IPL Auction 2011: Financial Gamble and Strategy

Posted in Marketing & Strategy Articles, Total Reads: 4166 , Published on 08 January 2011
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Glitz, glamour and big money and of course cricket has been synonymous with the Indian Premier league over the past 3 years. However before the auction took place this morning everyone was skeptical about the continuity and success of IPL because of the absence of one man who single handedly had created it and made it such a big success. However after witnessing the auctions for the past 7 hours one can easily say that the future of IPL is indeed bright.

 

IPL Auction 2011

 

Indian Premier League 2011 auction held at Bangalore on 08th January 2011 saw 350 of the biggest superstars of cricket go under the hammer. So is IPL really on top of the mind of these big corporate or is it just an entertainment package for them. After following the auctions closely we can say that it pretty well meant business for them and they all had clear strategies in place which we plan to analyze. To start off the franchisees had $75 Mn at their disposal to be spent at the auction. The IPL financials have always involved huge sums of money alongwith the glamor and glitz.

So now let’s try to analyze how the franchisees went about bidding process. The first shocker came when the first player went in for auction. Yes right, Gautam Gambhir was bought by Kolkata Knight Riders for an astonishing $2.4 Mn. Agreed that he is a good player but the price simply surprised many. But in the hindsight we can say that Gambhir is being considered for a leadership role and won’t be surprised if he leads KKR in IPL 4. This shows a clear strategy to build the team around him. Similarly the two new franchisees Pune and Kochi needed a captain and have opted for Yuvaraj and Jayawardene though it has costed them a lot. Similarly Punjab went in for a new face in the form of Gilchrist and intend to build a team around him. This was not the case for Mumbai, Chennai, Rajasthan and Delhi as they had already retained Tendulkar, Dhoni, Warne and Sehwag. However the same cannot be said about who actually would lead Royal Challengers Bangalore and Deccan Chargers as no one can be considered as a captaincy material from the team that has been picked.

Further as the auction progressed one thing was pretty clear the franchisees were keen on picking up Indian players at a higher price as compared to their fancied international counterparts. The last 3 editions of IPL has made them smarter as they now know that it is the Indian cricketers who form the crux as each team can pick up only 4 foreigners. So the team which has performed well in the last 3 editions has been the one in which the Indian players performed well. Thus the Indian players were in greater demand and a total of $ 38.5 Mn was spent on 38 players as compared to $ 30 Mn spent on 46 foreigners.

The top Indian players were in great demand and the Pathan family had a great day as they raked in $4 Mn. So on an average each Indian player was bought for $1 Mn. However there was complete madness in the auction as well. Consider Chris Gayle remaining unsold as this guy can win the game single handedly. And also majority of the T20 World cup winning English squad remained unsold with the exception of Pietersen, Broad and Collingwood. However the absolute shocker for the Indian fans would have been the way our ex-superstars namely Ganguly, Dravid and Laxman were treated by the franchisees. Ganguly remained unsold and the other two were just bought above their base price. This shows that the franchisees were looking for young blood and were thinking about the future.

Finally let’s have a look at those teams which retained players. Cricketing icon and demi-god Sachin Tendulkar was retained by its franchisee Mumbai Indians. Sachin Tendulkar not only adds value as a player to the Mumbai Indians side but also is an unparalleled favorite crowd puller amongst the contemporary cricketers across the world. Brand Sachin would not only add value to its franchisee as a player, but would also be useful in marketing, sponsorships, branding, merchandising etc. Same is the case with Dhoni and was rightly retained by Chennai.

However as the day progressed it was clear a few franchisees had a strategy in place and a few were simply blank. Take the case of Chennai, they were interested only in retaining their old squad and were bidding only for those who were in their squad the last year. They looked disinterested in other players and were hardly bidding for them. Mumbai had a good strategy in place and they went all out for Rohit Sharma whom they had missed last time around. It would be great to see how Tendulkar will manage Symonds and Harbhajan now. Punjab in the morning session were completely out of sync with the proceedings but made some aggressive moves in the afternoon session and at one point of time they almost had a fight with the Mallya’s over Tiwary. Pune did a good job and have a balanced side with a good mix of Indian and foreign players.

The biggest and the most entertaining cricket event of the world, which has caught the imagination of millions around the globe, is a spectacle beyond words. Superstar players, top businessmen, Bollywood stars and electrifying entertainment hold the world with amazement. IPL is the biggest sporting bonanza in the cricketing world with the best wanting to be associated with it. From business organizations for marketing, branding, sponsorships to franchisees selecting, evaluating, purchasing and rejecting cricketers to having partnerships with global brands, all become a part of a never ending strategy in the IPL.

 


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