Tuesday, 14 June 2011

How much can IPL style leagues fetch in other Countries

Ever wondered that what would be the worth of IPL style league if formed in other nations. Can they offer IPL style salaries or can they fill in the coffers on the hosting nations like it has done for BCCI. Can any other country rival the IPL.

To start with the first question that comes into mind is what all could be the factors that will decide the value of a franchise in any country. If tomorrow Afghanistan wants to go for a APL or Pakistan wants to go for PPL, how can I sitting here estimate the value each franchise will fetch.

I tried to work on the same and create some sort of approximate model. A model which if gives me value with a 10% error would be great. For my reference I have the IPL where 10 Franchise gave BCCI 1400M$ for 10 years. Which means 140 M$/Year for BCCI and also 140 M$/Franchise for 10 years (14 M$/Year/Franchise).

The factors I could think of are
  1. Interest Factor (Squarely Proportional)
  2. Population
  3. Per Capita Income
  4. Poverty Level (Non Poor Squarely Proportional)
  5.  Security Factor
  6. Infrastructure (Squarely Proportional)
  7. No of Teams ( Inversely Squarely Proportional)
Based on these factor and using IPL, I found out a constant. The same constant and the formula can be used for finding value of other IPL style leagues

Before going into some exciting results some explanations on some factors
1. Interest Factor:- It is very difficult to define. The factors I have used are based on guesstimate where the no of cricket article to total no of sports article is one Indicator. Another indicator is the level of attendance witnessed in the International matches.
Based on these factors the interest factors used are (Ind:- 2.5, Pak, BD & SL:- 3, Aus:- 1, Eng:- 0.9, Ken + Uga:- 0.8 (For East Africa PL), NZ:- 1, Zim & SA:- 1.5, WI:- 2, Canada:- 0.4, USA:- 0.1)
Many of you can challenge these factors. Perhaps a well traveled person can give the real picture. If people want to challenge this figure kindly do that and write in comments. I can definitely improve on these.
In my opinion Interest Factor has a square effect. means if A has 1 and B has 2, the effect on money would be 4 times for B)

2 & 3 Population and Per Capita Income:- No need to explain. This helps in giving the size of total market

4. Poverty Level:- While defining poverty level may have differences from country to country but this is a important factor. If some percentage of population if simply work to have food they cannot be expected to watch cricket or be a target market.
In my opinion, if the percentage poor are more in the country that would mean that non poor people who form a potential market would be even more less. The factor would again be squarely proportional.
This means a country with 20% Poor (80% Non Poor) the target market would not be 80% but rather 0.8 X 0.8= 0.64 or 64% Population would be available as market. So a country with 40% Non Poor (Half the previous case, 60% Poverty) then just 16% population will be the market. Hence though the non poor dropped to half, the potential market dropped to a fourth

5. Security Factor:- If you have war in a country, then not much would be fetched for franchise. Hence this is also a very important factors. This is again a guesstimate based on present cricket scene, crime rate and terrorism etc. The factor would be between 0 & 1 meaning 0 if worst case and 1 is the best
The number worked for various countries are (Ind:- 0.8, BD:- 0.7, SL:- 0.8, Pak:- 0.3, Aus, Eng & NZ:- 1.0, Zim :- 0.5, WI:- 0.9, SA:- 0.8, East Africa:- 0.7, USA & Can:- 1, Mal:- 0.9)

6. Infrastructure:- Again a very very important factor. I clearly defined the terms for it. Stadiums can be in a country Good, Average or Bad. The tournament can be held in 3 ways:- Home and Away, Partial Home and Away, One or Limited Stadiums. Based on these factor Home & Away+Good is 1, H&A+Average is 0.9 and so on. In the end we reach the worst case One Stadium+Bad is 0.2. If the tournament is not even in a stadium and a ground is used then Well!!!=0.1
It means even if we use one excellent stadium for all matches we are at a bad state as compared to if we go for Home and Away model in bad stadiums also. The reason is obvious, in one stadium how many matches can we expect the local population to go for. Also how will they decide which team to support. In home and away there are clear areas for home team and local support.

7. Number of Teams:- How can number of teams have any effect. Well ever heard of law of diminishing returns. According to it if we keep adding more units (teams or franchise's) the contribution of each team would be lesser than the previous one. I take the case of inversely squarely proportional.

Based on the above factors and getting data for all the points I tried to analyze the value of IPL style league in Bangladesh, Pakistan, Sri Lanka, Australia, England, New Zealand, West Indies, South Africa, Zimbabwe and non test potential markets of East Africa, USA, Canada & Malaysia. The factors assumed have been mentioned above. The rest can be found using internet. One factor Infrastructure I would be mentioning against each case. Lets see if any place can match IPL

Remember BCCI for 1400 M$ from 10 Franchise for 10 years. IPL is based on Home and Away model with good stadiums hence 1 factor for Infra

With a huge population and huge interest for cricket, Bangladesh surely looks like a lucrative market. The local league they started NCL T20 had 6 teams but was held in 1 stadium.
Bangladesh does not have the infrastructure for Home and Away model as  all 6 cities do not have stadiums and also airports, hence giving it a Infra factor of 0.4 (One or Limited stadium + Good Stadium =0.4)
Based on these factors each franchise would fetch 2.9 M$ hence meaning 17.4 M$ for BCB. Hence this is any way can never rival BCCI

They can go for a Partial Home & Away model, but this time SLPL went for One Stadium. Again the same Infra factor of 0.4 and 7 teams, each franchise will fetch 2.6 M$. This would mean 18.2 M$ or 1.82 M$ for each year. Incidently as part of SLPL, SLC is getting 1.75 M$ / year. I was actually very happy to see such close results for my calculations.

Similarly working on same factors the summary is as follows
  1. India:- 10 teams, 140 M$/Franchise, 1400 M$ (Infra Factor(IF)= 1.0, H&A model)
  2. Bangladesh:- 6 teams, 2.9 M$/Fr, 17.4 M$ (One stadium, IF=0.4)
  3. Sri Lanka:- 7 teams, 2.6 M$/Fr, 18.2 M$ (One stadium, IF=0.4)
  4. Pakistan:- 8 teams, 10.9 M$/Fr, 87.2 M$ (H&A Model with average stadia, IF=0.9)
  5. Australia:- 8 teams, 74.1 M$/Fr, 592.8 M$ (H&A Model, IF= 1.0)
  6. England:- 18 Counties, 16.2 M$/Fr, 292.6 M$ (H&A Model, IF=1.0)
  7. New Zealand:- 6 teams, 14.0 M$/Fr, 84.0 M$ (H&A Model, IF=1.0)
  8. South Africa:- 6 teams, 17.6 M$/Fr, 105 M$ (H&A Model, IF=1.0)
  9. West Indies:- 6 teams, 9.7 M$/Fr, 58.2 M$, (H&A Model, IF=0.9)
  10. Zimbabwe:- 5 teams, 0.2 M$/Fr, 1.0 M$, (H&A Model, IF=0.8)
  11. Canada:- 5 teams, 5.6 M$/Fr, 28.0 M$ (One stadium, good, IF=0.4)
  12. USA:- 6 teams, 4.3 M$/Fr, 25.8 M$ (Partial H&A eg East Coast, IF=0.6)
  13. East Africa:- 6 teams, 0.73 M$/Fr, 4.38 M$ (H&A Model, IF=0.8)
  14. Malaysia:- 6 teams, 0.5 M$/Fr, 3.2 M$ (Partial H&A Model, IF=0.6)
Hence we see that the big bash comes closer to IPL roughly coming to 40% of size of IPL. ECB in present form of county cannot match. If they can reduce the number of teams to say 8 teams then they can get more than 650 M$ from their T20 tournament reaching 45% of IPL and then both Bigh Bash and ECB T20 would be in a position to take on IPL
About the others, not many can even come closer to IPL. If interest level is raised in USA and Canada, they can be much bigger markets than IPL too!!!!
Presently Pakistan has a serious issue on Security and factor of just 0.3 (0.8 of India). If they are able to improve the situation (Say Factor of 0.7) then instead of 10.9 M$ they can get 25.4 M$ for each franchise or a total money of 203.2 M$. This means a tournament roughly 15% the size of IPL. Not rivaling IPL but it can be also a good potential market.

The rest presently are small and will take some time to emerge out. Hence the market to look towards the future EPL and La Liga of cricket would be IPL, PPL, Big Bash, EPL T20 and USPL. The SLPL, WIPL, BPL etc would be like K League or MLS. Looking for some exciting times.

1 comment:

  1. Great sharing i like this post how much can ipl style leagues fetch
    Thanks for sharing
    IPL 2014