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An analysis of player performance and salaries in the Indian Premier League (IPL), including the creation of indices to evaluate batting and bowling performance, an examination of the relationship between past performance and salary, and a comparison of the IPL to other leagues such as the English Premier League and the National Basketball Association.
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Acknowledgements
First and foremost, I would like to thank my thesis advisor, Professor Raghu Sundaram, for sharing the same enthusiasm and passion in my topic of research. In addition his undivided attention, constant guidance, patience and immense knowledge were a source of motivation to help me complete this thesis. I could not have hoped for a better thesis advisor and this would not have been possible without his help. I would also like to thank the faculty advisor for the Honors Program, Professor Marti Subrahmanyam, for giving me an opportunity to be a part of this program and pairing me with my advisor. His constant reminders and dedication towards the program were a great morale boost when the research was slow and hard to find. In addition, I would like to thank all the professors who took the time out on Friday mornings to come and lecture us on various topics. Without their insights, my research would have been limited. Their teachings pushed me to think beyond and look at questions beyond the immediate questions I had initially thought of. I thank my fellow thesis students, especially Veena Bontu, Misha Esipov, and Vinod Kasturi for their constant criticism, motivation and enthusiasm towards my topic and the class, which always pushed me to work on my thesis. Without their company in Friday morning class, in Stevenson Lab or in the Leadership Suite till 4 A.M throughout the semester, this thesis would not have been possible. I would also like to thank Hannah Kim and Surekha Rao for their constant moral support. Lastly, I would like to thank my parents and family for their love and constant support in all the decisions I made in completing this thesis.
Abstract
In my thesis, I examine the initial auction process for the Indian Premier League, a recent and immensely successful cricket league in India. The league is based on a new format of the game, one that requires a very different set of skills compared to earlier and traditional forms. I look to find the link between pay and performance for the top 89 players in the league. Since the league is based on a new format of the game, adequate historical data on the performance of players in this format is lacking. So I try to explain the bids for players using two methods. Firstly, I see whether the auction-based pay was justified by performance in subsequent seasons. To do this, I create a performance index based on important cricket metrics to assign a value to a player’s performance. I use the index to compare performance rankings to pay. The second method looks to explain the auction bids through past performance in other formats of the game. The investigation also includes other factors such as age and the ability to lead the team (captaincy), which could be important variables in picking a player for a team. The results are mixed; they show that pay cannot be adequately explained by past performance alone, nor are pay levels justified by future performance. The bids for players in the initial auction appear to have been based on intangibles that are hard to quantify. This is not, perhaps, entirely unexpected given the very new format of the game. However, the last three years have revealed a substantial amount about the relevant skills for this format and the players who possess them, and I expect that the pending renegotiations of the original contracts will be tied closer to performance.
In the 2000s, a third and even shorter format was introduced called Twenty20 cricket, and abbreviated T20. Games in the T20 format last only 3 hours, and internationally this format saw its first ―Word Cup‖ only in 2007. The huge success of the T20 World Cup, particularly in the game’s dominant market of India, led to the launching of contemporary cricket’s first professional league, the Indian Premier League, the subject of this thesis.
The Main Questions
The main question I am addressing in my thesis is that given the auction process used for the IPL, were the players who were paid the most successful? In addition, since the format of the game is relatively young and there is not enough historic performance data available, what were the bids for the players based on? Each format of the game requires a very different set of skills. These differences are so significant that nations have different teams for each format of the game. It is also important to note that each format of the game has come to demand a specific skill set from players and has allowed for the development of specialists. The auction took place only five years after the first Twenty20 game was ever played. However, given this background and the limited availability of data for this format, did the team owners base their bids on player performances in other formats of the game? Furthermore, some of the players picked for the IPL have never played an international match in their life, thus what were these picks based on?
The Structure of this Thesis
In my thesis, I will start with a more detailed history of the game followed by an in depth analysis of the Indian Premier League itself. I will further cover the rules for the auction process to acquire players and compare the top paid players of the league to the players in the National Basketball Association (NBA) and the English Premier League (EPL). I will proceed to calculate
a performance index to measure the pay to performance and will publish the research and results thereof.
2. Cricket and the IPL: A Background
The new format of the game, 20-20 cricket is responsible for the growth of club cricket. Before this, club cricket was not as popular as it is today. Though the game is played primarily at the international level, each country has intra country competitions in various forms of the game. These clubs are divided on the basis of geographical states such as in Australia and India, counties as in England or island nations as in the West Indies. Though this competition was in all formats of the game, each format had some changes, for instance Test matches ranged from 3 – 5 days instead of the traditional 5 days. This internal competition is more of an effort to find players for the national teams. There were no professional leagues and the concept of club cricket was nothing close to what the Indian Premier League has made it out to be.
In the 1970’s, Kerry Packer, a rich and influential Australian tried to create a league for his television network in order to secure exclusive broadcasting rights to Australian cricket. Even though his bid was refused by the Australian Cricket Board, he setup individual agreements with players from leading countries and started the league. However in light of court cases and new developments, the league was short lived and ended after 2 years. Thus the first attempt to create a professional league in cricket was not successful.
In 2007, the inaugural World Cup for the 20-20 format of the game was played in South Africa. Twenty20 was still in its infancy since the World Cup was played just 4 years after the first 20- 20 game was played. As the reigning ODI champions, Australia were the favorites to win the World Cup. This is because ODIs are the closest form of cricket to Twenty20. However, India
million for the Rajasthan Royals to a $ 112 million for the Mumbai Indians. The auction price for each of the teams can be found below.^2
Table 1 – Team Owners
This table summarizes the owners of each franchise and the amount they paid for the franchise.
Franchise Owners Price (USD million) Mumbai Indians Mukesh Ambani’s Reliance Industries Limited 111. Royal Challengers Bangalore Vijay Mallya’s UB Group 111. Deccan Chargers Deccan Chronicle 107 Chennai Super Kings India Cements 91. Delhi Daredevils GMR Group 84 Kings XI Punjab
Bombay Dyeing (Ness Wadia), Priety Zinta, Dabur (Mohit Burman), Apeejay Surendera Group (Karan Paul) 76 Kolkata Knight Riders
Red Chillies Entertainment (Shahrukh Khan, Gauri Khan, Juhi Chawla, JaiMehta) 75.
Rajasthan Royals Emerging Media, Ultra Tech Cements, Shilpa Shetty, Raj Kundra 67
The new franchises, Kochi and Pune were sold recently for $333.33 million to Rendezvous Sports World (a consortium of 5 companies) and $370 million to Sahara Group respectively.^3 The base price for each of these franchises was $225 million. This shows that the value of each team has risen by 4 times in just 3 years.
(^23) http://www.cricinfo.com/ipl/content/current/story/333193.html http://www.cricinfo.com/ipl2010/content/current/story/452856.html
Television and Viewership
A consortium of India’s Sony Entertainment Television and World Sport Group paid $1. billion to secure the global broadcasting rights of the IPL for ten years. However, due to a court case, there was a revised deal, where Sony Entertainment Television paid about $ 2 billion. In addition to this deal, many other companies paid undisclosed amounts for regional broadcasting rights. In addition to the media rights, DLF paid $50 million to sponsor the league, Hero Honda paid $22.5 million to become a co-sponsor and PepsiCo paid $12.5 million to become the beverage partner. Kingfisher Airlines became the umpire sponsor by signing a five year deal for $26.5 million.^4 The above figures testify to the IPL’s success in attracting money and raising sponsorships.
This kind of money for sponsorship and media rights should give us an insight into the size of the audience for this league. The Indian Premier League audience size in immense to say the least. Just the populations of the 8 cities, to which the franchises have been awarded, have a combined population of about 50 million according to the 2010 census conducted by World Gazetteer.^5 The city-by-city breakdown of the population can be seen in the Appendix 1. Apart from these cities, there is a wide fan following from the other cities in India and from the other countries that have participating players. It is estimated that about 26.3 million people watched the first three matches of the inaugural season. This number grew to 29.4 million people for the year 2009, when the IPL was held in South Africa and has further increased to 37.1 million people in the current (latest) season of the IPL. The viewership has surged a total of 41% since the inaugural season pointing to a rampant growth in the popularity of the league. This growth
(^45) http://www.cricinfo.com/ipl/content/story/343372.html 104&srt=npan&col=aohdq&pt=c&va=&srt=pnanhttp://www.world-gazetteer.com/wg.php?x=&men=gcis&lng=en&dat=32&geo=-
Salaries are pro-rated if a player is unavailable for part of the season, with the exception that if a player is unavailable for less than 25% of the season, the franchise is still liable for 25% of the salary and 25% of the salary is also counted towards the salary cap. The salary offer is valid for three years, although there is the possibility of player transfers in future years. Each team must also have four under-22 players. Each player bid starts with the base fee fixed by the IPL for that player, and there is no upper limit. Players were grouped into different bands within the auction based on the expectations of the organizers. Players in the same band were of similar experience and ability. Franchises were allowed to nominate one ―icon‖ player who would have to play for their team – with the promise that they would earn 15% more than the next highest paid player on that team.
In addition, the auction rules also stipulate that each squad should have a minimum of four catchment-area players — the under-22 players and the Indian national team players if so qualified can be counted for purpose of this rule.^6
(^6) http://www.thaindian.com/newsportal/sports/each-ipl-squad-must-have- cricketers_10019190.html#ixzz0hSU5eit
The catchments areas are defined by reference to a player’s registration with his local cricket association. They are:
The minimum salary for under-22 players is $20,000 per year. For other Ranji Trophy and non- auction players, it is $50,000 per year.
The players are what make the league so popular and successful. To get them on board, Mr. Lalit Modi, the founder of the league divided the top 100 players into 4 categories and promised them minimum salaries of $100,000, $200,000, $300,000 and $400,000 respectively. Over and above this, the players were auctioned in an open auction allowing the franchise owners to pay market prices for these players. This ensured most of the players to double their annual salaries by playing a mere 14 – 16 games over less than two months. It is important to note that this was just the salary component of the compensation not accounting for endorsements or any other sources of income. This would translate to a base range of salaries of $7,143 - $28,571 per game based on 14 games, which is the minimum number of games a team plays in any season. This base range obviously increased with the auction and the Indian Premier League has become the 2nd
team. VVS Laxman decided to surrender his icon status to enable his team to have more money to buy more players. However, the other 5 players retained their status. Thus, though these players are some of the top paid players in the league, I have not included them in the above table because they were not directly bid on.
Table 3 – Salaries for the Icon Players
This table shows the salaries for the icon players. These are calculated on a per game basis as well to be able to compare them better.
Name Country Team Salary Salary/Game Sachin Tendulkar India Mumbai $ 1,121,250.00 $ 80,089. Rahul Dravid India Bangalore $ 1,035,000.00 $ 73,928. Virendar Sehwag India Delhi $ 833,750.00 $ 59,553. Yuvraj Singh India Mohali $ 1,063,750.00 $ 75,982. Saurav Ganguly India Kolkata $ 1,092,500.00 $ 78,035.
2009 and 2010 Auctions – A Comment In the 2009 and 2010 auction, players have been bought for higher prices than stated in the above table. In the second auction, Kevin Peterson and Andrew Flintoff were bought for $1.55 million each. In addition, JP Duminy was sold for $950,000. In the third auction, Kieron Pollard and Shane Bond were sold for $750,000 however there was a tie. In a silent auction, these players were sold for $ 2.3 and $ 1.35 million in a bidding war making them the highest bid players of the league. 8 However, the players only ended up getting $750,000 each, while the excess bid over that was paid to the IPL. This was because this auction was based on special tie-breaker rules. However, I have not included these players in the top 10 players because I have only taken
(^8) http://reliance-news.blogspot.com/2010/01/nita-ambani-wins-tie-breaker-bags.html
into account the initial auction. This is because there is a learning curve with auctions, which could have affected the prices, teams paid for these players. The Top Paid Players in the EPL and NBA Table 4 – Salaries of the Top 10 EPL Players This table shows the top 10 paid players in the EPL according to the Portuguese agency, Futebol Finance are: (all figures are converted to US Dollars using the exchange rate of 1.5 USD/ Pound.)^9 It also calculates per game salaries to be able to compare the salaries to those of the Indian Premier League.
Rank Name Country Team Salary Salary /Game 1 Emmanuel Adebayor Togo Manchester City $ 11,100,000.00 $ 292,105. 2 Carlos Tevez Argentina Manchester City $ 10,500,000.00 $ 276,315. 3 John Terry England Chelsea $ 9,750,000.00 $ 256,578. 3 Frank Lampard England Chelsea $ 9,750,000.00 $ 256,578. 3 Steven Gerrard England Liverpool $ 9,750,000.00 $ 256,578. 6 Michael Ballack Germany Chelsea $ 8,400,000.00 $ 221,052. 6 Rio Ferdinand England Manchester United $ 8,400,000.00 $ 221,052. 6 Kolo Toure Ivory Coast Manchester City $ 8,400,000.00 $ 221,052. 9 Wayne Rooney England Manchester United $ 7,800,000.00 $ 205,263. 9 Robinho Brazil Manchester City $ 7,800,000.00 $ 205,263.
It is important to keep in mind that these are the top 10 players for the league not based on initial contracts but on renegotiated deals and transfers. The salary per game has been calculated on 38 games, which is the number of games each team plays in a season. The comparable salaries for the NBA for the top 10 paid players are in Table 5.
(^9) http://www.soccertools.com/50-top-paid-players-in-world-soccer-for-the-2009-2010-season.html
3. Data and Methodology Indian Premier League Performance Statistics for batting and bowling Pay based on initial auctions Performance Statistics Test performance for both batting and bowling One Day Internationals performance for both batting and bowling List A performances for both batting and bowling I will use this data to run regressions to try and find the correlation between pay and performance both before the auction and after the auction to see if either of the performances justifies the amount of money that was paid to the players. Terms
There are three main aspects to cricket; batting, bowling and fielding. Batting is how the team scores runs in the game and there are a number of statistics pertaining to batting that speak to how well a player is performing.
Runs – A run is a basic unit of batting. The basic objective of batting is to score as many runs as possible.
Batting Average – It is the number of runs scored per innings played and is a first measure of the potency of a batsman.
Strike Rate – This is a measure of the number of runs scored per ball faced. It gives an idea as to how fast the batsman is scoring his runs. Since each team plays only a limited number of balls, scoring runs fast is important.
Not Outs – It is a measure of the number of times a batsman has played an innings and not gotten out or lost his wicket by the time the innings wrapped up. There are various ways in which a batsman can get out. Along with scoring runs, another objective for batsmen is to protect their wicket or remain not out.
Highest Score – It is the highest number of runs a batsman has scored in an innings in his career.
100’s – The hundred run mark is considered a milestone in cricket and is called a ―century.‖ Like runs, the number of centuries is a measure of a batsmen’s performance.
50’s – The fifty run mark is also considered a milestone and is referred to as ―a half-century.‖ Like the other performance measures, the higher the number, the better the batsman.
0’s – A ―0‖ or a ―duck‖ is when the batsman gets out without making any runs. This is contrary to the objective of batting and a higher number indicates poor performance.
Bowling is the other major aspect of cricket. Bowling is how the team takes the wickets or gets the other team out. If the bowling team takes 10 wickets in an innings, the other team’s innings is over and the two teams switch roles.
Overs – An over is a set of six valid balls delivered by a single bowler. A valid ball is a ball whose delivery meets certain specified requirements.
