AS SUCH
THEY WOULD HAVE GRABBED THIS OPPORTUNITY WITH OPEN ARMS. HOWEVER, MR.
LALIT MODI REFUSED AND SAID THE AMOUNT BEING ASKED WAS TOO MUCH.
To pay an amount less than 1 percent of earnings to secure the
tournament from the possibility seems a bit too much. Why is that. Its
not the amount that bothered Mr. Modi but the idea that the anti
corruption unit would not allow any match fixing thereby not allowing
some of the owners to earn through match fixing and thereby give them
more return on their equity. Match fixing would allow some of the
owners to not only convert some of their illgotten gains which were
illegally earned to become white money but would also allow them to
earn more illegal money on their initial investments through match
fixing. A win win situation on all counts. Of course none of this
would be possible with Paul Condon and the anti corruption branch of
the ICC monitoring all of the matches. So, Mr. Lalit Modi refused.
IPL although being vastly popular in India has already dented the
image of cricket. In India most of the people watching IPL don't care
who wins. They just watch it for entertainment. In fact many
youngsters don't even care if match fixing is going on. They will
still watch it as entertainment like watching a fictional movie.
Unfortunately, genuine cricket fans like myself have become so
disillusioned with this process that I barely watched any IPL matches.
Out of the 56 league matches I did not even watch 5 matches. And even
those 5 were not watched in entirety but in bits and pieces. This was
contrary to the first season where I watched all the 56 league matches
in entirety.
However, as long as the millions in India watch IPL matches
irrespective of whether match fixing and betting exists the IPL will
continue to earn its millions.
However, its cannibilism on cricket's other products like test cricket
and one day cricket has already taken place. Further ***ism will
continue. The very nature of cricket is already in danger due to match
fixing and betting. As long as the millions in India don't care, as
they get this lovely entertainment of cricket (fake or real), and
beautiful *** women, combined with the opportunity to bet and enjoy
oneself, IPL will continue in India as it has become India's Las
Vegas.
Viva Las Vegas.