印度超级联赛板球（音频）
仅用17年，IPL就通过把板球打造为定制化媒体产品，而非沿袭传统体育，成长为一个规模超过160亿美元的联赛。 五日制测试赛被压缩成3小时的T20“对攻战”；连续两个月每晚安排一场黄金时段比赛，宝莱坞明星、烟火、舞蹈、稀缺的投球与充沛的六分球共同构成产品。如今，IPL媒体版权收入约为每场1600万至1700万美元，仅次于NFL，高于英超、NBA和MLB——Ben称之为“资本主义与宗教的完美结合”。
联赛的诞生，首先依赖Lalit Modi把BCCI被忽视的资产变成经济上的卡脖子资源。 他推动将板球的转播价值货币化，随后以BCCI董事身份，把Sahara的赞助费从约10万美元提高到每年1500万美元；据报道，他还为Nike卖出每年5200万美元的球衣赞助，并用一份6.2亿美元、4年的Nimbus合约取代Rupert Murdoch旗下的Star。Modi始终坚持，自己从几乎没有商业化的版权中“创造了数十亿美元的价值”。
IPL最深的竞争优势，在于BCCI同时控制印度球员、媒体版权以及进入国际板球体系的通道。 反叛的印度板球联赛（ICL）证明了这道壁垒：BCCI威胁对现役球员实施终身禁赛，取消退役球员的养老金，后来又提出只有放弃竞争联赛才能获得特赦。这项“被圈住的资源”让IPL能够聚合印度需求、吸引全球其他顶尖球员，并执行独立联赛无法复制的拍卖制度。
Modi与IMG通过明确面向女性、儿童及非体育娱乐预算设计产品，扩大了板球的广告市场。 印度原有板球版权已经“吸干”可用的广告预算，因此IPL瞄准控制单电视家庭遥控器的女性，并直接排在晚8点电视剧的档期。Shah Rukh Khan、Preity Zinta等宝莱坞球队老板让每场比赛都成为明星节目；女性观众占比从传统板球时代几乎为零，首季便升至30%—35%，最终达到50%，甚至让女性美容品牌能够投放在“阿尔法男性的胸膛”上。
特许经营模式压低了下行风险，球员拍卖则最大化了竞争均衡与老板利润率。 球队无需承担球场债务，获得等额中央收入，初期还能拿走收入池的80%；首年特许经营费接近500万美元，而主持人称中央分成接近1000万美元，老板从一开始就可以盈利。500万美元的球员最高预算、75%的最低支出线、统一的3年合约和现场竞价共同迫使市场发现真实价格——最便宜的Rajasthan首季夺冠，薪资总额最低，却凭借更好的数据分析击败了对手。
治理问题一度几乎摧毁联赛，直到印度最高法院介入，才让机构投资者敢于下注。 Modi因涉嫌竞标操纵、未披露家族利益、回扣、赌博和洗钱等问题被停职；他否认这些指控，并称自己因拒绝操纵比赛、受到黑手党威胁而逃离印度。后来一场假球丑闻牵涉Rajasthan与Chennai，而BCCI主席N. Srinivasan的公司恰好拥有Chennai，促使法院推动改革、暂停球队并建立更干净的治理结构，最终为CVC与RedBird的投资铺平道路。
国内牛市情景有理由把IPL经济推向今天NFL的规模，但前提是媒体竞争与机构信任能够持续。 中央收入目前约为每年15亿美元，来自仅74场比赛；据估算，平均球队收入为7000万至8000万美元，EBITDA约5000万美元，估值达到10亿美元。印度广告市场、更多比赛、新增球队、升级球场以及潜在的主权资本都提供上行空间；而Reliance—Disney媒体合并、对时点高度敏感的流媒体经济学、BCCI拿走50%的分成，以及球员只获得联赛收入12%—15%，则是主要风险。
超级牛市情景是，T20最终成为全球娱乐格式，而不只是印度板球的主导形态。 板球将在2028年洛杉矶奥运会回归，已有估算显示美国拥有2000万重度球迷；IPL老板正在向美国、南非和英国联赛延伸，而印度若将赌博合法化，将打开一个巨大市场——主持人称，境外投注目前已达到每场7.5亿美元。障碍在于分发：印度晚8点的比赛在美国西海岸约于早上7:30开场；但主持人过去看似不可思议的结论，如今已从幻想变成有条件的判断：IPL“可能达到或超过NFL的规模”。
1. IPL用17年压缩了一个世纪的联赛建设
Ben最初做研究时，以为板球不会引起大多数美国听众的兴趣；研究结束后，他确信真正的故事是：从零开始打造一个大型联赛。NFL和NBA用了大约一个世纪才达到今天的规模，IPL于2008年成立，规模增长约20倍，超过160亿美元。
产品转型与公司架构同样重要。一项围绕五日制比赛展开的“沉闷、礼貌的英国运动”，被改造成一场3小时的T20比赛，核心是强力击球、六分球、烟火、啦啦队、场上表演和宝莱坞魅力。
David最有把握、也最具挑衅性的判断是：IPL可能在20年内成为全球最大的联赛。NFL把资本主义与集体经济学的结合做到了极致；Ben认为，IPL找到了更强的东西——“资本主义与宗教的完美结合”。
2. 印度电视业给了Lalit Modi第一次分发套利机会
Modi在20世纪90年代初从Duke大学回国时，已经被美国体育文化以及Monday Night Football制造“预约式观看”的能力所吸引。印度当时几乎没有成熟的体育媒体基础设施，但家庭电视渗透率开始提升，使这个国家特别适合开展新的内容与分发业务。
通过家族与Philip Morris的烟草合作关系，Modi获得了一个非同寻常的实体渠道：约8万至10万名代表已经在印度各地走访便利店和街角商店。他利用这些关系找到当地有线电视运营商，在不自行制作内容或铺设线路的情况下分发Disney节目。
真正重要的不是最初的儿童节目，而是这套机制。Modi成为Disney在印度的合资伙伴，并认识到，一家全球媒体公司可以通过把优质内容连接到数千个非正式本地分销商，进入一个庞大且高度碎片化的市场。
3. 板球管理机构几乎不知道自己拥有宝贵媒体版权
Rupert Murdoch旗下News Corp通过Star进入印度，并套用了Fox的打法：锁定能够驱动直播观看的体育项目。实际上只有一个候选——印度国际板球；Star以足够低的价格拿下版权，成为印度不可或缺的体育频道。
BCCI在1991年几乎是偶然发现了这项资产。南非访问印度时，官员原本据说准备索要2万美元，甚至接受更低金额；但在他们开口前，南非先提出20万美元。Jagmohan Dalmiya接受了报价，随后进一步推动一个更大的原则：板球商业版权属于BCCI，而非国营电视台Doordarshan。
Dalmiya后来在2001年引入中央球员合约和养老金制度。这让BCCI同时控制了未来联赛的两项承重资产：广播商需要的版权，以及观众想看的印度球员所受其约束的合约。
4. Modi被逐出ESPN-Star后展开了长达十年的复仇战略
ESPN和Star在1996年停止互相竞价，并在印度合并。Modi称，Murdoch不满他推高板球版权价格，并迫使他离开公司；合并后的公司则指控其低报收入并从有线电视运营商处收取回扣。双方随后陷入诉讼，Modi家族没有从最初持股中获得任何收益。
David把这场由此产生的恩怨视为故事的情绪引擎。Modi认为自己把Disney、现代有线电视和体育广播带到了印度，最终却被Murdoch拿走了生意；因此，在板球领域击败Star既是商业策略，也是个人复仇。
主持人反复提醒，IPL的历史很少能归结为单一叙事。当时印度商业处于“低信任环境”，腐败和回扣指控，与一种本土辩护并存：外国公司进入印度，却期待印度参与者遵守外国规则。
5. 控制Rajasthan让Modi找到了进入BCCI的路径
获得BCCI席位首先需要影响一个邦板球协会。Modi在1999年加入一个较小的协会但未能站稳脚跟，随后于2003年进入Rajasthan板球协会，发动David所称的基本上是一场政变，并在2003—04年成为协会主席。
他从这一基地出发，主张BCCI对国际板球的定价严重偏低。2004年，这一说法看似荒谬，当时版权收入每年或许只有1000万至1500万美元；但Modi看到了电视观众的增长，也看到了广播商可以从这项占据印度全部注意力的运动中赚取什么。
他的竞选最终帮助他在2005年取得BCCI董事席位。虽然他只是众多董事之一，但他以“破坏球”的姿态到来，开始把一个近似监管者的板球管理机构改造成追求利润最大化的商业企业。
6. 赞助拍卖暴露出BCCI错失了多少价值
据报道，Sahara每年只支付约10万美元，成为印度国家队的主赞助商。Modi要求大幅提高金额——主持人称最终交易约为每年1500万美元——并表示如果Sahara拒绝，就把赞助库存拿出来拍卖。Sahara没有测试市场，而是选择接受。
随后，Modi在Nike、Adidas和Reebok之间组织了一场公开的密封信封竞价，为球队球衣版权设定了接近每年5000万美元的预期最低价。Nike以据报道5200万美元的价格胜出，而这场拍卖本身也制造了宣传效果，并建立了透明的价格发现机制。
主持人估计，在大约2个月内，Modi就在原本几乎没有实质收入的地方找到了约1.5亿美元的年度赞助价值。他的打法始终一致：制造竞价、让交易成为新闻，并拒绝让潜在支付意愿继续隐身。
7. 印度中产阶级让Modi看似荒谬的价格变得合理
20世纪90年代初，据报道，印度只有约200万户家庭的可支配收入超过1万美元。到21世纪中期，这一群体增长了约10倍；如今采用的定义显示，印度约有5.5亿中产阶级，年收入为7000至4.5万美元。
绝对规模比百分比更重要。即使中产阶级只占印度约31%，人数仍超过美国总人口；印度政府则称，在2015年至节目录制期间，约有2.5亿人脱离贫困。
板球约占印度体育观看时长的93%，而美式足球在美国的占比远低于一半。刚开始购买Pepsi、手机、流量套餐和运动产品的消费者，为广告商提供了高效的全国性渠道，使过去只有数十万美元的赞助价格在经济上不再合理。
8. Modi通过制造另一家体育广播商把Murdoch赶出了市场
Modi邀请Murdoch喝茶，终止Star现有的版权合约，并为4年期版权设定5亿美元最低竞价——约为当时价格的10倍。Murdoch的回应在经济上合乎逻辑：Star和ESPN实际上是印度仅有的体育频道，谁还能有能力竞价？
Modi的答案是，体育网络不过是附着在优质版权上的品牌电视台。他接触了Sony、Sky和Nimbus，承诺自己可以帮助任何综合广播商建立所需的体育业务，就像他此前做过的那样。
Nimbus以6.2亿美元、4年的报价胜出。主持人称，Nimbus因为拥有板球，很快成为印度领先的体育频道。Modi同时把BCCI变成一家重要经济机构，并以让Star出局的方式完成了复仇的第一阶段。
9. T20提供了传统板球缺失的黄金时段产品
BCCI当时只有一支印度球队，每年出场约105天；相比之下，NFL约有285场比赛，MLB接近2500场。板球运动员的身体条件允许创造更多库存，但五日制测试赛和8小时的一日国际赛无法适应每晚的大众观看。
英格兰板球管理机构曾面对空荡的球场和老龄化观众，于2003年引入并商业化20回合制板球：每回合6球，每队120球，比赛约持续2.5至3小时。稀缺性改变了策略——每一球都变得重要，激进得分占据主导，六分球成为板球版的本垒打。
传统主义者的敌意反而强化了这种反向定位。T20喧闹、年轻，而且有意不严肃；澳大利亚的“Big Bash”这个名字准确捕捉了它的承诺。David称之为“大众板球”，因为它终于可以占据工作日黄金时段，而不再要求观众腾出一整天。
10. 反叛的ICL证明BCCI控制的球员才是决定性卡点
Modi和IMG原本计划在2009年审慎推出联赛，但Zee TV在2007年宣布成立竞争性的印度板球联赛。Zee长期追逐板球版权；在一项要求其与国营电视台共享直播信号的广播法规出台后，其经济模型受到损害，而BCCI拒绝重新谈判。
ICL提出了同样的大方向：城市球队、国际球员和T20娱乐。BCCI则威胁对现役球员实施终身禁赛，包括从未代表印度出场的潜力球员；各邦协会跟进，退役球员也面临失去养老金的风险。
这个联赛运行了2个赛季，但2009年BCCI的特赦要求球员只有切断与ICL的联系才能回归。教训非常明确：仅凭媒体资本无法绕过控制印度球员、国家队资格和板球最有价值国内观众的机构。
11. 印度2007年的世界杯胜利把加速变成了宿命
印度曾抵制T20，并派出一支年轻阵容参加在南非举行的首届T20世界杯，3名核心球员缺席。外界预期很低，这反而让这支缺乏经验的球队不断晋级时形成了极具感染力的故事线。
Modi承诺，任何人在一个回合中击出6个六分球，就能得到一辆Porsche 911。Yuvraj Singh对阵英格兰时真的做到了——这是板球最罕见的成就之一；在这一刻“点亮印度电视屏幕”时，他还朝Modi示意要车钥匙。Modi最初或许承诺的是一块Rolex，后来球员们坚持要Porsche。
印度随后在最后一回合的决赛中击败巴基斯坦，约4亿人收看，据报道这是当年全球收视量第十高的电视事件。球队在孟买的巡游吸引约400万人，花了11小时才抵达体育场，为IPL提供了任何营销 campaign都买不到的启动平台。
12. IPL的设计同时优化了顶级技能与结果的不确定性
David把娱乐问题归结为两个要求：展示全球最优秀的人类表现，同时保持足够的均衡，让观众无法预测赢家。拿掉技能，结果就会变成编排好的表演；拿掉不确定性，富有的球队就会把竞争变成注定的结局。
BCCI通过控制印度球员，并拥有足够的观众与资金吸引国际明星，解决了人才获取问题。更难的设计问题，是防止印度的亿万富翁工业家或最大城市通过砸钱建立长期统治。
对照组让问题更加尖锐：NFL的硬工资帽制造了“任何一个星期天都可能赢”；NBA的软工资帽允许王朝；MLB薄弱的竞争平衡税让Dodgers在2024年超出门槛1亿美元，并赢得世界大赛。欧洲足球还叠加了老板亏损、精英固化和降级风险。
13. 轻资产特许经营让非亿万富翁也愿意成为老板
Modi和IMG禁止举债，实际上也阻止球队拥有球场。现有场地已经由与BCCI有关联的邦协会控制，从而消除了英格兰足球俱乐部常见的融资负担——它们还没买一个球员，就可能先背上巨额球场付款。
中央媒体与联赛赞助版权统一谈判，再等额分配。NFL式的结构让市场规模不再决定竞争资源，使中央收入而非不平等的本地交易成为每支球队的经济基础。
盈利能力是明确的设计约束，因为球队所有权必须覆盖印度最富有的企业集团之外的人群。在去掉球场资本支出、限制球员支出后，宝莱坞人士和规模更小的投资者也能参与，而不必与Mukesh Ambani的外部资产负债表正面竞争。
14. 疲软的广告市场迫使IPL瞄准女性与儿童
Modi成功销售国际板球后，制造了一个新问题：2008年印度整个广告市场只有约20亿至30亿美元，而6.2亿美元的版权包意味着广播商每年仅为覆盖版权成本，就可能需要卖出全国广告总额的约5%。
他一贯直截了当地判断，BCCI已把整体价值“从几百万美元提升到10亿美元”，并“吸干”了市场中的品牌预算。要为另一个高端资产提供资金，他得出的结论是：“我需要女性和儿童。”
IMG的Andrew Wildblood准确概括了战略转向：IPL不应与其他板球竞争，而应与大众娱乐和“肥皂剧”竞争。在单电视家庭中，女性往往控制遥控器，因此联赛必须代表充满活力、色彩、噪音的现代印度，并成为第二天早上人们讨论的话题。
15. 宝莱坞把板球变成每晚的家庭事件
Lalit与IMG安排连续2个月每晚8点、每周7天各打一场比赛——“每天晚上都是Monday Night Football”。单场比赛集中观众，保护故事连续性，并填补黄金时段电视剧占据的整整3小时。
宝莱坞不是装饰性营销，而是打开家庭另一半观众和新广告预算的钥匙。Wildblood的判断是，过去只能在银幕上看到电影明星的人，如今每晚都能在体育场、场上和球队故事里看到他们。
主持人把这种效果比作Taylor Swift出席NFL比赛，只不过IPL把它彻底制度化：想象Swift拥有Chiefs，出现在场上，并为球队打造启动营销。IPL同时成为奥斯卡、颁奖季和顶级板球，而不是要求非球迷只关心击球数据。
16. Shah Rukh Khan的参与在球队诞生前就被设计成了一笔金融交易
Shah Rukh Khan起初告诉Modi，自己的热情在足球而非板球，也不知道该如何经营一支球队。Modi的回应基本是：“让我来处理。”Khan只需要相信他并“签张支票”，尽管他担心押上自己的毕生积蓄。
Modi知道Nokia想让Khan担任名人代言人。他向公司出售了一份每年500万美元的球衣赞助，赞助对象是Khan未来可能拥有的球队；随后又把特许经营费安排成10年支付，首年只需支付约500万美元。
Khan的集团中午以7500万美元赢得Kolkata，据报道下午3点就签下Nokia，首年经济账基本打平。这个国家最耀眼的明星一旦承诺加入，其他宝莱坞人物也跟进，包括以7600万美元成为Kings XI Punjab主要老板的Preity Zinta。
17. 第一份十亿美元版权交易用承诺制造了确定性
Nimbus声称其与BCCI的合约已经包含IPL；Modi则称新联赛并未被明确写入，并邀请对方起诉。他仍将Murdoch列入黑名单，而Disney与ESPN提出的收入分成方案缺少足够的前期现金，无法让潜在球队买家放心。
Sony愿意支付首年6000万美元，但不愿承诺10年。Modi于是说服总部位于新加坡的World Sport Group以10亿美元的 headline 价格买下全球版权，起初只支付6000万美元，再以同样金额将印度版权分授给Sony，并保留国际市场的上行空间。
这笔交易依赖Modi的个人承诺：如果IPL失败，他会在第一年后停止，而不会强制执行剩余9.4亿美元。Ben的表述同时抓住了其中的天才与脆弱性——WSG只有在Modi的承诺足以承担或有负债时，才获得了一个免费的国际期权。
Modi反复使用的创新是“无风险交易”：找到一方的现金来覆盖另一方的首年义务，再把长期合约公开为价值证明。这种安排确实实现了利益对齐，但也需要参与者对他的信任来维系。
18. 特许经营经济学把时间变成了创业工具
稳态下，球队将分享中央媒体与赞助收入的50%，但首年拿走80%。8支球队各获得收入池约10%，等于把6000万美元的电视付款转换为每队约500万美元。
这项分配几乎完全对应首年特许经营费的最低分期付款。加入中央赞助后，主持人估计每支球队能收到约1000万美元，却只需支付约500万美元，在本地收入尚未形成之前就实现盈利启动。
因此，募集说明书把名义上的5000万美元保留价转换成有限的短期下行风险：付款摊至10年，资产保持轻量，球员支出受到控制，签约的中央现金覆盖早期义务。8支球队最终以7.24亿美元成交，高于总计4亿美元的保留价。
19. 球员拍卖优于传统工资帽
Modi把拍卖机制追溯到家族公司与Sotheby’s的关系：把每件物品交给出价最高者，透明地发现价值，并让交易成为“全城热议的话题”。争议是有意制造的；他称其为IPL的“第一支柱”，希望批评者持续讨论，而联赛不必对每次挑衅都作出解释。
每支球队获得500万美元的最高预算，并被要求至少花掉这一上限的约75%。所有人围绕同一个有限预算在同一房间竞价，因此只要仍有一个老板可以出价，私人承诺或情绪化诉求就无法压低球员价格。
球员在各组内随机出场，避免球队完全预先规划分配。唯一可持续的优势就是更好的信息——通过数据分析、球探和判断，评估球员相对于拍卖价格能贡献多少。
Rajasthan低于最低支出线，被罚款，却仍赢得首届冠军。这个结果为该模式提供了一个异常干净的证明：最便宜、薪资总额最低的球队，能够凭借更好的评估击败富裕老板，而不是依靠更多资本或更高权限。
20. 标准化合约同时强化均衡与经营杠杆
初始合约期限为3年，球队和球员每年都拥有退出选项，整个球员池则在定期举行的“超级拍卖”中重置。球队可以保留4名球员以维持本地认同，但大多数人才会反复回到开放的价格发现机制中。
统一条款限制了经纪人通过期限、保证金或定制条款改变经济条件的能力。Ben将其比作标准化融资文件：只需填入拍卖价格，其余法律机制保持不变。
球员仍然接受这套只给他们联赛收入约12%—15%的制度，而多数大型联赛的球员分成约为50%。吸引力在于，2个月赛季就能带来改变人生的收入，同时允许球员在其他地方赚钱；对印度球员而言，拒绝BCCI规则的代价是被排除在国家队板球之外。
随着媒体版权爆炸式增长，拍卖预算却缓慢上升，这种不平衡进一步扩大。法院改革后成立的球员协会只代表退役球员，现役球员没有类似NFLPA的集体谈判组织，老板因此拥有异常持久的经营杠杆。
21. BCCI拿走50%是联赛最独特的经济异常
与NFL这种几乎把所有联赛收入分配给球队的清算中心不同，BCCI最终保留IPL中央收入池的一半。购买球队的投资者只获得另一半中的等额份额，却仍要承担球队的身份建设和运营责任。
官方理由是履行管理职责：维护球场、教练、基层发展和球员输送体系。IPL球队历史上缺少MLB式学院与小联盟体系，因此大量人才培养仍由BCCI而非单支球队承担。
Ben的怀疑值得保留：BCCI显然并不需要数亿或数十亿美元来完成这些职责，而访谈称这笔钱迄今也没有真正投入球场建设。但老板同样避免承担重大开发、球场和球员薪酬成本，因此，BCCI的50%抽成虽然经济负担沉重，却不能直接与其他联赛的结构相比。
22. 首次拍卖在创造高价值球队的同时保住了均衡
Mumbai以最高价成交，Mukesh Ambani与Reliance出价1.12亿美元。N. Srinivasan的India Cements以9100万美元买下Chennai，而他当时也在BCCI董事会任职；Kolkata成交价7500万美元，Punjab为7600万美元，Rajasthan则以6700万美元的低价成交。
相对有限的价格差确认，中央收入已经削弱了市场规模的决定性。Mumbai球队的价值仍高于Rajasthan，但没有本地媒体版权和无限制薪资可能造成的数量级差距。
MS Dhoni随后拿走500万美元预算中的约150万美元，相当于一名球员占据球队可用拍卖资本的30%。这笔交易制造了新闻，同时迫使Chennai通过明确的机会成本表达信念。
竞争结果仍然高度分散：如今10支球队中有7支赢过冠军，每支球队至少都拿到过亚军。Rajasthan从未再夺冠，但其首冠证明首年均衡是真实的，而非理论上的安排。
23. 首个赛季从第一球开始就实现了产品市场匹配
2008年4月18日的首场比赛，由客场作战的Royal Challengers Bangalore对阵Shah Rukh Khan旗下的Kolkata Knight Riders。国际球星Brendon McCullum为Kolkata拿下158分，这场异常出色的个人T20表演，为新联赛提供了理想的开局故事。
整个赛季，IPL平均占据印度所有开机电视的约4.9%，超过同时段任何一部电视剧。Rajasthan对Chennai的决赛收视份额约为10%，并在最后一球结束，弱旅Royals最终夺冠。
约300万美元的奖金池让冠军立即具有财务意义，而不是让老板承担季后赛和巡游的成本。主持人认为，这修正了NFL的一种荒谬之处：赢得超级碗可能对球队当年经济账产生负面影响。
女性已经占首届观众的约30%—35%，最终升至50%。后来Lotus Herbals把美容品牌放在一名男性球员的球衣上——“把硬核女性品牌放在阿尔法男性的胸膛上”——并报告SPF保湿霜销量增长20%。
24. Modi在履行原有风险分担安排前重新给成功定价
首季超出所有预测后，按照原有经济条件执行剩余9年的合约，对Sony和World Sport Group而言显得极其划算。Modi指控Sony违反Vodafone的独家协议，并称其有时提前切断直播以插入额外广告。
他没有要求对方纠正行为，而是利用这些所谓违约撕毁协议，并直接与Sony签下一份约24亿美元、10年的交易。年度现金收入从6000万美元升至约2.4亿美元，而Sony仍然接受。
结果印证了Modi“我为所有人赚了很多钱”的说法，但Ben的反驳依然成立：长期交易对手通常期望从承担创业风险中获得回报。这一操作显示，Modi最大化价值的本能可能破坏其最初结构赖以维系的信任。
25. 搬迁整个联赛证明IPL本质上是电视产品
2009年，由于选举和安全问题，印度无法提供比赛场地。在大约1个月的通知期内，组织者把赛事搬到南非，重新安排南非各城市的运营，并将比赛转播回印度。
赛季仍然成功，因为门票和其他本地收入相对较小。在主持人后来的球队模型中，中央分配接近6600万美元，而门票只贡献约400万美元；即使地理位置完全改变，卫星信号仍然保住了核心产品。
这次紧急搬迁也比计划更早地将联赛国际化。IPL证明，球队、球员和每晚的故事可以迁移到另一个板球国家，而不会摧毁观众经济，为最终的全球牛市情景提供了早期证明。
26. 过高的扩张价格让音乐停止，也暴露了Modi的敌人
2010年，Pune和Kochi分别以约3.33亿美元和3.7亿美元成交，远高于最初约9000万美元的平均价格。中央收入增加部分解释了价格上涨，但每年约3300万和3700万美元的特许经营分期付款，给球队留下的容错空间要小得多。
Kochi在1个赛季后失败；Pune坚持了2个赛季后以财务困难为由退出。Modi的生态第一次产生了实质性输家，而不只是失望的竞标者；原本分散的对手因此获得了证据，也获得了攻击他的动机。
BCCI以22项指控暂停Modi，包括绕过治理程序、操纵竞标、把合同导向朋友、广播回扣、在3支球队中向亲属或关联方隐瞒利益、赌博和洗钱。2013年，BCCI终身禁止他参与印度板球。
Modi否认这些指控，并称自己因拒绝操纵比赛而受到印度黑手党威胁，最终前往伦敦。主持人无法调和这两套截然不同的叙事；他们更窄的结论是，只有在所有参与者都赚钱时，他的系统才保持政治稳定。
27. 假球把私人冲突转化为公开治理危机
讽刺之处在于：Srinivasan曾是反对Modi的主要力量，后来又成为BCCI主席，但他同时通过India Cements控制Chennai。2013年，警方指控与Chennai和Rajasthan有关联的参与者涉及假球。
假球不一定操纵整场比赛，也可能只操纵某个离散事件，例如为相关投注市场操纵一个回合。这一区别降低了所需的共谋规模，却没有减轻损害，因为观众再也无法相信，哪怕是单个瞬间也一定源自真实竞争。
印度最高法院介入调查，持续约2年，迫使Srinivasan退出BCCI领导层，并暂停Chennai与Rajasthan2个赛季。临时的Pune和Rajkot球队取代了它们，法院同时建立了更清晰的治理结构。
28. 法院改革把IPL变成了机构可投资资产
Rajasthan老板Manoj Badale称，这场丑闻是IPL与印度发展中的“关键时刻”。联赛已经成为外国投资者担忧的缩影：腐败、政治不稳定、追溯性规则变化，以及无法确定谁的协议能够兑现。
前澳大利亚板球运动员兼投资人Ed Cowan的框架更积极：IPL是大规模外国资本的风向标，而政府认识到，现代印度需要一个清晰可见的证明，表明治理能够得到修复。
法院重置并没有消除IPL异常的BCCI结构，但它把监督专业化到足以让全球资本依赖。主持人认为，如果没有2015年的改革，RedBird和CVC后来进入市场很可能不可能发生。
IPL的声誉重要性超过了企业价值。印度拥有全球外包巨头和庞大的国内企业集团，但IPL正在成为一个可见的消费机构，在这里印度毫无疑问是全球领导者——实际上是一家国家级企业冠军。
29. Star回归与Reliance Jio点燃了IPL的第二条增长曲线
2017年，Rupert Murdoch旗下的Star终于通过一份约25亿美元、5年的版权包重新拿回IPL版权，相当于每年约5亿美元，是此前Sony经济条件的2倍。随后Disney收购21st Century Fox，其中包括Star，交易金额约700亿美元，复仇周期由此闭合。
IPL直接契合Disney对全球规模、技术和通过Disney+拥有分发能力的战略重心。版权提供的不只是节目内容，更是印度媒体消费最强的持续驱动因素。
Reliance Jio带来了分发冲击。2016年推出前，印度只有约3000万部活跃智能手机，因为流量价格仍超出大多数人的承受范围；Jio把实际流量价格压向零，装机量到2022年达到约8亿。
Facebook以57亿美元收购Jio约10%的股份，说明了其中的赌注。正如电视渗透率在20世纪90年代帮助国际板球发展，廉价移动数据把IPL变成大众流媒体产品，并将可触达观众扩大了数亿人。
30. 制作、语言与球员流动让观众忠于联赛
Star带来了成熟的体育制作：更多摄像机、球员和球柱上的麦克风、场上机位、更丰富的图形，以及竞争周等熟悉的推广机制。底层比赛没有改变，但观感质量更接近领先的美国和欧洲广播。
印度的语言多样性又从单场比赛、互不重叠的赛程中创造了优势。据报道，Star在孟买搭建了一座8层演播室，设有8个解说席，把同一场直播信号分别送入印度主要语言的区域观众，而不是迫使所有人使用第二语言英语或印地语。
频繁的拍卖让明星在球队之间流动，削弱了纯粹的本地认同，却强化了全联赛消费。一名Mumbai球迷可以同时关注Mumbai Indians、Virat Kohli和MS Dhoni；由于比赛从不重叠，对球员的喜爱最终转化为对IPL本身的观看。
据报道，2019年决赛吸引了3亿至4亿独立观众，而创造纪录的2025年超级碗为1.38亿。2022年常规赛独立观众达到3.61亿；访谈称2023年为5000万；据报道，2024年仅流媒体覆盖就达到6.2亿。
31. 扩张把特许经营变成全球另类资产类别
2021年，CVC以约7.5亿美元买下Gujarat Titans，一家印度国内集团则以约9.5亿美元买下Lucknow Super Giants。费用仍分10年支付，部分所得被重新分配给现有球队，以补偿股权稀释。
RedBird在同年投资Rajasthan。考虑到这支球队起步价格低廉，且曾因假球被暂停，这一投资尤其具有象征意义。如今，一家纽约大型体育私募股权公司已经愿意为IPL的治理、现金流和退出价值进行承保。
隐含价格约为最初球队平均价格的10倍。稀缺性强化了财务逻辑：印度拥有许多亿万富翁，却只有10支主要IPL球队，即使联赛长期考虑扩展到12支、14支或16支，供给仍然有限。
32. 2022年版权拆分把数字杠杆从Disney转移给Reliance
BCCI把版权拆分为国内与国际、电视与数字套餐。Disney-Star以略高于30亿美元的价格买下印度次大陆5年电视版权；Reliance与Paramount旗下Viacom18则以略高价格买下国内流媒体版权及大部分国际版权。
Disney保住了稳定的电视经济，却失去了驱动Disney+ Hotstar的资产。下一个季度，Disney+订阅用户净减少约200万至300万；核心Disney+仍在增长，但管理层开始将Hotstar单独列示，以明确印度是收缩来源。
相比印度国内，国际版权仍然微不足道。据报道，Times Internet为美国5年版权只支付3300万美元，为中东支付2600万美元；Ben试图在Willow TV上寻找历史比赛却未成功，这暗示美国版权包并未支撑出成熟的消费者体验。
2024年11月，Viacom18/Reliance与Disney-Star以85亿美元的交易合并印度业务。除非Google、Meta或其他平台参与下一轮拍卖，否则整合后的市场将只剩一个具备规模的主导国内竞买方。
33. 当前经济学把媒体规模与软件式利润率结合起来
主持人估计，IPL每年媒体版权收入约14亿美元，中央赞助收入为1.5亿至2亿美元，其中包括Tata每年6000万美元的冠名赞助。中央总收入因此接近15亿美元，联赛总收入约为16亿至17亿美元。
约85%的收入来自中央，只有15%来自本地，全部由2个月内的74场比赛产生。每场约1600万至1700万美元的媒体版权收入低于NFL的4500万至4900万美元，却略高于英超，并达到NBA约530万美元的3倍。
在扣除BCCI分成后，平均球队收入合理估计为7000万至8000万美元，工资帽约1700万美元，球场资本支出很少，EBITDA或许达到5000万美元。这意味着60%—65%的利润率、接近20倍EBITDA和约12倍收入的10亿美元估值。
这些倍数由现金流而非纯粹的奖杯资产稀缺性支撑。不过NFL在绝对规模上仍大得多——媒体版权约140亿美元，年度总收入约200亿美元；因此，“单场第二”不能与今天的联赛规模相提并论。
34. 国内牛市情景把人口红利与更多库存相乘
据报道，2008年至2023年，IPL版权年复合增长率约为18%；同期印度广告市场从约20亿美元增长到200亿美元，目前仍以约6%—7%的速度增长。人均GDP增速接近10%，中产阶级预计仍将显著扩大。
如果广告市场连续20年以6%—7%的速度复合增长，规模可能接近今天的10倍，并支撑接近NFL当前水平的版权价值。主持人先打一个五折，认为市场规模增长5倍，再从比赛数量中找到第二个乘数：更多球队、更长赛季，以及可能增加的另一比赛窗口，合理上可以让库存翻倍。
本地收入是下一个明显的解锁点。球队目前每年只有约7场主场比赛，也无需拥有球场；但更长的赛程可以支撑包厢、座位许可证、高端接待、零售、餐厅、电影院和综合开发区，把本地贡献从15%推向NFL约40%的水平。
沙特的兴趣可能为这些基础设施提供资金；相关报道讨论过围绕300亿美元联赛估值的投资，主持人还称最新一届超级拍卖在沙特举行。主权财富同样是类似LIV Golf的威胁，但主持人认为，协商式参与比另起炉灶更有可能。
35. 熊市情景是高度集中的分发叠加治理风险
印度商业环境已经改善到足以吸引机构资金，但联赛仍需要类似NFL的合约信心，才能维持类似NFL的价值。任何不透明的关联交易、追溯性规则或受政治影响的执法重新出现，都可能迅速逆转2015年后的重估。
Viacom18/Reliance与Disney Star的组合，消除了当前电视买家与流媒体买家之间的清晰竞争。Google具备可信度，因为印度是YouTube最大的用户市场；Meta也拥有庞大的印度WhatsApp和Instagram受众。但下一轮拍卖需要真实报价，而不是平台理论上的支付能力。
Viacom18的31亿美元数字版权包还内含时间风险。流媒体采用率和变现必须在5年版权期内兑现；如果价值在合约到期2年后才出现，也无法挽救一个在第2年至第5年的假设过于激进的买家。
劳动力经济学是另一条潜在裂缝。BCCI拿走50%，现役球员缺少真正的工会，关联联赛中的老板可以共同抑制工资上涨，而球员只获得收入的12%—15%。这些条件支撑了今天的利润率，但不一定永远具备政治或竞争上的可持续性。
36. 超级牛市情景从2028年洛杉矶奥运会开始
T20板球将在2028年洛杉矶奥运会回归，这是它自1900年以来首次重返奥运会。尽管印度裔美国人只有约500万，美国已经拥有估计2000万重度板球球迷，因此赛事的初始需求比普遍认知更强。
时区是最大障碍：印度晚8点的比赛在美国西海岸约于早上7:30开始。Major League Cricket的老板，包括西雅图的Satya Nadella和Soma Somasegar，因此认为，美国球迷的形成可能需要本土球队、球员和基层发展，而不只是转播IPL。
IPL仍然可以借鉴NFL的国际化打法，在海外举办比赛、调整开赛时间，或增加第二个赛季窗口。更进取的结构可能允许IPL关联的美国球队与印度球队进行跨联赛季后赛。
棒球提供了切入点。主持人肯定MLB的投球计时器和流媒体执行力，但认为162场比赛、薪资不平等和年轻人兴趣下降是结构性负担，类似于T20迫使英格兰板球重塑之前的状况。
37. IPL所有权已经在建设全球板球体系
据报道，Major League Cricket的6支球队中有4支与IPL老板存在关系；David称，他认为南非的T20球队大体上也与IPL组织建立了关联。成立仅4年的英格兰The Hundred同样吸引了包括IPL关联老板在内的大型投资者，其赛制进一步缩短到100球。
这让竞争联赛既是竞争者，也是额外的IPL窗口。老板可以跨不同赛历扩展球探网络、品牌和球员关系，同时降低独立竞争者聚集足够人才、挑战印度中心地位的可能。
这种权力仍然建立在规模强化的卡脖子资源之上：印度只占全球板球球迷约35%，但其他超过10亿球迷分散在许多国家。IPL可以逐一聚合较小市场和国际明星，而没有任何单一替代市场拥有同等集中需求。
38. 媒体IP与赌博可能把经济规模扩展到直播版权之外
David认为，可以制作一部以Drive to Survive为范本、面向全球传播的全联赛纪录片。Netflix在2019年推出的Cricket Fever帮助他理解IPL，但那部片只跟踪Mumbai Indians；更强的产品应当利用整个“肥皂剧”中的球队竞争、拍卖和老板戏剧。
板球球员已经可以与娱乐行业最大的明星竞争。Virat Kohli在Instagram上约有2.7亿粉丝，Shah Rukh Khan约4800万，前者大致与Taylor Swift相当；赛季期间，球队控制着可变现的球员IP，并能在转播中插入多条由球员主导的广告。
赌博在印度仍然违法，但主持人援引的数据称，境外合法投注据报达到每场IPL约7.5亿美元。被归类为技能游戏而非赌博的Fantasy平台Dream11拥有约2亿用户，估值80亿美元。全面合法化将是一次巨大但不确定的变现事件。
核心IP优势是真实存在的直播不确定性。宝莱坞制片厂如今会避开IPL持续2个月的赛期，即使这段时间本来正值大片上映季，因为这一窗口中“最好的宝莱坞产品”已经变成每晚的板球比赛。
39. IPL的打法把非凡资产与无法回避的创始人悖论结合起来
合适的老板可以改变一项资产的价值：Shah Rukh Khan的形象、表演和关系，让Kolkata的价值超过被动资本所能创造的水平。1961年至2024年，体育特许经营资产年复合回报率通常约为13%，股票约为10%——对应的增长约为2300倍和550倍，且相关性更低、可见回撤更少。
令人不适的问题是：没有Lalit Modi那套完整的激励与方法，IPL是否还能存在。主持人的答案基本是否定的：传统监管者不会在不可能的时间表下，把球员、广播商、明星、赞助商和老板组织到一起，也不会一次又一次地凭空制造市场。
Ben追问，创造价值是否必须依赖被指控的自利交易。David只能找到Visa的Dee Hock等极少数类似案例——他们能够在不拥有传统所有权的情况下建设变革性机构——这说明低信任体系可以让利益一致的创业成为可能，但公共职责与私人回报的清晰分离却异常困难。
他们的最终判断超越了板球迷不迷板球的问题：Modi与IMG打造了“迄今为止人类所知最完美的体育娱乐产品”。一场接一场，每一球都稀缺，每晚都至关重要；顶级技能由拍卖实现均衡，且一半观众是女性——这为未来某一天挑战NFL提供了可信基础。
I am listening to the Kolkata Knight Riders anthem as my pump-up song.
Oh, nice.
It is so awesome. Have you seen the music video with Shah Rukh Khan, the owner of the Kolkata Knight Riders?
No.
He is the main character, with the Bollywood dance around him.
Okay, I'm going to go watch it right now.
It is a little cheesy because I think it's from the 2008 era, but it is perfect pump-up music.
Oh, yes. We've got the player silhouettes in fire.
Yes, that's exactly the one.
This is incredible. How have I not seen this before? This is something that American sports definitely need to adopt.
Oh, man, we've got a construction crew.
Too hot, too cool.
That is exactly the right reaction.
Okay, I'm going to pause it. We're not even going to record an episode. I'm going to watch this over.
All right, let's do it.
Let's do it.
Welcome to the spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts.
Today we cover the most interesting story in sports: cricket. Now, when David pitched me this idea a few months ago, I thought, “I'm not that interested in cricket.” And to all of our U.S. listeners out there, I'm guessing you feel the same way. But I was very wrong.
There are 20 million hardcore cricket fans in the U.S. today.
Great point, as we will get into later in the episode.
Great point. And listeners, this story really isn't about the game of cricket anyway. It's about how to create a massively successful sports league from scratch.
Something that I thought was impossible after doing our NFL and NBA episodes, which each took 100 years to get to where they are today.
Indian Premier League cricket started a mere 17 years ago, in 2008. And even more than a sports league, the IPL is a case study in how to create the perfect entertainment product. They took this sleepy, polite British sport with matches that lasted 5 days, and they completely transformed it. It is compressed down to 3 hours. It's a high-octane slugfest that is all about power hitting and hitting sixes, the sort of cricket equivalent of a home run.
It's got Bollywood glamour and on-field dance performances, cheerleaders, fireworks, and the way they started the league itself was a high-stakes auction to a group of billionaires and movie stars.
And, of course, they carefully studied all the mechanics that made the NBA and the NFL as successful as they are today, and then applied them on steroids. It's an amazing story.
On top of all of this, the story itself has just about the most palace intrigue of any company we've ever studied. You've got Disney, Philip Morris, Rupert Murdoch, Reliance, Tata, and even Google. There's a very, very complicated founder figure. There's corruption, potential self-dealing, betting, rigging, and miraculously, the league has been successful despite all that.
So successful, in fact, that it is the fastest-growing major sports league in the world, growing 20x in value since 2008 to be worth more than $16 billion today.
Insanely, the media rights to each match are so valuable that they're second only to the NFL. The TV broadcast rights—for each match, let me just say this again—are worth more than an English Premier League soccer match, an NBA game, or a Major League Baseball game.
Yes, there's one angle where IPL cricket looks like pure, unadulterated capitalism applied to the world of sports, but there's another angle where it looks a lot more like a religion, or a unifying cultural force, or even a mechanism of diplomacy, as we shall see.
And David, I don't want to spoil too much, but last night, before we were recording, you were pitching me that 20 years from now, the IPL will be the largest sports league on the planet, period. Bigger than the NFL.
That is the case I'm going to make on this episode. It's funny: on our NFL episode, we came to the conclusion that the NFL is this perfect blend of communism and capitalism. And I was thinking, “Maybe the IPL will be an even more perfect blend.”
No, it's the perfect blend of capitalism and religion.
Yes.
Ooh, that's a great way to put it.
Even more lucrative.
Yep. So, listeners, is this a bubble waiting to pop, or the future of entertainment? Today, we dive in.
Well, we have one huge announcement to share with you today. A save the date. We can't say much yet, but after incredible listener demand over the years, we are finally coming to New York City. Yeah, July 15th. Save the date, mark your calendars with our good friends at JP Morgan Payments. And if you want to be the first to know when we have any details to announce, acquire.fm/nyc. We can't wait to see you there. We can't wait to see you there and we can't wait to be there. Yep. If you want to know every time an episode drops, check out our email list. It's the only place where we share a hint at what our next episode will be and share episode corrections, updates, and little tidbits that we learned from previous episodes. And we actually had quite a few little ones from all the Rolex enthusiasts. So, thank you to the deluge of people who wrote in with little corrections to particular reference numbers about the Rolex episode. That's acquired.fm fm/e to join the list. Join the Slack and talk about this with us afterwards with the whole Acquired community acquired. Slack. And if you want more acquired between each episode, check out ACQ2, our interview show where we talk with founders and CEOs building their businesses in real time. This most recent one was with Bill McDermott, the CEO of Service Now, talking about the art of enterprise sales that he used to grow Service Now to over $10 billion in revenue. Before we dive in, we want to thank our presenting partner, JP Morgan Payments. Yes, just like how we say every company has a story, every company's story is powered by payments. And JP Morgan Payments is a part of so many of their journeys from seed to IPO and beyond. So with that, this show is not investment advice. David and I may have investments in the companies we discuss and this show is forformational and entertainment purposes only. David, take us in.
1. Lalit Modi Enters Cricket
We start in the early 1990s with a colorful character, shall we say, named Lalit Modi. No relation to Narendra Modi, the prime minister of India, but he is from another famous Modi family. Lalit is the son of the renowned Indian industrialist K. K. Modi, who had built a fairly large conglomerate in India, in the vein of Reliance or Tata or whatnot. It seems like all these big Indian companies are conglomerates. It was actually kind of hard to find a scaled Indian company that did one thing.
Yeah, the industrial structure in India, at least today, seems to be more like South Korea or Japan, with the big conglomerates.
Yep. But in this case, Modi's conglomerate primarily is based around the tobacco industry. They have a joint venture partnership with Philip Morris and are one of India's leading tobacco and cigarette companies.
So Lalit, as the heir-apparent son in this family to this business, gets sent to college in the U.S. for his education. First he goes to Pace University, and then he transfers to Duke University. He ends up not finishing and comes back home and rejoins the family business. But when he comes back, inspired by his time at Duke and how basketball-crazy Duke is, he's like, “Man, the thing that really struck me about America is how sports-crazy everyone is there, how big a business sports is in America, and how big the sports media business is around it.”
Yes, we should get into that. Specifically, I saw him reference Monday Night Football as this appointment viewing. His friends would all gather around it. They couldn't do anything on Monday nights at that time because they were all glued to the TV watching Monday Night Football.
Yep. And this is kind of the perfect time for it, because here in the early ’90s, Indian households are, for the first time, starting to get television. So there hadn't been a sports culture, and there certainly hadn't been a sports media culture, in India up until this point. But it's fertile ground.
So Lalit goes to the Walt Disney Company—and Disney, of course, owns 80% of ESPN at this point in time—and says, “Hey, my family has this joint venture with Philip Morris. Help them enter the Indian market, and we can help you, Disney, do the same thing.”
And at first it's not sports, it's not ESPN yet. It's Disney kids' movies and merchandise entering the market that way.
Yes. So, in kind of a genius fashion, Lalit uses the sales force that the Modi company has for its tobacco products. They have 80,000 to 100,000 sales reps who are going to convenience stores, corner stores, in every part of the country in India, this vast, vast country where the majority of people do not live in large cities. They've got a sales-channel relationship into these stores, distributing cigarettes. So Lalit says, “Hey, we can leverage this sales force and use those people to go hook up with these early Wild West proto-cable operators out there in these towns and villages in India, and bring them Disney content.”
It's amazing. And so this isn't like distributing home video, right? This is finding the local person who has set up all the wires to go out to the other homes in the neighborhood, and going to that person and saying, “Hey, I know you have hundreds or thousands of homes that you're sending content to. Can you send this content there?”
Yep. There is a national over-the-air broadcast network in India called Doordarshan. But just like happened decades earlier in the U.S., little mom-and-pop cable operators are starting to pop up and saying, “Oh, yeah, we'll run a wire. We've got a satellite dish. We're pulling down a signal from CNN or what have you, and we'll rebroadcast those channels out to you via wire into your home.”
Makes sense. So at this point, Modi is acting as a middleman between the content-creation business and the distribution business.
He neither has to create the Disney movies and the Disney content, but he also doesn’t have to lay wires.
Yep. He is the JV partner that Disney is entering India with.
Got it. So now we are in the early ’90s. Disney isn’t the only major global media conglomerate that sees the potential of this newly television-hooked-up Indian consumer market. There’s News Corp out there and Rupert Murdoch. And Rupert, of course, really built the television side of News Corp and Fox on the back of 2 things. It was news at first, but then it was really sports that helped Fox totally take off. I mean, the NFL Sunday deal here in the US is what put them on the map.
This is the blueprint for bringing Fox and News Corp into a new country, and Fox Sports and eventually all the regional sports networks in the US.
Exactly. So News Corp had just launched a new brand and channel in India called Star. And Rupert’s going around looking for how he’s going to run this playbook in India. What sports is he going to broadcast? And pretty quickly he figures out that there’s really only 1 sport that matters in India, and that’s cricket. And it just so happens that he thinks he can actually get the rights to broadcast Indian national cricket pretty darn cheaply.
We’re going to come back to that in a little bit. And the question is, what is cricket at this point? You know, this is the Indian national cricket team playing other countries in these international matches, and then there’s a big World Cup, but it’s not like each city has a team or something like that.
Yeah, there’s no English Premier League of cricket at this point in time. Cricket is just this international game. And now that the Indians are getting televisions, the Indian national team playing cricket is becoming must-see television.
Yeah. It’s Monday Night Football. It’s the playoffs. It’s probably every Indian male who has access to a TV watching when the Indian national team is playing. And I say male because, at this point in time, cricket is a male game.
Yep.
So Rupert hoovers up these rights pretty cheaply, and all of a sudden Star is now the place to watch cricket in India.
Lalit sees this. He’s got the partnership with Disney. He’s always been interested in sports, and he’s like, “Well, hey guys, you have ESPN. We’ve got to get in this game. We’ve got to be getting cricket, too.”
Yep. So Lalit, ESPN, and Disney go to IMG, the big international sports agency—which, we didn’t plan this at all, is an amazing crossover with our Rolex episode. The same IMG. IMG, of course, helped Rolex design the Testimonee program that brought in Jack Nicklaus and Arnold Palmer and then ultimately Roger Federer and all of the athletes who partnered with Rolex over the years.
Yep. So Lalit, ESPN, and IMG go to the National Cricket Board in India that controls these broadcast rights. The National Cricket Board is called the BCCI, the Board of Control for Cricket in India. And they say, “Hey, you sold these pretty cheaply to Rupert. We’ll pay you more. We’ll take them. We should run an auction process here.”
And it’s worth knowing the BCCI’s responsibility is not really a profit-maximizing organization. It’s kind of a regulatory body. It’s not the government, but they’re tasked with developing the sport of cricket, and in particular cricket in India, ensuring that the sport has longevity and has all the infrastructure that it needs. They’re like the stewards of making sure that Indian cricket has a long and successful future.
And all of the other cricket-playing countries, from England to Australia to Sri Lanka to the West Indies, they all have the same type of structure in their countries, and they all actually roll up to the ICC, which today is called the International Cricket Council. But it’s interesting to note that, when it started in 1909, it was the Imperial Cricket Conference. So that gives you a sense of the way that cricket was spread around the world by the British.
Yes, it is the British Commonwealth countries that are historically the cricket-playing nations and are part of the ICC.
Yep. So we’ve been talking about how these early cricket rights here in the ’90s—Star and Murdoch—they’re able to get them super cheap. It actually wasn’t until right before all this goes down that India even realized they had the broadcast rights to cricket at all.
Yes. They didn’t even know. And this is crazy. You can’t make this up. How do they find it out?
In 1991, the South African national cricket team comes on a tour to India. It’s international cricket. They’re playing in India. And the South African Cricket Board is like, “Hey, we want to broadcast this. How much do we owe you for the rights?”
Cricket was newly extremely popular in India. It was 1983, 8 years before, when India had won the Cricket World Cup for the first time. This was a really big deal. The nation comes together; they’re all excited about it. Then, in 1987, it’s the first time the World Cup is actually hosted outside of England. It’s actually in India and Pakistan. So the power of cricket globally is starting to shift to India. And so this is only 4 years after India hosted the World Cup for the first time, and cricket’s kind of on the rise.
Yep. And it’s all tied up with the television penetration of India.
Yes. The first time that it’s even possible for these to become big national-pride-type events. So here South Africa is just coming for a tour, national team, and the board is like, “Well, how much do we owe you for this?” They don’t know how to respond.
So there’s this great history of them sort of talking amongst each other: “Well, what do we think we should say? We should say $10,000. Is that crazy? Let’s start with $20,000. See what they say? $20,000. And then they can bargain us down from there.” So they go to the meeting or phone call with 1 representative of the BCCI and the South African board. And before the BCCI representative can open his mouth at all, the South African board member says, “We’re thinking $200,000. Does that sound good to you?”
And then you guys are like, “Yeah, that sounds great. Let’s do that.”
So they only just discovered that this thing had value, that they even had these rights and that they could sell them. And then it got really concretized into law a couple years later. There’s a legal battle between the BCCI and the national state broadcaster, Doordarshan. This legendary leader of the BCCI, Jagmohan Dalmiya, goes to war against the state broadcaster. And the outcome of this legal battle is, yes, even the Indian government, the state broadcaster, has to pay the BCCI for these rights. The BCCI is the owner of the rights, and they can sell them to anyone they want.
Yep. And that guy, Dalmiya, was the BCCI board member who was negotiating with South Africa. He was the guy on the call who heard $200,000 and was like, “Okay.”
Yeah. It’s like, “Look, South Africa has to pay us.” And then they come home, they get into a legal battle, and find that even the Indian government has to pay us. We really own these rights.
Yeah. He was like the proto-Lalit Modi.
Dalmiya before Lalit.
Yes. There’s 1 other really fun sort of history-turns-on-a-knife-point element to cricket in India. So, like you said, Ben, cricket was the most popular sport in India before 1983, but that didn’t mean that much, and it hadn’t captured the country’s imagination that much yet. Also, England always hosted the World Cup. The center of gravity was England, and so it wasn’t India’s thing. It was just a thing they participated in. It was a British thing. There’s an amazing line about this by an author named Ashis Nandy, who wrote a book called The Tao of Cricket, and he says, “Cricket is an Indian game accidentally discovered by the English.”
While we’re on this topic of things the BCCI realizes they own—and in particular, Dalmiya, and I hope I’m pronouncing that correctly, is the one who gains these rights—the same way that he solidifies the broadcast rights, in 2001 Dalmiya introduces central contracts for Indian players and pensions for retired cricketers as a part of the BCCI’s remit. The BCCI is the one who pays the players. This is so critical. And at the time it’s almost like, “Oh, of course the BCCI pays the national team.” But it sort of sets up this umbrella that, no matter how an Indian cricketer is playing cricket, we are the ones who pay them, or at least who sort of have a contract with them. And that, along with the BCCI’s ownership of media rights, is this killer combo that would eventually lead to the IPL as we have it today.
Yep. So all this launches ESPN in India, and there’s back and forth for a couple years between Star and ESPN, and they’re bidding over these cricket rights with the BCCI. Eventually, in 1996, they decide, “Hey, let’s stop fighting each other. Let’s just merge.” Antitrust regulation in India is not quite what it is in the US at this point in time.
No.
So Star and ESPN merge, and to hear Lalit tell the story, Rupert Murdoch is kind of a sore loser here: Lalit came in and increased the money that he had to spend for these cricket rights, and ultimately had to merge with ESPN. He decides that he’s going to kick Lalit out of his baby, out of this company post-merger.
Now, is that really what happened?
That’s Lalit’s side of the story. Star and ESPN, the merged entity, would allege that Lalit underreported revenues that they were collecting and was accepting kickbacks from the cable operators, all sorts of stuff. There’s a big lawsuit about it. It goes on for a couple years, and at the end of it, Lalit gets booted out of the business. And despite his family’s 50% ownership in that original ESPN-Disney joint venture, he gets nothing. He’s out in the cold.
Brutal. So from his perspective, he’s like, “Hey, I started Disney India. I modernized cable in India. I brought sports to India. I did this. And now all of a sudden I’m out in the cold, and I get nothing.” And in his mind, Rupert Murdoch is the reason that this happened. He’s the villain.
Rupert stole it away from the Modi family. My sworn enemy from here onward. And thus begins a 10- to 15-year journey that is not just the ultimate revenge play by Lalit on Rupert, but accidentally, along the way, starts the biggest sports entrepreneurial story phenomenon that has ever existed.
Yep. Crazy out of this feud. And I will say, more than any other episode that we've done, it seems like every element of this has 2 completely different sides to the story, both of which the leaders of that side dig in and maintain. In most companies we study, there kind of becomes one canonical truth, and it's mostly written by the victors.
But in the history of the IPL, and especially with Lalit Modi, there's always 2 completely different stories representing how it went, and nobody ever gives an inch on either side. They just say, “Oh, that's all lies. That never happened. No way did that ever happen. Zero truth to that.” And so it is a little bit difficult to tease out what actually did happen, given there is no convergence of story.
Yeah. And this is probably the right moment to say a word about the nature of doing business in India, at least at this point in time: the 1980s, early 1990s. The euphemism, I believe, that the Indian business environment is referred to as is a low-trust environment. In other words, this is par for the course.
If you make an investment, you should be babysitting it very carefully, very actively, making sure that your interests are protected. A lot of corruption, a lot of kickbacks, and particularly doing business in India as a foreign company at this point in time is at your own risk, shall we say.
And I will say, these phrases—corruption, kickbacks—that is a Westerner's way, or an American way, of describing it. I think another way to look at it is just, these are the norms. This is the way you do business. I don't know what you expected.
Totally. You, Disney, you, News Corp, you are foreign corporations coming into our country and trying to play by your own rules here. Like, no, this is India. You play by our rules.
2. The Murdoch Vendetta
So the net of it is, Lalit's got this blood vendetta against not just News Corp and Star, but Rupert Murdoch personally, specifically. And what's the way to hit him where it hurts the most? Well, it's the biggest piece on his chessboard, a pillar of News Corp: sports. And it's what Lalit thinks is his birthright, like he brought to India—professionalizing and televising sports. He needs to take that away from Rupert.
So how are you going to do that?
Well, who controls cricket in India? It's the national cricket board, the BCCI. So Lalit figures, okay, I need to engineer getting myself installed on the BCCI board. It turns out the way that you get to be on the board of the BCCI is, first, you need to be either president of or just on the board of a state cricket association. There are states within India.
So in 1999, Lalit manages to join the board of one of the smaller Indian state cricket associations. That ends up not working out. And then, in 2003, he manages to get appointed to the Rajasthan Cricket Association board. Then he quickly engineers what basically amounts to a coup of the board and gets himself elected, in 2003–2004, as president of the Rajasthan Cricket Association. So now he's got a path to the BCCI.
He starts waging a campaign that the BCCI is vastly under-monetizing the television rights to international cricket. Mind you, he was directly involved in buying them for cheap when he was back at ESPN, but now he's like, “I know how valuable these are. I know how many eyeballs these are getting. You guys, now you're selling them for $10.5 million a year. These are worth hundreds of millions of dollars a year, right? Other than the latest slate of Bollywood movies, this is what the Indian population cares about. So why are we making $10 to $15 million on it?”
Yeah, this is an outrageous claim in 2004. It also just happens to be right. But saying something like this is crazy. He is a dark-horse candidate to come in and reform the BCCI and fully commercialize this quasi-governmental entity.
Right? That is the important thing. Their remit was not to make the most money. They were not acting as a capitalist enterprise with shareholders. It was to preserve and promote the game of cricket, to make sure that our national team is good.
Yep. But most of the members are industrialists from the industrialist families, just like Modi. Their interests are Disney, News Corp, these big multinational corporations. “I would really like to have a relationship with you all. Oh, maybe there's stuff we can do together. Maybe we should advertise our company's products on these cricket events, and maybe we can get to know you and advertise on other programming that you're doing.” So it's rife with conflicts of interest, shall we say?
And the only reason that Lalit doesn't have this conflict of interest is because he got ousted.
He's ousted. Exactly. And his life mission is to extract revenge here.
So this campaign succeeds, and in 2005 he finally gets appointed to the BCCI. And this is wild: within a span of like 2 months, he completely upends everything. He's not the chairperson of the BCCI; he's just a newly elected board member, one of, I don't know, 5 or 7 board members. He comes in like a wrecking ball.
The first thing he does is go to the main sponsor of the team—the title-presenting sponsor of the Indian national cricket team. I think at this point, probably already the logo is on the jersey. That's one of the main things you're going to get as the title sponsor. And maybe at this point in time, you're also getting the logo on the broadcast, but it's pathetically commercial compared with cricket today.
Well, let me give you a sense of how commercial it is at the time. The presenting team sponsor is the Sahara Group, which is another one of these big Indian family conglomerates. How much do you think they are paying the BCCI for this sponsorship?
I don't know, a million bucks.
$100,000 per year.
I thought a million was low. Wow.
Well, just you wait: a million is low. Mind you, when we've said that cricket is the biggest sport in India, nothing else matters. It borders on religion. It has 93% mind share of sports in India. And I think that calculation is done by viewer hours.
Yeah. If you look at all sports watched, cricket is 93% of the hours people paid attention to. If you look at American football, the NFL in America, it's like, I don't know, 37% or something like that. It is less than 50%. Cricket in India is 93%.
Yeah, it's a one-sport country, and it happens to be a one-sport country with one of the 2 largest populations in the world, that is growing the fastest in the world, and the middle class is rapidly expanding. So, like, this is exactly—as you know, if you're Pepsi or you're Tata—$100,000 to sponsor...
Oh my God. Oh my God. Unbelievable.
Now you might think, “Oh, okay. Well, you just told me that this sport is sort of in the model of the Olympics right now. It's international competition. Maybe they're not playing that much. Is this team only playing for 2 weeks in the summer? Maybe there's just not that much inventory.”
No, they are playing 105 days of competition per year, all nationally televised. And not to mention, one of those days is when they play Pakistan—or more than one of those days—and the whole country stops to pay attention on that day. That game alone, you would think, would be millions of dollars.
You see, at this point in time, there are 2 forms of cricket. There are one-day internationals, which is the new, fancy version of cricket that came about in the 1970s or 1980s. And that really was to enable tournaments to happen—you can play a match in 1 day. It takes all day; these are 8-hour games, so it's all day, the country's eyes are glued on this.
The other form of cricket, the classical form, is Test cricket. A match lasts 5 days, so one-day internationals were invented so that you could have kind of a round-robin tournament. Otherwise, there's no way you can have a tournament where every match is played. The vibes are very different, shall we say.
Do you know why it's called Test, by the way?
I believe it's because it's a test of the strength and will of the team, and in particular to test the English team. When they first brought cricket out to the rest of the Commonwealth, it was that those teams could then come and test against the English team. When they came to Lord's—Lord's is the hallowed cricket ground in England—to play this 5-day, thoughtful, quiet, strategic game...
Yes. The vibe is like golf, even though you're playing something that looks like baseball. I have to bring in some personal history here. I am a quarter British. I'm genetically predisposed to already be into cricket.
But when I was growing up, my grandmother was British. Probably every other summer, I would go spend 2, 3, 4 weeks with my family in the Midlands, in the countryside in England, visiting my grandmother's family. And as a little kid, what would be on TV in the summertime in England? It was this Test cricket.
So I grew up—even though I played baseball and I love baseball at home—in the summers when I would go to England, I'd turn on the TV and watch this Test cricket. “Oh, this is super cool.”
But yes, exactly like you say, Ben, this is the gentleman's game of gentleman's games. You play it in a white V-neck cable-knit sweater, right in the middle of the summer, by the way.
And the incentives are all funny, too. It's not about swinging these big home runs. Your goal is basically to hit little line drives, keep it on the ground, and make sure that you're able to score 1 run at a time, not 6 runs. You have a lot of time over the course of 5 days to let your strategy play out. And so you're not trying to make the absolute most use of every ball bowled the way that you are in modern versions of cricket.
To give you a little sense of this Test cricket, and I believe one-day internationals as well, there are 4 possible outcomes of the game. You can win, you can lose, you can tie.
Wait, so what's the fourth?
The fourth outcome is a draw, which is different from a tie. A tie is if the score is tied at the end of the match, which almost never happens because you're playing for at least 8 hours, if not 5 days.
You know, the scores are in the hundreds here, so the odds that they're going to be tied are very, very low.
I see.
A draw happens when one team is not able to finish their innings in the time of the match. So, if you get to the end of the day—like, oh, the sun goes down, it's time for dinner—and all of your batsmen have not yet gotten out in your innings, well, then you could be behind, ahead, whatever. You just didn't finish. It's like a DNF: did not finish.
What?
Just a draw. And so then you have this funny strategy where you're trying to drag the game out if you're losing.
Yeah. If you're behind and you're batting second, or in a test match in your second innings if you're batting second and you're behind, you're just trying to draw the game out. Amazing. All right, so we're going to leave the world of test cricket behind in the '70s. There's a lot of test cricket still played today, but—
Oh, yeah. It's still a big thing for these big international tournaments, the World Cup, all that. That's one-day internationals. This ODI format.
All of this amazing and delicious sidebar is just to point out that there's a lot of inventory here. The Indian national team is playing 105 days per year, and the Sahara Group is getting their logo on their white cable-knit vests for $100,000 a year.
I think in one-day internationals, they actually did start wearing more athletic clothing.
That's right. That's correct. That's not the white sweaters. Indeed.
So Lalit here now, in 2005, when he finally gets on the BCCI, the first thing he does is go to Sahara and say, “The price is going up. It is now $1 million, Ben, as you were saying, per day of competition. So you are going to go from spending $100,000 a year to spending $15 million per year. And, oh, by the way, if you don't want to do that, that's fine. I'm happy for you not to do that. I'm then going to go put this out to auction, and we'll see who is willing to pay that.”
Wow. To give you a sense of just how much latent value there is here, I don't think it goes to auction. I think Sahara just says, “Okay.”
Yeah, they're very aware that this is a very good deal even at this price. I mean, if you want to reach the nation of India, there are 2 ways to do it: Bollywood and cricket. That's it.
So when this massive escalation happens in 2005—I believe this is correct—overnight, this becomes the highest-paid jersey-logo deal of any sport on the entire planet.
Oh, interesting.
So basically, from not even commercial to now the single-largest logo sponsorship in the world. Why is Lalit able to all of a sudden extract this huge, record-breaking amount of value for this sponsorship, whereas before it was really not even commercial?
We alluded to it before, but the rise of the Indian middle class is what's driving everything here. One stat I saw was that in the early '90s, when we started our story a little bit ago, when Lalit was first getting involved and Disney and Star were entering the Indian market, there were only about 2 million households in India that had a disposable income of $10,000 or greater. By the time we're here now, when Lalit gets on the BCCI and is wrecking all these deals, it's 10 times that. So there's, call it, 20–30 million households now in India that are, by that definition at least, middle class. Fast-forward to today, it's another 10 times plus that number.
You know, there are 400—close to 500 million—people in households in India that have that level of spending.
It's actually even more. It's 550 million people who are a part of India's middle class. Now, that middle class is defined differently than the American middle class. It's $7,000 to $45,000 in annual income.
But that really gives you a sense. You said that in the early '90s there were 2 million people that made more than $10,000, and now half a billion people make more than $7,000.
Yeah, those numbers are pretty close. So we went from 2 million to 500-plus million. That is an emergence of the middle class in unbelievably rapid succession there. And I think the thing to keep in mind about India is, anytime you're saying a percentage of the population, you're still talking about a large number of people, right? The absolute amount of people is huge. The middle class in India today is 31% of the population, but 31% of India is more than all of America, right?
Yeah. You just said it was 550 million people. Full stop. Pause. Let this sink in. The middle class in India, per this definition—but still, that is enough annual income that you can spend it on consumer goods—is bigger than all of America. That's what's going on here.
Another stat—we may as well just start really contextualizing the shift here. The Indian government says that 250 million people have been lifted out of poverty between 2015 and today. They lifted an entire America's worth of adults out of poverty in India, to all of a sudden buying Pepsi, buying cell phones, buying mobile data plans, buying, oh, I don't know, Nikes and Reebok.
So what's the next thing that Lalit does after this Sahara deal?
There's no gear sponsor. There's no kit sponsor for the team at this point in time. I think some of the individual cricketers had had some super-cheap early deals with Nike or Reebok or whatever. Lalit goes to the 3 big companies—Nike, Adidas, and Reebok—and says, “Hey, I'm putting this out for bid at auction: being the kit provider, the gear provider”—kit being the British term for athletic gear.
Or cycling.
Or cycling. Yes—to the Indian national team. And, yeah, if you want to win this, I'm expecting a minimum of $50 million a year. Just to float a number.
So Nike comes in and wins at $52 million a year.
Oh, and by the way, since Lalit knows that there's going to be competitive bidding between these 3 shoe companies, he makes a media event out of it. He has them all submit their bids in sealed envelopes. He has a whole press conference, opens the envelopes in front of the media, and makes it a whole circus. It's like LeBron's “The Decision.”
So this is enormous. Lalit's 2 months into his tenure on the BCCI board, and he just found $150 million a year. Whereas previously, sponsorships were nothing. They were making, call it, $10–15 million a year in TV rights. He just 10x-ed that from something that's worth far less than the TV rights.
Yep.
So then he sets up a personal meeting with Rupert Murdoch, who at this point in time, via Star, has all the TV rights to Indian international cricket.
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Okay, David. So Rupert Murdoch is back entering the picture.
Ah, well, Lalit probably thinks here that it's coming full circle.
We're only just getting started.
He sets up a personal meeting with Rupert Murdoch, and he sets the meeting for a friendly Friday-afternoon tea. How very cricket. Remember, at this point, I think Star is paying $10–15 million a year for these TV rights. Lalit walks in, sits down, and says, “Mr. Murdoch, I am informing you that your contract is terminated right now. We are going to rebid the contract, and you are welcome to submit a bid. We are mandating that the minimum bid is $500 million for 4 years.”
And Murdoch basically spits his tea out. He's like, “You're crazy.” That's 10 times the current value.
Totally. So obviously he's offended by that, but he's like, “Who are you, and why do you think this is going to work?” Remember, Star and ESPN had merged.
There’s no other sports channels in India. There’s no other sports in India. Rupert’s like, “Who’s going to bid on this? You’re all hot air here. There’s no way that this is going to work. I’m the only game in town. You’re basically trying to extort me—and, oh yeah, rip up my contract that I have with the BCCI. You’re 2 months into the job. Get lost.”
Right. You need me. You need me.
But of course, Lalit has a plan for this. He’s going to do just what he did with ESPN in the first place, back in the day. It’s not that hard to set up a new network to come in and bid on these rights.
And by the way, it is now clearly, demonstrably, and provably so much more valuable than back in the day. We’re now 15 years into the television penetration of India, shall we say? There are tons of other broadcasters and cable channels out there. They’re just not sports channels.
Well, what’s a sports channel? That’s just a marketing term. It’s just a channel. You add another channel. You make ABC Sports, NBC Sports, CBS Sports, Fox Sports. Anybody can do this.
Lalit goes to Sony, which is the number 2 broadcaster in India. He goes to Sky from the U.K. and says, “Hey, you want to enter India?” He ultimately goes to an Indian entertainment company called Nimbus, which was a broadcaster but also didn’t have a sports channel. He says to all of them, “These rights are now available. The minimum bid is $500 million for 4 years. This is going to be very profitable for you. It’s very easy to set up a sports network. I’ve already done it. I will help you do it. You are welcome to bid.”
Nimbus ends up winning the auction with a $620 million bid for 4 years.
Wow.
They set up the Nimbus Sports Channel. I believe it quickly becomes the number 1 sports channel in India. There’s nothing else. If you’ve got cricket, you’re the number 1 sports channel in India, and Star and Rupert are out in the cold.
So Lalit really did make the BCCI an economic powerhouse where they really didn’t have material revenue before. Now suddenly they have hundreds of millions of dollars coming in—what, $200 million a year-ish between TV and sponsorships?
Yeah. They’ve got $25 million from sponsorships, and then they’ve got—
Yeah. What’s that? $25 million from this?
Yeah, and then another $150 million from broadcast.
Yeah. So hundreds of millions of dollars a year.
Unbelievable. Totally unbelievable, with more potential to monetize beyond that. I mean, he got $150 million from 2 sponsorships. You can have more than 2 sponsors here. He completely commercialized the BCCI. Transformative.
You know, he would say, when he later gets kicked out of the BCCI—and there’s tons of controversy and everything, which we’ll get into later, with people accusing him of self-dealing and doing all these things—he’s like, “I created billions of dollars of value for cricket in India, the BCCI, the government, and all the players involved from nothing.” And he’s absolutely right.
Yep. Absolutely right.
And by the way, he shut Rupert Murdoch out of all of it. So here we are now. He’s won. He’s extracted his revenge. He’s taken over Indian cricket. He’s created the single biggest pool of money anywhere around the globe in cricket as a sport.
I mean, this is way more money than we’re talking about here than England or Australia or the West Indies or Sri Lanka or New Zealand—the other cricket-playing nations. England and Australia are big media markets, but they’re not this big.
Well, on a sheer population basis, they just can’t come anywhere near India.
Totally. And we’re not even at the end of 2005 yet. This guy is a force. But as you might expect, he’s not quite satisfied.
Shocking. If we’ve learned anything studying all these characters over the entire arc of Acquired’s history, they’re never satisfied.
Totally. He’s, I’ve got to assume, thinking about this 105 days of competitive play that the team is playing. You know, that’s 105 cricket matches. That’s not a lot of inventory. On the one hand, it’s a lot, but it’s only 1 team that you’re talking about here, playing 105 matches.
The NFL plays what? I think 285 games, including the postseason. So, more than double that. And that’s the scarcest sports media in the world.
Yes. And the only reason that the NFL plays that few games is because the bodies of the players just can’t take anymore. They would fall apart.
Right. Major League Baseball has almost 2,500 games played per season.
Yes, thousands of games.
Cricket is not like American football. This sport was designed to be played 5 days in a row.
Yes, the cricketers’ bodies are not falling apart.
There is a lot more juice to squeeze here. So thus starts, unquestionably—truly, unquestionably, this is in no way a controversial statement—the most brilliant, most successful sports entrepreneurial business plan of all time: the Indian Premier League, a domestic, city-based cricket league in India that Lalit is going to set up in the model of the very best elements of the NFL, the English Premier League, the NBA, and international cricket.
I mean, this is something that is not emergent in any of these other sports we’re comparing it to. There’s no BCCI for football in the U.S. There’s nobody telling the NFL what they can and can’t do.
The BCCI is the one that controls the players’ contracts, how much they make, who decides what leagues they can play in or can’t play in, and who cuts media-rights deals. This is all happening through this organization that Lalit now de facto controls. It’s not the league. It’s a parent to any league or organized play.
Absolutely. They innovate beyond the other leagues, too.
Yeah, totally. To me, this is not a controversial statement: The IPL is better set up structurally than the NFL. It is the most perfect sports league that exists.
All right. So how does he do it? What is it? You’re telling me it’s the most amazing thing ever. Prove it.
3. The T20 Revolution
So, besides Lalit seeing that there’s an inventory opportunity to expand cricket in India beyond the 105 or so days of competition that the international team is playing, there’s also the perfect opportunity at this moment within the cricketing world, which is that the whole game is undergoing a major revolution.
England had just introduced a brand-new version of the game. Up until this point, there were only 2 versions of cricket that were played professionally. There’s Test Match cricket, the 5-day gentlemanly event with the cable-knit sweaters that we talked about. Then there are the 1-day, 8-hour matches that are for international tournaments and competitions.
One-day internationals. Yep.
Back home in England, cricket was basically starting to become a dying sport—the nation that invented the game, that was the home of everything sacred in this sport and this industry. Empty stadiums. I mean, truly empty. They had the most incredible stadiums built for cricket, and you look at these old videos and just see empty seats everywhere, empty sections. The only people still left watching it are basically old men.
Women have never really cared, and kids are like, “I’m interested in football, European football. I don’t care about this.”
Not to mention, who can take 5 days off work to go watch something?
Yeah. This is happening during the day, or even 1 day during the international tournaments.
Yes.
It is made for retired men, or especially in the old days, the elite people who didn’t have jobs.
Exactly. That was the whole point of the game. It was for the nobility.
But that’s not going to work in the modern world.
Yep.
So in 2003, the England and Wales Cricket Board finally realizes, “Hey, we’re desperate. We’ve got to do something.”
There was another form of cricket that was mostly played recreationally and by school teams: 20-over cricket. So rather than these 5-day events or the 1-day events, it was a limited number of balls, or pitches, essentially, to use the baseball analogy, for each side. That was 20 overs.
An over is 6 balls. Each team gets 120 balls bowled at them, and you’ve got to make do with just those 120 balls. All of a sudden, you’re going from Test cricket—which is thousands of balls bowled, or pitches, in the baseball world, over 5 days—to the 1-day international version of the game, with hundreds of balls. You’re going down to 240 total balls bowled, 120 for each side.
Compare that to a Major League Baseball game, for instance, which has an average of about 300 pitches per game, about 150 each side. All of a sudden, cricket went from the boring version of baseball to the more exciting version of baseball, purely because of this very interesting difference: The balls are scarce. You have to get the most points possible based on a small, fixed number of opportunities to hit it.
Right. A baseball game can go on forever. Pitches can go on forever—extra innings, et cetera, et cetera. Nope. These T20 games have a strict balls-bowled count.
Yep. It’s tight. And that means games take 2½ to 3 hours. That means games can be played in prime time in the evening for the very first time in the sport.
Finally, we have cricket for the masses. I mean, how was anyone even supposed to watch these ODIs unless it was on a Saturday? You now can watch cricket every night of the week because there’s a 3-hour prime-time format for everyone of every class to watch.
Yep.
So all of a sudden, you start seeing these green shoots in England in 2003, 2004, and 2005. Domestically, they start playing T20. They start televising the matches. Younger people start paying attention again. There’s a revitalization.
So obviously, the international game sees this. Lalit sees this. He’s thinking about starting up a domestic league in India. This is the perfect opportunity.
What an amazing gift: a new format of the game. Perfect for prime time. An incredible opportunity.
There's one other thing that fell in their lap, which is that the fuddy-duddies who love Test cricket absolutely hated it.
Yes, which made it more exciting.
And so the way that the original T20 was advertised, even before we get to the IPL, you just look at a famous match between Australia and New Zealand. New Zealand doesn't take it seriously at all. They come out with crazy hairdos, and they're wearing whatever. T20 is kind of a joke from the start, and once the players do that, the advertising kind of leans into it: This is not a serious sport. This is party time, and we just have to be playing cricket.
This is basically the Savannah Bananas version of baseball. We'll talk about the Savannah Bananas later for folks who don't know about them or who aren't in the US. The Savannah Bananas are like the Harlem Globetrotters of baseball. It's a purely entertainment spectacle.
It's a spectacle, for sure.
And the IPL is not quite that. I mean, T20 is definitely competitive, but the old-timers look at it as a joke, even though it's a highly skilled thing, and that's a perfect spark.
Totally. So, the Australian domestic T20 league that gets started right around this same time, to give you a sense of this, is called the Big Bash League. That's the image that they're projecting. The Big Bash League is a legitimate real sports league today and probably the second-biggest, second-best T20 cricket league in the world behind the IPL, but this is not targeted at the Test-cricket-loving audience, right? It sends the right message, too, because you were trying to bash the ball. This is a game of batsmen.
There's an amazing moment that happens—I forget exactly which competition it's in—but someone gets 6 sixes in a row. It's like the most amazing thing ever to watch.
It's basically home run derby.
Yes. When there's no limit on the number of balls, you're trying to play for a draw. If you're behind, you're trying to make things go longer. Now, all of a sudden, it completely changes the strategy of the game. You only have 120 balls, and you need to maximize your score.
So, rather than trying to run out balls or whatnot, sixes become way more important.
Yep. So, Lalit Modi knows this is the perfect opportunity. He goes back to IMG, which—remember—he had initially partnered with Disney and ESPN way back in the day to start broadcasting cricket in India in the first place, and says, “Hey, I need to hire you as consultants for the BCCI. We're going to set up a whole new league.”
Andrew Wildblood, who runs IMG's India operations, becomes essentially Lalit Modi's partner in setting up how to structure this. What are we going to create as the business plan of this new league? We've got some time. We've just done these major rights deals and sponsorship deals for the BCCI. Let's be really thoughtful about this. We'll plan to start it in 2009.
4. The Rival League Threat
So, here we are. We're now at the end of 2006, beginning of 2007. We have 2 to 3 years to set this up. Then, in the spring of 2007, a rebel league starts up under their nose in India. Another domestic T20 league with city-based franchises announces that it's going to launch, and it's going to be called the Indian Cricket League. It's backed by the broadcaster Zee TV.
Not only was it called the Indian Cricket League, which is just a great name, but that was actually an entity name that Lalit Modi had registered in the ’90s.
Yes. I don't know if Lalit Modi was thinking he would actually call the IPL the Indian Cricket League, but then something else launches called the Indian Cricket League.
Yeah, it's a good point. This opportunity for a domestic cricket league was not some “aha” brainstorm that Lalit Modi had once he took over the BCCI. Everybody knew that this would be a huge opportunity, right? This is like social networking in 2004. The time just wasn't right yet.
He had been thinking about it all the way back when he was first working with Disney to fight against STAR and enter the market, but the timing just wasn't right.
All right. So, what is this Indian Cricket League? Where did it come from? What is Zee TV?
Way back in 1996, Subhash Chandra, the founder of Zee TV, recognized exactly what you're saying, David: “I'm a TV distributor.” He owned a satellite TV company. He saw exactly what Lalit Modi saw. Sports are the most important thing. India increasingly cares more and more and more about cricket. This is going to be the perfect thing to distribute over my airwaves.
From 1996 to 2004, he tried to get the rights to cricket and didn't get them. Finally, in 2004, he bid the highest for domestic cricket in India, but the BCCI still did not award the rights to him.
Oh, interesting. So, this must have been right before Lalit Modi joined the board and restructured the whole thing.
It must have been right around that time. Finally, 2 more years go by. He wins. He gets a 5-year deal between the BCCI and Zee TV for the exclusive rights to broadcast cricket.
Oh, wow. I didn't even find this—that they had a deal with the BCCI.
They had a deal. Wow. One year into the deal, something called the Sports Broadcasting Bill passes. This requires broadcasters to share feeds in real time—live feeds without ads—directly with the state-owned broadcast channel.
Interesting.
Which, of course, destroyed the profitability of this enterprise that Zee TV was trying to create by broadcasting cricket, if it had to give away the very thing it was collecting without an ability to generate revenue from it.
The BCCI ignores Zee TV's attempt to renegotiate this because, at this point in time, Lalit Modi is starting to work on setting up the IPL.
Yeah. And I think the Zee TV side of the story is, “Where did the Sports Broadcasting Bill come from? Why won't they renegotiate?” I think, David, you are correctly reading into this: the BCCI is starting to say, “Hey, just hold tight. We're going to make some changes here.”
Not knowing what's going on yet with the IPL, Zee TV is like, “This is so weird. I'm not making any money on this thing that I finally got rights to, that I really want the rights to. The BCCI won't negotiate with me, so I'm just going to start a new T20 league outside of the BCCI universe without their cooperation.”
Ah, so this is spring 2007, when they announce the ICL.
Yes. The BCCI immediately says that any players who sign up for the Indian Cricket League are banned for life from playing for India's national team or in any other domestic tournaments. This includes young players who have never even played for the Indian national team. Chandra is freaking out. He's like, “Wait, wait, what?”
So, he then tries to make this big appeal. The economic benefit that's going to come from a domestic league like this—everyone's going to watch it. That's going to promote the local economies of all these places. We're going to pull in talent from all these other countries, which, by the way, is straight out of the Premier League playbook. This is what the IPL ends up doing. It's going to be broadcast on Zee TV. I'm going to fund a $1 million prize pool.
The BCCI flatly ignores this again. In fact, what they did was go and pull pensions away from any retired cricketers who then went and joined the ICL.
Amazing. They're raising the stakes. They're saying no one who has any affiliation with us at all can do this.
So then other state organizations, like the Cricket Association of Bengal, recognized that this was going to be an issue if entrepreneurs started going around the state organizations. They also banned their players from joining the ICL. So, this really hamstrung the whole thing before it could even get going.
And then, finally, I'll flash forward 1 year and then we'll come back. In 2009, the BCCI announced an amnesty, and all players could return to official cricket without penalties if they cut all ties with the ICL. So, that was the final nail in the coffin, and then, in 2009, they shut down.
They actually played 2 seasons, in 2007 and 2008 and into 2009, and then they folded. But this was someone making a true run at, “What if we go around the state institutions, these regulatory bodies of cricket, and try to start something on our own?” It just didn't work.
Period. You can't go around them.
Well, I mean, this brings up probably the most important power-and-playbook theme that I was going to save to talk about later, but we should talk about now: the cornered resource of the players. If you are creating or running a sports league, it is of paramount importance that you have the best players in the world. If you do not have the best players in the world, you're toast. Nobody wants to watch the second-best players in the world play each other.
Well, I think that's right, but it is a two-sided equation. The BCCI worked itself into the choke point—or ended up in the choke point, the linchpin, or the aggregator position—where it aggregated both all the best players, at least the best Indian players, and the broadcast rights.
These are the 2 different things that Lalit Modi did during his term at the BCCI: both the centralized contracts for players and the centralized media rights, which they had the Supreme Court-approved right to auction off to any capitalist companies that wanted to bid for them. So, they owned the 2 things that mattered.
Yes, that is absolutely true. The players are the primary thing, though. The broadcasters will follow the players. STAR was desperate to rebroadcast cricket at this point in time. They would have loved for the ICL to take off and be able to broadcast that and go around the BCCI, but it just wasn't a compelling product.
The BCCI was basically using mafia tactics: “Hey, if you even think about going and playing there, you are banned for life”—from what really mattered at that point in time, which was the chance to play international cricket for India.
Yep. So, Lalit Modi, Andrew Wildblood, and IMG were like, “Okay, we've got to accelerate this. We were planning to launch what becomes the IPL in 2009. We need to launch now, next season, April 2008.”
I will say, given how rushed this was, it is shocking how well it is all set up. All these dynamics, all the rules and auctions, and everything about this league are so well balanced, given they pulled it forward a year.
Absolutely. It's also lucky for them that they pull this forward in response to the competitive threat from the ICL, because there's another media and marketing gift: unexpectedly, India ends up winning the first T20 World Cup that summer.
Yes. And they were initially really dragging their feet. They were resistant to T20. They already had ODI, and they loved it. I think you may have more details than I do, but 3 of their best players didn't go to the World Cup.
So, what happened was, T20 was introduced by England in 2003. It takes a couple of years for other countries to catch on and start playing it. Like you said, Ben, there was that Australia–New Zealand thing. 2007 is when the ICC finally starts to recognize, “Ah, maybe there's something to this,” and this is the first T20 World Cup that they organized.
They'd been doing the One Day International World Cup for years, all the way back to before 1983, when India won it. But 2007 is the first T20 version of this that they're putting on. The first team of the Indian national team had already just played the One Day International version, so they were tired.
The best players looked tired. I think “tired” is in quotes for cricketers—they can play any day of the week—but they weren't that interested. Then the star players were like, “Ah, let's let the young guys have a go at this new tournament.” So the young guys go, and the tournament is being held in South Africa. They go over there not expected to win, while the other countries are sending their first teams to this.
Amazingly, the young guys end up winning the tournament in incredibly dramatic fashion. And guess who they are playing in the final? Pakistan.
Yes.
So, during the group-play stage, the early stages of the tournament, the Indian team is playing the England team.
England, home of cricket.
Yes. Massive underdogs here. You've got the young Indian players. Lalit Modi has come over, of course, to South Africa to watch the World Cup. He's working on the IPL accelerated launch in the meantime, and he's like, “Okay, great. We're playing in the T20 World Cup. This is an opportunity. I want to create some exciting moments here.”
So he tells all the guys on the team, “If any of you hit 6 sixes in an over...” An over, like we talked about, is 6 balls in T20, with 20 overs. This is 6 home runs in an at-bat, back-to-back, essentially.
Yes. Very, very, very difficult to do. Oh, and they're bouncing the ball, right? You're trying to hit a ball that's bouncing somewhat unpredictably.
The bowlers can either bounce the ball or throw it like a baseball pitch. They can do whatever they want. You don't know what they're going to do.
And it might have spin. In baseball, you can throw a curveball. A curveball curves a little more than a fastball does, but it can't move that much. When you spin the ball and then it hits the ground, it can move a lot. So you really don't know what's coming. Not to mention a running start—the pitcher has a running start, the bowler.
So Lalit tells these kids—remember, they're kids from India, not from wealthy families here—“If any of you can hit 6 sixes in an over, this is going to be such a dramatic event. I know this is going to capture the public's imagination here. I will personally give you a Porsche 911.” I swear to God, this is true.
Wow. The Acquired Universe crossover. The crossovers are amazing.
And I believe, in fact, that when they were talking about this in the locker room, he might have first offered a Rolex. Then the players were like, “No, that's not enough for doing this. I need a Porsche 911.”
That's amazing. I think that might be the story. Either way, to drive a Porsche 911 in India, period, is a big statement, especially back in 2007. For a young kid, this is the pinnacle of anything they could ever dream of.
Yep. So they're motivated. They're playing England in the group round, and one of the young players, Yuvraj Singh, is up at bat. He hits 1 six. He hits 2 sixes, 3 sixes, 4 sixes. By God, he hits 6 sixes in an over.
The crowd's going insane against England in South Africa. I believe something like fewer than 20 people have ever done this in history, even to this day. This is one of the rarest feats, certainly in cricket, if not in all of sports, and he did it.
So he comes running over to Lalit, who's there in the stands, jiggling his hand back and forth, like, “I want the keys to my Porsche. My Porsche.”
And he gets his Porsche. Lalit would tell you that he paid for it out of his own money. I'm sure Lalit's quote on this is, “That lit up the Indian television screen. It turned the entire country upside down. Everybody started to tune in.”
So they win that match against England. Next thing you know, they find themselves in the final against Pakistan. Now, the Indian national team—the first team at this point in time—despite India being the biggest market for cricket in the world, was not that good. I believe they had not won an ODI, a One Day International World Cup, in quite a while.
Here, these young guys—the T20 team—are in the finals against Pakistan. They win in the last over. An incredibly exciting, dramatic finish. The television audience back home in India for this was 400 million people.
Wow. The numbers are just staggering.
When India plays Pakistan in cricket, it is a national holiday. That game, that match, was the 10th most-watched TV event of the year, period, around the whole globe.
Wow.
The young team comes home. Lalit calls up Nike before they leave South Africa, and he's like, “I need open-air tour buses for the team, for the whole retinue. You meet us at the airport. We are going to do a parade to the stadium in Mumbai, and we're going to have a huge victory celebration, just like they do in Western sports after they win a World Cup.”
They come home. The team arrives at the Mumbai airport at 6:00 a.m. The crowds are packed. There are 4 million people on the streets. It takes them 11 hours to get from the airport to the stadium. It's all televised across the country. It's like a national holiday, and it is the most perfect, fertile ground in which to insert the imminently about-to-launch IPL.
Which will lead us to the specific rules of how the IPL works and the dramatic auction for the initial teams.
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All right, so David, India's coming hot off winning the T20 World Cup cricket final, and it's time for the birth of the Indian Premier League.
Yep. We have finally arrived at what we've been hinting at the whole episode: just the sheer brilliance of how the IPL is architected.
If you are starting from a clean sheet of paper and trying to design the perfect sports league, there are 2 things that you really need to try and maximize to make it appealing to an audience. The first is that it needs to be the best place in the world to showcase human skill and achievement in that sport. In other words, you need the best players in the world playing there.
The second, though—and this is where a lot of sports leagues go wrong—is that you need uncertainty about the outcome. You need competitive parity among the teams in the league. This is the any-given-Sunday element of the NFL that has been the key critical ingredient to making the NFL the most valuable sports property in the world.
Every year, they're tweaking things here and there to try and make it a little bit more balanced. The NFL would love nothing more than every team to go 8–8 and then have an incredibly competitive, who-knows-what's-going-to-happen playoff situation. It was almost a disaster when the Chiefs almost won 3 Super Bowls in a row. The possibility of that was so unnerving. It took them 100 years, but they became wizards of that competitive balance.
And David, I’ll say one quick thing. It’s not to create the best sports league. It’s to create the best business.
Yes. I was taking it as tautological that that is what you are trying to achieve. If you want to create the best business out of sports, you need it to be the most entertaining version of that sport, which means you need uncertainty as much as possible.
Now, importantly, this does not mean you are simply creating spectacle and controversy and entertainment without quality sport. You know, that would be the Harlem Globetrotters. That would be the Savannah Bananas—amazing, incredible businesses and products, but never going to be the biggest thing in the world in their sports.
Correct.
And on top of that, it has to remain a game of skill, not chance. So it can’t be a pure BS entertainment show, and it can’t be too subject to randomness. It has to be the best people competing in skill against each other to create the most thrilling product, but in the most balanced game design that you could possibly offer.
Yep.
So, because of everything we’ve talked about to this point in the episode, the first part of getting the best players in the world was actually pretty easy for the IPL. That’s what created the opportunity, assuming it was birthed out of the BCCI.
Yes.
If it had come from elsewhere, it would have been a nonstarter and impossible.
Correct.
The BCCI has cornered access to the best talent in the world. That’s because they have all the money, they have the Indian fans who care about watching the best Indian players, and they have essentially veto rights over the best Indian players playing anywhere else.
Now, the trickier one: competitive parity. This is where so many leagues go wrong. To get competitive parity among the teams on the field, you need every franchise to have access to the same opportunity to win, no matter how much money they have, how much money the ownership group has outside of the franchise, or how big of a market they’re playing in.
Exactly.
Or how good they were last year. You can’t throw the board up in the air too much every single year because you need some continuity of fan base, but you also kind of can’t really allow for dynasty creation. There are a million little ways that a misalignment could get in there and ruin competitive balance. You have to think through all the different variables and balance them all.
Yep.
And we’ll get into this later in the episode, but here in the U.S., I think this is where Major League Baseball has gone really, really, really wrong over the last set of decades.
Yeah, it’s the Yankees. It’s the Dodgers.
They’ve never successfully implemented a salary cap in baseball. And so, guess who’s in the World Series? The New York team and the L.A. team.
Yep.
And then the worst example of this is the European soccer leagues. It’s the top 2–5 franchises at the top that are spending the most money, buying the best players, and winning every year. And you have owners that are willing to spend hundreds and hundreds of millions of dollars on players and essentially run the teams in the red because they have to spend so much money on players to win.
Yep.
So now think about setting up this new league in India. For reasons I’ll get into in a second, you need to have a diverse ownership group. You can’t just have super-wealthy industrialists owning all of these teams. But if you look at Indian society at this point in time, it’s so bifurcated between the billionaires of these conglomerates—the Ambanis of the world, and so on, the Tata family—and then other people who you would want involved but are going to have nowhere near the same amount of godlike resources that these other people have.
Yep.
Coming out of the ’90s, and starting to change already here in the mid-2000s, it’s essentially an impoverished nation with a very thin slice of billionaires. So, as you’re setting up these franchises, you need to make them no-brainer investments for whoever makes them. And you can’t have this have-and-have-not dynamic.
So the first order of business, which is the easiest one, is stadiums. Ben, you were mentioning teams running in the red in the English Premier League. This is, I think, beyond just overpaying for players, the biggest problem in the English Premier League, which is that a lot of teams own their stadiums, and then the debt payments that you’ve got to make on these stadiums are just crippling.
This is soccer for anyone who’s not a Premier League fan.
Yeah, exactly. These are hundreds of millions, if not billion-dollar, edifices that these teams are funding and owning through debt, and then the debt payments are just astronomical on top of astronomical player salaries that they’re paying.
So the first thing that Lalit, Andrew Wildblood, and IMG decide as they’re setting up the league is: no debt. No team is allowed to have debt, and de facto, no team will own its stadiums. The driving force of all this is that the teams have to be profitable because we want to incentivize this diverse group of people to own them.
You need to make it so that if you are entering this auction for the first 8 teams, you sort of have capped downside. So, thing number one: make sure that they’re not going to have insane stadium debt right out of the gate.
Yep.
Well, guess what? India already has pretty big cricket stadiums in all the cities that you would want to put franchises in. And who owns and controls those stadiums? The BCCI. The state cricket associations, which all roll up to the BCCI. So, problem solved.
Problem solved. Problem solved. Awesome.
So, next and most important is what happens to media rights deals for broadcasting the games and central sponsorships within the league. Are media rights deals negotiated by each team individually, like they are in Major League Baseball, or are they going to be negotiated centrally and split evenly among the teams, like they are in the NFL?
Obviously, there is a superior model here. And hey, guess what? The BCCI and Lalit are already in position to run this as a central model because they already do that for the BCCI’s international cricket rights, for which Lalit has just hugely successfully done the $620 million deal.
Yep.
So, okay, we’re going central rights, and then we’re going to distribute that central revenue from both sponsorships and TV rights equally to all the teams.
But as Lalit and IMG are thinking about how they’re going to maximize the TV rights deal that they’ll do for this new IPL, this new domestic cricket league, they kind of have a problem because of the success that they just had selling the international rights. And that problem is they already saturated the entire market of buyers for this form of entertainment—cricket broadcast in India.
There are other broadcasters who would love to have these rights, but ultimately, the end buyers are the consumer brands that are buying advertising against this programming. And the $620 million rights deal was so big that they just absorbed the entire market of cricket advertisers.
Basically, the broadcasters who now own those rights took on such a big liability that they’re trying like crazy to get their sales force to go and sell as many ads as possible. Get Pepsi, get wireless carriers, car companies, and so on.
And keep in mind, this is something I didn’t realize until the end of my research last night: India’s advertising market was historically small. So the entire total addressable market for advertising—not digital advertising, not mobile advertising—in 2008 in India was $2–3 billion. And a huge chunk of that just went to international cricket.
So even to break even on these rights, those broadcast networks now need to go sell—what was it?—$600 million.
Yeah, $620 million over 4 years.
So call it $150 million a year. Assuming it’s a $2 billion ad market, they need to go sell and take up 5% of the entire advertising market per year just advertising during cricket games.
This is before the IPL, right?
So that is a real liability. They are signing up, even to break even, to go sell 5% of the ads. They probably need to sell something like 10% of the ads to turn it into a real business in the entire country for that year across all products.
So this creates, to your point, this new problem for Lalit and the gang creating the IPL: Where are we going to get the money? You now need to go find a whole new set of advertisers, on top of what you’ve just sold, to go and buy a new rights package to advertise into that new rights package.
So Lalit actually has a great, amazing quote about this dynamic, in the way only Lalit can speak. Here’s the quote:
“Being the big daddy for all sporting events in India already, with the BCCI bilaterals—the international matches, bilaterals against other countries—all the money that was there in the market that brands had for spending was consumed. There were no more budgets left. We had sucked it all out by taking the price of BCCI in aggregate from a few million dollars to a billion dollars. I had already sucked that money out. And so, when I looked at where are we going to get the money to make the IPL work, I needed women and children.”
God, it sounds diabolical in his words.
He’s spot on. It’s exactly what the dynamic is.
Yep.
And again, back to the league dynamics of setting up this league versus the BCCI just running the one international team: Again, look at the NFL. It is super important that your central revenue stream of your TV rights deals and your central sponsorships be very, very large, and that that be the most important revenue stream for your teams, because that’s what keeps competitive parity.
The risk to the NFL’s model is that the Dallas Cowboys or the San Francisco 49ers start making too much local revenue, and then they’re making more money than the other teams, and all of a sudden the balance is out of whack.
Yep. Although, theoretically, the salary cap keeps that in check. Ah, well, we’ll come back to that in a minute.
Okay. So you would think they’re kind of between a rock and a hard place here. And this is where Lalit and IMG’s just incredible entrepreneurial genius comes in.
They said, “We are going to make the IPL into an entirely different product, with a different target advertiser and sponsor from our international cricket, by having a different audience.” They needed to attract women to view the game, and then advertisers who were going to advertise products to women for the IPL. So, it was a totally different market segment in terms of advertisers.
Essentially, you needed to make the product one where, if Mom sat down or if your sister sat down and threw something on for the night, she was going to pick the IPL versus whatever else she was going to put on. And whatever else she was going to put on were soap operas.
I’m going to read a quote here from Andrew Wildblood at IMG, who was Lalit’s partner:
“There were a number of guiding principles behind how we put the IPL together. One was that it should reflect the characteristics of modern India: energetic, colorful, noisy, exciting. Two, it should not compete with the other forms of cricket, but rather it should compete with other forms of entertainment. So, evening prime-time viewing.
“Not only is India somewhat short in terms of supply of sports content, it’s actually quite short in terms of general entertainment content. Apart from Bollywood, Lalit and I agreed that we didn’t want to compete with other cricket. We wanted to compete with the soap operas. We therefore needed to create the IPL in the image of a soap opera, so that if you didn’t watch last night’s episode, you’re not in the conversation at the water cooler the next morning.
“Most households in India were single-television homes, and women controlled the remote control, watching soap operas at night. The man of the house had little to say in what was seen. So, in order to create a successful television product, we had to make something that women would be attracted to. And that’s what caused us to bring in Bollywood.”
No other sports league in the world has done what the IPL has done here. Today, IPL viewership is entirely 50/50 gender parity between men and women. The reason that is the case is because they brought Bollywood into the ownership groups.
Bollywood and cricket were, and still are, the 2 biggest things by far in India. As Andrew Wildblood was saying, there is no number 3. It’s Bollywood and cricket. And when it comes to Bollywood, there is 1 star who shines brighter than everyone else.
There’s a quote from Manoj Badale, who is the principal owner of the Rajasthan Royals and wrote a book about his experience. He writes:
“Within Bollywood there are B-listers, A-listers, double A-listers, and way above them all is Shah Rukh Khan, richer and more famous than Tom Cruise or Clint Eastwood and adored by the entire country. It turns out he and Lalit had known each other since childhood, and there were few others within Indian cricket who could have convinced him to invest and participate so actively in the league. The profile that he provided as the tournament was launching was incalculable.”
So, Lalit knows Shah Rukh Khan, the biggest star in India. There’s 1 problem, though: Shah Rukh is not a cricket fan. He’s into soccer.
Really?
So Lalit goes to him and is like, “I need you to be part of the ownership group.”
No way. Because, retroactively, I watched an interview with Letterman, and he’s making jokes about how he was never good enough. He’s fulfilling a childhood dream. He was never good enough to play cricket, so he may as well own a team. That’s totally post facto retcon.
Yes, yes, yes. Here’s the real story. This is amazing.
All the quotes from Lalit and the direct firsthand information from Lalit come from a great series of interviews that he did on the Sports Entrepreneurs podcast.
Lalit obviously knows Shah Rukh. This is the perfect way to get him into the ownership group. He’s the brightest star in India. Have him at the matches. I could tune into a soap opera at night, or I could go watch the biggest star in India dancing on the field, with all this incredible stuff going on at the matches.
But the problem is, he’s not into cricket. So, Lalit tells the story. Shah Rukh said, “Lalit, I don’t know how to do this. My passion is football. I have no idea how to run a team or do anything.”
I, being Lalit, said, “Shah Rukh, let me handle it. I’ll put a consortium together for you. You just need to write a check.”
He says, “You’re going to take my life savings?”
And it was his life savings in those days. I said, “Just write the check, and we’ll talk about it if you end up winning the team at the auction.”
This is the most incredible gangster-type stuff.
Here’s what Lalit did. Because he’s friends with Shah Rukh, he knew that Nokia, the big handset manufacturer at the time—we’re still slightly pre-smartphone era here; we’re in 2007.
And definitely pre-smartphone in India. Way pre-smartphone in India.
Nokia was desperate to get Shah Rukh as their celebrity spokesperson in India. For whatever reason, Shah Rukh was not engaging with them. So Lalit says, “Shah Rukh, just trust me. Do I have your word that if I put a consortium together for you, you’re in?”
He says, “Sure.”
Lalit turns around and goes to Nokia and says, “I know you want Shah Rukh. He’s not going to do it, but you can become the jersey sponsor of his new team that he’s about to have in this new cricket league that is going to be the biggest cricket league the world has ever seen.”
Wait, wait, David. I have an alarm bell going off in my head. What do you mean it’s going to be his team? That seems like something you can’t promise when there’s an upcoming auction and you don’t know how the auction is going to end.
Would it be? Would it be? Yeah. Well, if he were to have this new team, he’s going to be in the stands. He’s going to be on the field. He’s going to be wearing it. He’s going to be singing. He’s going to be dancing. He’s going to be doing the music-video introduction to the team in the league. TV cameras are going to be all over him, and he’s going to be wearing the shirt with Nokia right there on the front of the chest. You can have all of that for the low, low price of $5 million per year in cash up front.
Wait, is this to be the jersey sponsor of 1 team?
Yes. Jersey sponsor, 1 team, $5 million in cash.
Whoa. 1 team that doesn’t exist, that theoretically might be won at the auction by Shah Rukh Khan. Theoretically, it is crazy how many things need to come together here. This is some major chicken-and-egg stuff that needs to come together before a ball is ever bowled.
The sponsorships, the media rights, the ownership group—an immense amount of money being promised in contracts and changing hands for a league that has never existed.
India, baby.
And Lalit. And Lalit. I mean, he’s an incredible entrepreneur.
So Lalit goes back to Shah Rukh and he’s like, “All right, I got you your team. I’m going to set the minimum reserve price in the franchise auction at $50 million, but it’s going to be payable over 10 years. No matter what you bid and what you win, the first year’s payment is going to be $5 million.
“So, if you bid $50 million, it’s $5 million a year for 10 years. You bid $100 million, it’s $10 million a year over 10 years on average, but I’m only going to charge you $5 million in the first year.”
I believe that’s how it was set up. On top of it, if you’re trying to get people over the line, just generally, make it payable over 10 years, right? The capital calls are the way to do it. It’s an incredible way to get someone to bid $50 million to $100 million for something that doesn’t exist yet and say, “Well, in the first year, you’re only out $5 million.”
And there’s a sweetener, which you’re going to get to in the media rights, with the way that they tier that down. Lalit is a genius at structuring your own out-of-pocket money. I’m not sure how much risk you’re actually going to be taking, even though all of these dollar signs are eye-wateringly large.
Yes. Well, again, media rights are important. We can’t get to the media rights yet because, like we said, there’s the problem that, to sell the media rights, you’ve got to bring a female audience in and you’ve got to prove that. And to prove that, you need Shah Rukh and you need Bollywood.
So now he goes back to him. He’s like, “I got you your team. The first-year payment is going to be $5 million. Guess what? Nokia is sponsoring your team for $5 million. You are already in the black. You have a profitable enterprise on day 1.”
Wait, is this after the auction?
No, no, this is before the auction.
Got it. Okay. This is, you know, “I’ve got you your team,” in quotes here. I see. Got it.
So Shah Rukh’s like, “Oh, wow. Okay, great. I’m in. That is an offer I can’t refuse.”
Wow. A free cricket team. Sure.
So, we’re now fast-forwarding slightly to when the auction actually happens in January 2008. The auction happened. Shah Rukh won the team at 12:00. At 3:00, he had a signed agreement with Nokia to pay the $5 million for the front of the shirt for that year. So, he had a wash and was laughing all the way. That wouldn’t have happened for anybody else.
Amazing.
Okay, so now, back to the fall, when they’re getting this all set up. Lalit can now go around to everybody and say, “Shah Rukh is in. We’ve got Bollywood. And, oh yeah, Nokia is in.” And they’re in for $5 million for jersey sponsorship of a single team.
So now they’ve set the price. This thing is for real. They have set the market.
Exactly. Now that Shah Rukh’s in, all the rest of Bollywood wants to come in, because wherever Shah Rukh goes, he’s the leader of the pack. The whole rest of the community wants to come along, too. He’s unbelievably charming.
By the way, this Letterman interview—he’s like butter. Unbelievably charming. I’m trying to think of an analogy in Hollywood. There is no analogy.
So, 1 of the top A-list actresses, an actress named Preity Zinta, ends up becoming the principal owner and buying another 1 of the teams. This is even more amazing. Now you’ve got 1 of the top actresses coming in as the principal owner of a team.
So now you've got not just Shah Rukh Khan, who even alone would have been enough to draw in the women in the general entertainment audience and beat the soap operas. Now you've got a top A-list actress, one of the best actresses in Bollywood, who's also going to be a principal owner of one of the teams, who's also going to be at all the games, in the stands, with TV cameras all over her. That's just going to bring the whole circus.
So Lalit says, “In one way, they are 90% of the market”—they being Bollywood. “Once I had their reporters and their people in there, and all their stars starting to attend, and everybody getting their makeup artists and their people and their endorsers and their brands talking about them attending a match, it changed the whole thing around. Them being on the field sent a whole different message to the crowds who wanted to see these people who could only otherwise see them on screen, but now they can buy a ticket or they can tune in on TV and they can come see the stars there, even from far away, every night of the week.”
And then the pièce de résistance, at least when designing this product for a general TV audience and competing with soap operas: Lalit meant the quote about competing with them quite literally. So when IMG and Lalit go out to bring the bidding to the TV networks for this, they say, “Here’s our schedule and time slot. We are going to have matches every night of the week, 7 days a week—1 match at a time at 8:00 p.m. We are going to go directly up against the soap operas, which also run every night of the week at 8:00 p.m.
“These are going to be 3-hour matches, 8:00 p.m. to 11:00 p.m. And it’s going to be like Monday Night Football every single night of the week, only 1 match at a time for 2 months. And you’re going to have all the biggest Bollywood stars there, all the A-listers, who, by the way, will never act in soap operas because they’re only acting in the big-time movies, right? We’re going to have them in our soap opera. We’ve got them captive in the stadium with the cameras on them.
“And then also, by the way, from a sports programming perspective, this is also going to be the best cricket in the world. So all the men who are already watching the international cricket, they’re going to come here, too. The whole family is going to watch. And for anyone who’s a little skeptical of this, just think: in the U.S., how many people watched NFL games in the last few years just hoping to catch a glimpse of Taylor Swift when the camera goes to her for the, gosh, I don’t know, 30 total seconds per game that she’s on? I mean, the amount of newsworthiness that came out of, ‘Oh, here’s what Taylor looked like when she was in the stands making an expression. Here’s the jacket she wore.’ Imagine if she’s the owner of the team.”
Yes. Imagine if Taylor owned the Chiefs. That’s what’s going on here.
There really is no comp for this in sports except for the single game of the Super Bowl. I think the Super Bowl is like this in the U.S., where it’s a family event. Everybody watches. I mean, Jenny watches. My wife has no interest in football. She hates Sundays and Monday nights during the season when I want to watch football, and she couldn’t care less. But the Super Bowl, even though she has no interest in football, she will tune in to watch that just because it’s an event. She wants to see the commercials. She wants to see who’s there, et cetera.
This is what the IPL is every single night of the week. The IPL is like the Oscars, or it’s awards season, but it’s every night instead of just 4 Sundays.
Yep. Exactly. Okay. So, so far, you’ve got 3 pillars of competitive balance that they’ve managed to stabilize here, at least at the start. You’ve got, first, the stadiums and no debt—not owning stadiums, an asset-light business model. Second, you’ve got a diverse ownership group, which is necessary both to ensure that no 1 group has financial resources outside the system that can outspend any other, but more importantly, you really need Bollywood to be involved here to unlock the media budgets. So then now 3, falling into place here, is the media budgets and being able to get a huge central broadcasting rights deal.
Yep, which gets evenly distributed.
Yep. Exactly.
So here we are now by January 2008. All the pieces are in place to get that deal. Lalit and IMG are ready to take it out to the markets for bidding. Of course, per usual, there’s just 1 problem, which is that Nimbus—remember, it had spent $620 million to buy the international cricket rights from the BCCI—they’re like, “Wait a minute. We already own this. We paid you $620 million over 4 or 5 years, or whatever it was, for the rights to all of BCCI cricket. This is what we’re paying you for. The IPL is a BCCI product. We should have this already. Makes sense to me. I see the argument.”
And of course, Lalit says, “Nope. The IPL was not specifically laid out in the contract, and if you would like to sue me, you are welcome to go ahead and sue me. Good luck here winning.” Of course, it wasn’t specifically called out by either party, and so therefore Lalit gets to say, “This is something different.”
Nimbus is already making out great. They went from being a middling broadcaster that had no sports rights to all of a sudden having all of the sports rights. Yes, they paid a lot of money for it, but they’re making a lot of money from it here, too. This is always Lalit’s argument: “I make money for everybody.” This is just how business in India gets done, or at least was how business in India got done in this time frame—call it 2008.
Sure. From our U.S. American and Western perspectives, we can look at this and say, “Well, what was actually the letter of the contract? And shouldn’t there be a process here? Does Nimbus have these rights?” You just want to deal in good faith. You want to assume that if someone knows they’re about to launch a huge new cricket league that’s not included in your contract, and you’re operating under the idea that it is included in your contract, what’s in the contract doesn’t matter as much as what you both feel like you’re agreeing to. It’s a shame if what you’re relying on is, “Well, the letter of the contract says this.”
Yep. Exactly.
Okay. So Nimbus does not have the broadcasting rights. How do they get sold?
So Nimbus, they’re out. Star is still out because of another amazing Lalit quote. He just doesn’t let bygones be bygones. He’s talking about how he sets up the broadcasting-rights auction: “Rupert Murdoch—I had blacklisted. I would never allow him in due to what had already happened. So I blacklisted Rupert Murdoch.”
Amazing. I mean, this was 10 years ago that that happened. ESPN and Disney corporate say that they’re interested in bidding on these rights separately from Star, which they’re already in a joint venture with, but they think this is so interesting that they’re interested in bidding. Ultimately, though, they can’t get comfortable enough to put an actual bid in. They say, “We will broadcast it over the top as Disney, soon to be Disney+, in the coming years, but we’re only going to do it on a rev-share basis. We won’t give you cash up front. We’ll just share advertising revenue with you.”
Obviously, that’s not what Lalit wants because he needs the cash to have the central sponsorship guarantees and central media guarantees out to the franchises, right? No one’s going to bid on one of these teams for $80 million unless somebody is guaranteeing you there is media revenue there.
Exactly. So what does he do?
He just runs the same playbook he’s always been running, which is that he goes to another broadcaster that does not have a sports channel or sports presence. This time, it’s Sony, which is the number 2 broadcaster in India at this point. But like Nimbus before, and Disney before that, they did not have a sports channel, and he says, “I will make you a sports channel. And, by the way, this isn’t just sports. This is sports and Bollywood and the greatest entertainment product that India and the world has ever seen.”
The minimum bid for this is $600 million for 10 years, but I am expecting $1 billion over 10 years, which would put it roughly on parity with the India international cricket rights that Nimbus had bought the year before.
So Sony’s like, “Okay, we’re interested. We see the value here, but 10 years is a big commitment for what is essentially a startup, and we don’t know that it’s going to work. I mean, again, not a ball has been bowled. Not a ball has been bowled. No teams have been established yet. There are no official ownership groups that have bid on franchises. Yes, this is a very compelling business plan, Lalit, but no domestic cricket league has ever proven valuable anywhere in the world.
“You know, there are domestic leagues in Australia, in England, in New Zealand, et cetera, but they’re peanuts. They’re the minor leagues. They’re fine. They’re not going to justify a $100 million-a-year, $1 billion-over-10-year media-rights deal.”
But they say, “We are interested. So what we would like to do is buy just the first year at the same pro rata price as the $600 million minimum bid for 10. We’ll pay you $60 million for year 1.” So, you know, it’s something. It’s money on the table, but it’s not really going to send the signal of strength to franchise bidders that Lalit wants for the auction coming up. He really wants the 10-year deal to project stability and cash-flow certainty. That also, by the way, is going to match up with the 10-year payable period of the franchise fees. That’s why he wants 10 years.
So Lalit and IMG say to Sony, “Okay, we hear you. Hang on.” They turn around and go to a sports-rights group based out of Singapore called World Sport Group. It’s basically just like the Nokia and Shah Rukh Khan deal. They say to World Sport Group, “Here’s what we need you to do. We need you to bid and buy the 10-year media-rights deal at the $1 billion price that we want, but we’ll only charge you $60 million in year 1.” So then they would owe the remaining $940 million over 9 years.
Exactly. And so you’re going to put up $60 million in Year 1. And this is for the global rights, by the way, to IPL broadcasting. And what you’re going to do is, you are going to turn around and immediately sublicense the Indian domestic broadcast rights back to Sony, who is good for that $60 million on the table—cash on the table.
And then you, as your vig for facilitating this, will have the rest-of-the-world international broadcast rights that you can then go sell and profit from at your pleasure. Oh my God. But I mean, it’s kind of crazy. Sure, there’s the rest of the world, but without that, what you’re basically saying is, “Sign this contract. You’ll be cash-neutral in Year 1, and then you will have a massive liability in Years 2 through 10. Good luck. Hopefully, you can make money on it.”
Yes. Well, so here’s the Lalit quote. I knew that once we had the TV deal signed, all the rest would follow. Remember, he’s already set all this up with Shah Rukh Khan. He’s got the players, he’s got Shah Rukh Khan, he’s got the stadiums, and he knows this is going to work if they can secure the bag on the TV money.
So he says, “Although the deal was for $1 billion, I told the broadcasters I only needed $60 million in Year 1. Let’s get the first year done. We’ll worry about the rest later. I promise, if we don’t achieve what we set out to achieve, I won’t carry on the IPL after Year 1.”
He’s basically saying you have a gentleman’s agreement from me that if this doesn’t turn out like we think it does, I will pull the plug on the whole thing, and you won’t be on the hook, WSG, for $940 million in Years 2 through 10. So if you believe that, then it really is a free option for the international rights for Year 1.
Exactly. Like I said, it’s the same Shah Rukh deal. It’s like, “Hey, I am finding you the money to cover your costs in Year 1, and you are in the black. You can make whatever profits you want from the rest of it.”
Yep. Fascinating. Which, again, legality—or, to the Western view, ethics—aside, actually is brilliant. What an amazing way to start something from nothing.
Yep. Transactions create value. Let’s throw that abstract idea out. When I pay you for something and you deliver me that good or service, value is created in the world by that transaction happening. Otherwise, it wouldn’t happen. Otherwise, I’d say, “I’d rather keep my money,” and you’d rather keep your good or service.
And so, if you can make transactions happen where it actually is in the interest of both parties to do it, where they otherwise wouldn’t have happened, that is literally a value-creative event.
Totally. And what Lalit is architecting here is not just saying transactions. He’s saying, “No-risk transactions. I’m going to create no-risk transactions where you have no downside and all upside.” And he actually genuinely is able to align all the players here such that nobody is really holding the bag.
But there’s an if. There is no risk to this transaction if you trust that I’m going to pull the plug in Year 2 if it’s not working and you don’t owe me $110 million a year for something that you’re not getting value out of.
Yeah. Exactly. You need to have some level of trust here. Actually, a pretty high degree of trust. That’s essentially the trade. In exchange for telling the world that I trust you, I am getting a free option to sell the international rights in Year 1.
Yep. I am valuing your trustworthiness.
Yep. Well, you could argue, if you’re WSG, whether you should have or should not have valued Lalit’s trustworthiness, because what he offers does end up coming to pass. It’s just not in the spirit in which he offered it.
All right, so how’s it go?
Okay, so they announce the $1 billion deal with WSG and Sony. This is like an earthquake that hits the cricket world. No domestic league had ever remotely been valued on a media-rights basis like this before. Not to mention, the league doesn’t exist yet. There are no franchise owners, et cetera. It’s just a business plan.
Then, on the back of that momentum, 10 days later, at the end of January, they launch the franchise auction. And, like we said, the minimum reserve bid for each of the 8 franchises is $50 million for the ownership groups. But the TV money is now in place. This is why it was so important.
So how much of the TV money are they entitled to? That will help me evaluate whether I should bid $50-plus million for a franchise.
So here is the prospectus that gets distributed out to potential bidders on these franchises. Of the central media-rights revenue—the broadcast deals, like they’ve just done with WSG and Sony—and also the central sponsorship deals, 50%, one-half of that, will get distributed out to the collective 8 franchises, to be distributed equally.
But here’s the kicker: Lalit is the master of manipulating time in his deals. That is what it will be at steady state. In the first year, it will be 80%—80. So 8 out of every $10 that are coming in centrally to the IPL will get distributed out. It just happens to be 8 teams. So each of the 8 teams is going to get 10% of the total central money that’s coming into the league.
And then it’s going to be a sliding scale over the next 10 years that’s going to take it down to 50%.
And so how does the math work out now?
Okay, you already know what the TV-rights deal is. It’s $60 million in the first year, hard cash that’s coming in. And then there’s upside from sponsorships that Lalit might go sell, but he needed to get the franchises in place before he sells the sponsorships. So that’s about $5 million in cash to each team in revenue from that deal in Year 1.
Bingo. TV rights alone, $5 million in cash coming in each year. And remember what he told Shah Rukh Khan: the franchise fees are paid over 10 years, but I’m going to let you pay the effective minimum price in Year 1—only $5 million in Year 1. Magically, it works out. You get a free franchise for the first year.
Amazing. No matter what you bid, you’re probably going to be break-even or close to it, even after paying players, which we’ll get to very early in the life of your franchise.
Exactly, the straw man that you are setting up, Ben. You’re giving me $10 million and you’re saying, no matter how much I pay for this team in Year 1, I only owe you $5 million. That sounds like a great trade.
And it’s an asset-light business model. You don’t have to invest any balance-sheet dollars. There are no stadiums, no hard assets, et cetera.
Well, if you are a smart sports investor, the first most important question you would ask next is, “What’s the salary cap?”
What’s the salary cap? What about the players? Here’s a funny thing. In most leagues, asking what the salary cap is the same as asking, on my P&L, what is the expense line for players?
Interestingly, in the IPL, they don’t pay the full salary cap. Plenty of teams are running around there with 75%, 80%, 90% of the salary cap and having a competitive team. It’s actually a different question in the IPL: asking what’s the cap versus actually asking, “What’s my team expense going to be?”
Yes. And what makes the IPL unique relative to every other sports league in the world—what they uniquely innovate on—is the auction system.
Players in the IPL are auctioned off just like a Sotheby’s auction, like a piece of fine art, or, as the media say when covering it, like cattle and sheep.
It’s like the draft but with money.
It is the draft with money, and it is absolutely freaking brilliant.
But before we tell the story of the IPL auction, yes, now is a great time to thank a friend of the show, Fundrise. The Fundrise team is awesome and they are big acquired listeners just like all of you. They've been evolving since we first started working together three years ago. At the time, Fundrise was mostly known as the US's largest real estate investment platform for retail investors. However, they were watching technology markets get larger than ever thanks to Moore's law and technology taking over every industry and feeling like it really was a shame that all these tech companies are staying private longer and that meant that retail investors couldn't get access. So, in 2022, they launched their move to bring their democratized model into venture investing, which was a pretty contrarian idea. Totally. This had been tried in the past but never really worked. Fast forward to today. Fundrise has invested in great companies like Data Bricks, Canva, Anderil, Ramp, fellow friends of the show Vanta and Anthropic, and also Service Titan, which just went public in December. It really is awesome what Fundrise has done. They've taken a retail platform that any American can invest in and gotten preipo access to some of the best private companies in the world. They've enabled access to all the value creation that's been locked away in private companies. Yep. When the Service Titan IPO happened, thanks to Fundrise, tens of thousands of regular investors got to celebrate alongside VCs, LPs, and employees. And timing really is everything. Fundrise is doing this at a moment where, thanks to AI, there's more value being created than ever in the technology sector of the economy. You can go to check out the full portfolio that Fundrise is building at fundrise.com/venture. And if you're a Growth Stage founder looking for a great series C or later investor, just get in touch and tell them that Ben and David sent you. This is a paid endorsement for Fundrise and all investments can lead to a loss.
5. The Player Auction Advantage
Okay, so David, I said the player auction is like the draft with money, but that’s not really giving it enough credit. The NFL draft did manage to turn itself into a huge, ridiculous viewer spectacle—a big thing at Radio City Music Hall in New York, with TV coverage. But the player auction is both a live spectacle and a key piece to the way that they balance the whole league.
And the rules for the annual player auction were nailed down even before the initial bidding for the teams happened, which is important to understand.
You need to know before you bid on a team as an owner how this whole auction process is going to work. It’s tied for the top priority of the most important things to know, along with how central revenue is distributed, because by far the biggest expense for any premier sports team attracting the best players in the world is player salaries. Put aside capital expenditures and potential debt payments for stadiums. That’s not part of this league. And that makes sense, by the way, that player salaries should be your biggest expense, because that is the most important raw ingredient to your business.
Yep. So, different leagues have different ways of dealing with this in different sports. We talked about this a little already, but I would say until the IPL auction innovation, what was generally regarded as the most effective way to deal with this was a hard salary cap. That’s what the NFL has. Every year, you have a dollar amount that is the same for every team. You cannot spend more than that dollar amount. It is simply not allowed. And how high that dollar amount is is the result of collective bargaining between the players’ union and the ownership group.
Yep. Which is a very sane way to do it.
Taking the 3 big U.S. sports leagues, the NFL is clearly the gold standard. It has the best way to manage competitive parity, which is the hard salary cap. Next is the NBA. They’re somewhere in the middle. The NBA has a soft salary cap, which means, yes, there’s a salary cap, but under some exceptions, you can go beyond it, and then there’s an associated luxury tax with going beyond it.
Yep.
This is a big problem. Not as big a problem as baseball, which I’ll tell you about in a second, but the reason this is a problem is it all of a sudden introduces the amount of wealth that your ownership group has outside of the business of running the team. Outside of the league, that now starts to play a factor in how much you can spend on players and starts to affect the competitive balance of the league. Or maybe, to put it in a more generic way, it’s the amount of access to capital the ownership group has, because whether or not they’re wealthy, if they’re in a market where their team can produce a lot of local revenue, then they can afford to pay for more expensive players out of that local revenue and pay the associated luxury tax fees.
In theory, the luxury tax should address this because you’re then redistributing some of that extra money that you’re spending on salary, and an equal amount, to other teams. But in practice, it doesn’t really work out this way. So, if you look at competitive dynamics in the NBA versus the NFL, you get dynasties in the NBA like the Warriors or the Lakers or the Celtics or the Spurs a few years ago. Yep. Cavaliers–Heat. Yep. The Heat. The Spurs are the anomaly because they’re not in a major market, but all those other cities, all those other teams I was talking about—San Francisco Bay Area, Los Angeles, Miami—these are big markets, right?
The luxury tax sounds great in practice, but the existence proof that you’re now naming shows the flaw. So, that’s the NBA, somewhere in the middle.
Then you’ve got Major League Baseball. Major League Baseball has no salary cap at all. They do have what is called a “competitive balance tax,” which sort of operates like a soft salary cap like the NBA, but in practice it’s a total sham because in the NBA there are at least strict rules about when, how, and how much you can exceed the salary cap by. In baseball, it’s just like, “Hey, there are some tiers, and if you go into the higher tiers of excess over the competitive balance thresholds, you pay more.” But there’s no cap on how much you can pay. You can pay an infinite amount and then just pay penalties to an infinite amount.
Last year, in 2024, 9 teams in Major League Baseball exceeded the competitive balance tax threshold. The worst offender by far was the Los Angeles Dodgers, who exceeded it by $100 million, which is just ridiculous. And then, of course, they won the World Series. GG, how did that happen? Why did the Dodgers feel comfortable exceeding it by $100 million and paying such a huge luxury tax? Oh, guess what? They’re in Los Angeles, the biggest media market in the U.S. And, oh, guess what? Major League Baseball does not have central media rights. The Dodgers have their own TV deal in Los Angeles, which is by far the most valuable in the sport. So, they’ve got the funding, as you said—the access to capital—to do this. And, of course, they’re going to win the World Series. It’s a big problem.
Yep. Why would anyone tune in to watch that?
Totally. I mean, sure. Then you’ve also got the separate problem with baseball of 162 games. Who cares about a game on a Wednesday night in the middle of the summer? I tuned in to watch the ALCS and the World Series last year, which was great. I will say, the ALCS—I’m from Cleveland—the Guardians’ total payroll was $106 million, playing the Yankees, whose payroll was $309 million. I mean, it’s amazing the Guardians got close, right? That’s just such a stark example. You’ve got one team that has 3x the annual payroll of the other team. There’s just no way.
Spring training is more compelling than the regular season. At least spring training is fun. And I say this as somebody who deeply loves baseball, but okay. So, that’s at least state-of-the-art in the big North American sports leagues. As I said before the IPL comes along, the NFL is the gold standard. They are the true any-given-Sunday league, which is not true in any of the other North American leagues.
European soccer is even worse. It’s a very, very small number of teams in La Liga, the Bundesliga, or the English Premier League that are winning. Not to mention, they have relegation. If you perform badly, rather than adjusting the league balance, they just kick your team out of the league, which is great as an owner. “Wow, my media rights and my everything is so valuable that—oh, actually, it all just went away because I’m out of the league entirely,” right? That is the ultimate disincentive to investment and ownership in a league. You definitely don’t want that.
Yes.
Okay, so Lalit Modi comes up with this incredibly brilliant idea and says, “You know what? Instead of having a salary cap, I’ve got something that I think might work even better. All these auctions that I keep running for all these media rights and sponsorships and everything work really, really, really well because they collapse everything down to a super-clear, one-time, in-the-moment transaction, and I can set the guardrails for minimum and maximum.”
And Lalit—this man is so good at using the business laws of physics out there in the world to figure out what things are actually worth. He just makes sure every time somebody pays what it’s worth, there’s never any money left on the table on any side. It very clearly does price discovery and makes the transaction happen for the exact right amount of money.
I’m trying to remember—there’s some episode we did recently where we referred to either the company or the founder as a value maximization pioneer.
Oh, value capture pioneer.
Yeah. Lalit Modi is a value maximization pioneer. Yes, it was Qualcomm, by the way.
Ah, Qualcomm.
So, here’s Lalit’s quote on how the auction comes about: “I got the idea of the player auction because our family company had a partnership with Sotheby’s auction house in India, where you offer the item to the highest bidder. What’s wrong with that? Great transparency. I also knew it would be the talk of the town. Extremely controversial. That was a central part of my strategy.”
And then he says in a different quote, “Our number one pillar, I would call it the pillar of the IPL, was that we needed to have a department called controversy. And controversy allows us to get front-page news. If you’re controversial, good or bad, it doesn’t matter. As long as people talk about us, they hate us, they like us, great, no problem. They want to talk about us. Let them talk about us, and we don’t clarify anything.”
I love it. Amazing.
Okay, so back to the auction. Of course, this is going to be controversial. Like I said earlier, the media is writing about this like the world’s best cricketers are being auctioned off like cattle and sheep. But this ends up being the perfect economic system for all the parties involved because it gets around a key problem with salary caps, even hard salary caps with hard limits: they’re always susceptible to dealings outside of the structure.
The NFL is really good about policing this, but that’s not to say that this doesn’t happen either explicitly or implicitly. Let’s say you’re a player. The NFL, by the way, has a $255 million salary cap available per team. So, let’s use this example: you’re up to $245 million, you have 2 players left, and you want to sign them both for $8 million. What do you do? You don’t have room in the cap. You only have $10 million; you don’t have $16 million available.
In practice, I think the cap probably would do its job, and there’s enough policing to ensure that. But in a low-trust environment, the thing you would do would be to say, “Oh, great. Sign both players for half,” and then go to them on the side and say, “Oh, hey, by the way, these other companies that I control are going to do a sponsorship deal with you. You’re going to become a celebrity endorser for them, and that’s going to be another $3 million contract that you’re going to get on the side.”
Or, look, you get to be an owner in a team at a low basis, and immediately you gain $3 million of on-paper wealth or something. Point being, you can’t police what happens outside of the artificial construct of a direct salary contract negotiation.
And the way I think this plays out in practice in the NFL is, let’s say you’re a player mid- to late-career. Travis Kelce is a great example here. Travis Kelce probably, at some point in recent years—I don’t remember when he was up for free agency—could have gone somewhere else and arguably could have signed for more money than the Chiefs were willing to pay him.
However, he has other business interests, especially now that he has his podcast. Does he really want to be seen as the heel who's turning his back on the Chiefs?
That was a good pro wrestling reference there.
The heel.
Exactly.
Yeah, right. This is all a soap opera. It's all entertainment at the end of the day. Point being, there are all sorts of considerations about why a player might be willing to accept more or less money for a given team, to play in that city, or not to have his storyline affected in a certain way.
Auctions eliminate all of that. So, the point you're making here is, if you have only $10 million of cap left but you need $16 million, you might be able to use some emotional or nonmonetary tactics to get $16 million of value out of just $10 million of cap, depending on the relationship that you have with each player and what their unique situation is.
Exactly. Then you get into all sorts of gaming. You're signing multiyear deals, right? You can set the number of years of the deal that's negotiated, set the dollar amount in each year, and set the cap impact in each year.
This happens all the time. You trade money from one year to another in order to free up cap space.
Yep. I've got the perfect example: quarterback deals, the biggest deals in the NFL. Obviously, they're going to want to make a lot of money, and that's going to have the biggest impact on your cap because they're by far the highest-paid player on your team.
At the same time, they also want to win a Super Bowl. A highly effective argument for a quarterback to take less money up front than they might otherwise is to say, “Hey, we've got a window right now. We've got some star wide receivers, a star running back, and some star defensive players. We'll give you a big contract, and we'll guarantee your money in the out years, but if you take less money in these early years to allow us to retain or go get some key weapons for you, in the parlance of the NFL, some receivers for you, be a team player here.” This stuff happens all the time.
So, the great beauty of the auction that Lalit sets up is that he sets both a maximum spend—a purse for every team coming into the auction—and a minimum spend. That minimum is 75% of the cap, right? Seventy-five percent of the maximum.
He sets the maximum at a level that keeps every team in the black. He knows what the central TV rights and sponsorship dollars are that are coming in. He knows what the franchise fees that all the owners are going to be paying are, so he can basically mastermind all of their P&Ls. He sets the maximum that you can spend in the auction such that every team is still going to be profitable.
He also sets the minimum spend so that one team doesn't say, “I want to be super profitable, and I'm only going to buy scrubs at the auction,” and have a really low salary base.
Now, you might think, “Wait a minute. An auction seems like it's going to be way more susceptible to the stuff you were just talking about, David, with the salary cap and all the deals and incentives that are happening outside.”
No, it avoids all that because it collapses everything down to a single point in time: everybody in the same room with the same finite resources. It turns it into a Monopoly game. It doesn't matter what happens outside the room.
Sure, the owners could say, “Oh, my star player, you come play for me. I'm going to give you an endorsement deal worth millions of dollars.” Sure, no problem. That doesn't get you any more resources to spend at the auction.
Well, even if you and the player collude on a lower price to save cap space, it doesn't mean that the bidder at the table next to you isn't just going to bid a higher amount for that player.
Everyone ends up going for their actual market value. You can collude all you want, and it will never work because everyone goes for their market value. An auction is a point-in-time event that maximizes market value for each asset, right?
The order that players come up in is organized into lots, and then the order within those lots is randomized. It's all architected in a way such that the only way for a team to gain an advantage over any other team in the auction is to have superior market intelligence, which has come to mean having superior analytics and superior player evaluation.
In the first year of the league, the Rajasthan Royals, who had the lowest purse, didn't hit the minimum purse and got fined by Lalit Modi. The maximum purse that he set for year 1 was $5 million, and that meant the minimum purse was, I think, $3.3 million. The Royals didn't even hit $3.3 million. They were so cheap. They were also the cheapest franchise sold at the franchise auction.
They got penalized by the league, and they ended up winning the championship because they came into the auction with better analytics than everyone else.
Amazing. I do think the one thing that's really important in this, though, to your point about collapsing it all into one single point in time, is that all contracts are 3-year contracts, which really reduces the gaming.
Well, I think there are 2 important impacts of that. The first, and most important for competitive dynamics, is that you can do all the gaming, all the colluding, and all the side deals that you want. That won't get you any more resources in the auction.
It also won't get you any superior information unless you were to do something really crazy, like collude with a player to say, “I'm not going to bid on you. You will go to another team, and then I will pay you money to play worse for that team,” like to throw matches, which might start to happen in the next couple of years here, as we'll see.
The other important impact, which I think you were saying there, Ben, is that because all this collapses to a single point in time, the IPL and Lalit Modi can say that all player contracts are standard contracts. There are no terms and no negotiations. Every player will be at 3 years, and both sides have an option to pull out after each year.
The team could say, “After year 2, you're not playing well anymore. I'm cutting you. I'm going to send you back to the auction pool.” Likewise, a player could pull out.
That also means no agents. At this point in time, I think most IPL players probably do have agents, but agents just can't impact things that much because it's a standard contract. Value discovery happens in the auction process, and then all the contracts are standard.
It's like what YC tried to do with the SAFE. It's just, look, you fill in the number. It's the cap. Whatever the cap is, is the cap.
Exactly. It really reduces the legal fees.
Yep.
So now you might say, “Well, wait. Why would players agree to this? This seems really team- and owner-friendly and not player-friendly.” Indeed, if you look at the percentage of revenue that IPL players make in the IPL versus in the NFL, players are essentially getting 50% of the league's revenues. In fact, in almost every sports league now, on average, players get 50%.
In the English Premier League soccer, it's something like players get 60%-plus. But like we were saying, the economics of those teams are upside down, and it's actually a bad thing for the league.
Yeah, in the IPL, even today, I think players are getting 12% to 15% of the league's revenue. It's extremely low. But they're thrilled. This is great for the players for 2 reasons. There's a carrot and a stick here.
The carrot is that before the IPL, they weren't making any money. There was nothing.
Yeah, this is constantly Lalit Modi's argument: “I know my side is making out great, but the guys were all making out much better than before.”
Yep. Before this, all the players were paid by their international boards, which meant, first, you had to make it onto the international team in your country. There was just 1 team, so there were such a small number of players who could even get paid at all to play cricket.
Now, all of a sudden, you have 8 teams within India, so it increases the pool of players. Second, there's just way more money to go around. You're only getting 12% to 15% of the revenue, but it's a really big pie.
And then the third reason is that the actual IPL season is very short, and you are not locked up for the rest of the year. You can come play in the IPL for the 2-month window that is their season. You can then go play for your international team or other leagues around the world. Do whatever you want the rest of the year and earn as much money as you want elsewhere.
Yeah, it's funny. My issue with the salary-cap disparity wasn't that big a deal in 2008, 2009, and 2010. If the cap was $5 million and each team was only making $10 million total from the central pool, it's actually a fine agreement.
It's the fact that the media rights and the sponsorship rights have since blown up like crazy, but the salary cap is pretty moderated in how much it's allowed to grow.
And interestingly, it's not an IPL thing. It's a BCCI thing. The BCCI determines those contracts with the players.
Of course they do.
So, that's all the carrot incentives.
Yep, that's exactly right.
But all that said, even if you were to have a better collective bargaining system and players were to make more in the auction purse relative to the revenues of the league, this would still be an incredibly beautiful system. Every other sports league in the world should adopt this.
They won't because the existing systems that they all have are too entrenched, but this is the new optimal system for running a sports league.
The last point to the structure of the auction is that every 3 years there's a mega auction where everybody gets back in the pool and it all resets, except each team can retain 4 players because you want that local fandom, those franchise players, to stay franchise players.
You want the equivalent of Tom Brady playing for the Patriots and building that brand equity for the Patriots. Importantly, though, there is still a salary cap that applies to that retained pool, which does start to get a little harder to police and opens the door to more side deals and other incentives. But for the most part, it really is an incredibly elegant system.
Okay, so here's the thing we glossed over, listeners, and if you've been paying a lot of attention, you might have caught it and expected us to address this. It's actually an enormous deal. We said right now the teams in year 1 get 80% of the central pool revenue, and over time that goes down to 50%.
The question you should be asking yourselves is, “Wait, where does the other 50% go?” Because if you listened to our NFL episode, we said the NFL is basically a clearinghouse that retains $0 at the end of every year and redistributes 100% to the teams. What do you mean teams only get 50% of the central pool?
The BCCI retains 50% of the central pool revenue, which eventually gets huge. I mean, these media-rights deals and these team-sponsorship deals—I don't want to spoil the numbers yet—but that is one enormous difference between any other sports system, especially the big four in the US, and what we're talking about here. There actually is a governing body for the sport in the country that sits atop the league and takes half the money.
India, it's crazy. It's totally crazy, but it's super not clear where the money goes. Definitely, they spend a lot of money on stadiums and upkeep and developing the game and hiring coaches.
Yeah, here's the rationale. I will give you the argument. The role of the BCCI is that they are the stewards of the game in India, and as the largest and most important cricket-playing country in the world, de facto, they are the stewards of the game around the world.
So, what that money is intended to go to is two things. One, infrastructure, like you said: improving the stadiums, et cetera. Spoiler alert for later in the episode: it doesn't really go there right now. And then the second, and arguably more important, thing that the BCCI does with that money is player development.
Still today, because the IPL is in its infancy relative to other established sports leagues, the teams and franchises themselves aren't set up to develop talent in the way that, say, Major League Baseball is the most developed on this front. If you're a Major League Baseball organization, you have minor league baseball teams around the country and around the world where you are signing and developing players. You've built out a spring-training facility.
And not just that, but it is a 365-day, around-the-world, global operation where you are identifying, developing, and preparing talent to play at the highest levels of the game. Right now, none of the individual teams or franchises themselves in the IPL are doing that. They are starting, but mostly that work falls on the BCCI.
Yep. I just call this out to say two things. One, as we now move forward in the story to the actual franchise auction and who is buying them, it's very different from buying an NFL team, where you are entitled to 100% of 1/32 of the league-wide revenue. As a team owner in the IPL, you're entitled to 50% of the league-wide revenue.
Does the BCCI need hundreds of millions, if not billions, of dollars to do player development and sort of nonexistent stadium-infrastructure development? No. And the second reason is to put the question back to you, Ben: you're harping on the fact that this is the new gold standard, which I agree with. Do you need a BCCI in order to create this system? Do you need a parent governing body above the league?
Because the league is just the thin agreement between a web of capitalist entities called teams. And then the question is, do you need some force above that?
Oh, this is great. You're setting up a question I have at the end of the episode, so we will come back to that. Great. So, okay, that's how the franchise auction works. That is in the information memorandum that goes out to all the franchise bidders for the franchise auction.
I mean, basically, the net of this, as we've implied all along, is you're getting a pretty sweet deal almost no matter what you bid. This is one of these crazy situations in the world where it's not about how big of a finance brain you have to figure out, “Is this a good investment opportunity?” It's access.
If one of these franchises is offered to you, you should have just said yes immediately and bid whatever everyone else was going to bid. This was a complete no-brainer. The question was, did it get offered to you or not?
Yes, Lalit and the BCCI would say, “Oh, no, no, no. Of course it was open and transparent. Anyone could have walked in.”
Sure. In practice, on the ground, almost assuredly, what you just said there is 100% true. The minimum reserve auction price for the franchise auction is $50 million per franchise, which would be paid over 10 years: $400 million for the collective 8 franchises. They end up selling for $724 million collectively, so there's a lot of bidding that happens.
So, what, $90-ish million a team on average?
Yes. The most expensive franchise is the Mumbai franchise, unsurprisingly, being the biggest city, where Bollywood is located, et cetera.
Gosh, you really couldn't script this any better. Duh.
It is bought by Mukesh Ambani, the wealthiest person in India and the CEO of Reliance, for $112 million. Highest bid in the auction, but not that much more. The spread here is not that big between the highest and the lowest.
The way the weighing machine of this market turned out is, hey, the teams actually are all pretty equally valuable. They did a great job balancing the league.
That's exactly what I read, too. Only paying $110 million total? The central revenue stream—this is an incredibly well-architected league.
The cheapest franchise, as we said, is the Rajasthan Royals, which is bought by a UK investor consortium led by Manoj Badale, who actually lives in London, for $67 million—roughly half the price of the Mumbai franchise. Shah Rukh Khan's group gets the Kolkata Knight Riders for $75 million. Preity Zinta's group gets the Kings XI Punjab for $76 million, suspiciously close in price to the $75 million Shah Rukh Khan bid, but only $1 million more.
Anyway, this is, I think, known at the time as one of the other board members of the BCCI who would soon become the chairman of the BCCI: a gentleman named N. Srinivasan, who also is an industrialist who owns the India Cements Company. He buys the Chennai Super Kings for $91 million despite also being a board member of the BCCI.
Hey, hey, what do you know? He's very interested in the development of the game.
Yeah, exactly. Very interested. This is a huge, resounding success.
And then on the back of the franchise auction, a couple of weeks later, the player auction actually happens, and it goes exactly as predicted. Interestingly, MS Dhoni, who's a legendary Indian cricket player, goes for $1.5 million in the auction, which was a huge spend.
I mean, remember, the cap on the purse is $5 million. So, you're spending $1.5 million of your $5 million on one player. And how many players per team?
There are 11 players who play on the field at a given time. So, one of your 11 players, you're spending 30% of your cap on.
So, anyway, all this is just as prophesied: huge headlines and more media buzz. And then, at least from a competitive-parity standpoint, it actually works. The Rajasthan Royals, despite being the cheapos, bring better analytics than anyone else to the auction, and they win the championship in the first year.
Now, we should also point out that they have not won a championship since then in the subsequent 16 iterations of the IPL season. But today there are 10 teams in the league, and 7 of the 10 teams have won the championship in the 17 seasons that have been played so far.
Yep. And every single team has at least been a runner-up—you know, second place, losing in the championship game. Sounds well balanced.
So, if you're trying to design a competitive-parity league, this is A-plus-plus. You can see why so many people tune in every single night in prime time, from the end of March through the end of May.
Okay, so the promise of all this sounds totally amazing, and we know it worked eventually, but most of the things that we study on this show that worked eventually kind of don't work at first. That is not the case here. What does the first season look like?
6. The First Season Explodes
I would say “explosive right away” is an understatement. As you might expect, given the incredible architecture of it and Lalit's force-of-will personality, this thing is a sensation. All of the predictions that they made—the business plan, the soap opera, every night that this is going to be the biggest thing ever to happen to media in India—it's true. And it's true right away.
This never happens. Never. The Rolex Daytona flopped at first. The Birkin bag was not heralded as anything special for like 20 years.
I think it happened in part because it had to happen. Lalit was running such a high-wire act with all of these year-1 deals, like, “Hey, I promise you this is going to work like we all think in year 1, and if it doesn't, I'll shut it all down.”
Oh, right. And Acquired is subject to heavy survivorship bias. We don't cover the ones that—
No, this was like a one-shot opportunity. There have been many other high-wire-act, one-shot opportunities that we're just not talking about. The one that immediately comes to mind is Activision Blizzard selling the Overwatch League slots. I mean, that just didn't work right away and then proceeded to continue not working.
Yes. To use a cricket analogy here, this would be like you are a batter facing the last ball of the game, and your team is down by 5 runs and you need to hit a 6 to win. The IPL hits a 6, but you've bet your entire life savings and reputation on the fact that a 6 is getting hit.
If it hasn't been obvious enough from what we've been implying throughout the episode, the underworld of India and the mafia are definitely involved in all of this, and that's going to come up in a minute. So it might not be an exaggeration to say lives are being bet on this to some extent.
So, April 18, 2008: first game, first match happens. The Royal Challengers Bangalore, as the visiting team, versus the home Kolkata Knight Riders, owned, of course, by the one and only Shah Rukh Khan. He's there, leading the parade into the stadium and doing the big opening event broadcast around the country. Every TV is watching.
And in the game, one of the star players for the Knight Riders, the home Knight Riders, Brendon McCullum—an international player, obviously not an Indian, but bought at auction by the Knight Riders—hits 158 in that first game for the Kolkata Knight Riders to win. That number probably means nothing to many of you who are not cricket fans yet. And I say, “Yeah, because you might become one after listening to all this.”
Those of you who do know cricket are like, “Oh, yeah, that was one of the greatest moments of all time.” To hit 158, which means being responsible for 158 runs in a T20 game where your entire team is only facing 120 balls—pitches, opportunities to score—and you personally score 158 runs on the balls that you face, that is an epic performance. Wow. What is your sense of how organic it was that this was an incredible spectacle right out of the gate?
It's hard to fake hitting sixes. There's a lot of rigging that would need to happen. There's a lot that would need to go into that. From the IPL's perspective, this could not be a better storyline.
So, the whole season basically goes amazingly. The average TV share viewership for the entire season is 4.9% of all active televisions in India watching the IPL, on average.
The first season?
Yes, a lot of TVs. There is no single soap opera between 8 and 11 p.m. that's getting that kind of viewer share in India. It works. The final match, the championship match, is won on the last ball by the underdog Rajasthan Royals—the cheapos—in dramatic fashion. That final gets a 10% viewership share, with 10% of all TVs in India tuned in to that final match. So it goes really, really, really well.
Oh, and we should say one other element of this: there's a prize pool that we didn't talk about. So, just to add one more great game-design mechanic, the winner of the whole thing gets, I think, a $3 million grand prize in that first year—5% of the central media rights deal. And then that prize pool is shared among the teams that make the playoffs, with the winner obviously getting the most, which is great, because that actually is one thing that's kind of a bummer about other sports leagues: you're not monetarily compensated for winning at all.
Yes, this is the great irony of the NFL that we learned after doing our episode and when we reprised it on the Armchair Expert podcast, which was super fun, with Dax and Monica. Winning the Super Bowl is actually a net-negative economic event for an NFL team. Now, in the long term, of course, it's better. It's super positive, but for the actual fiscal year in which you win the Super Bowl, it's massively net negative.
As we all know from the Dallas Cowboys, you don't need to win Super Bowls to make a lot of money.
That's right, Jerry Jones, baby. Just to tie the bow on that, the reason why winning the Super Bowl costs you money is you have to go play those games. Usually in the playoffs, best-case scenario, if you've got the number-one seed, you're playing home games all the way through, so you're not losing money. But usually, you're playing some away games. And then the Super Bowl is a de facto away game for everybody.
Either way, you're not getting the same share of tickets and luxury suites that you usually would. And then the kicker on top of all that is, if you win, the city makes you pay for the parade yourself.
But in all seriousness, back to the point in the IPL, this is so well architected.
Yeah, they're solving every little pain point of other sports leagues. Super interesting is the whole thesis underlying the whole thing: can we get non-male viewers? Can we get women to watch this thing? Resoundingly, yes.
In the first season, viewership was about 30% to 35% women. So, not 50/50, although today it is truly 50/50.
No women were watching international cricket before. I'm sure there were some, but 30% to 35% is a huge win. Like I said, today it's 50/50. Not only does this mean that brand sponsors of commercials during the broadcast can be both general-interest brands and brands focused at women, but in 2019, the Kings XI franchise actually brought on a beauty brand as one of their shirt-sponsor logos.
Really?
This is the first women-focused brand advertising directly as a sponsor and as a jersey sponsor of a men's sports team anywhere in the world.
Fascinating. And I think that's continued, and probably a bunch more have come from it.
There's a great passage in Manoj Badale, the principal owner of the Royals' book, where he talks about this. He says, “The sight of Chris Gayle—monster hitter, one of the West Indies players, one of the legendary big, huge, think-like-Barry-Bonds-of-cricket players, essentially—sporting a women's beauty brand across his right pectoral is quite something to behold. This is the definition of disruptive advertising, or as one ad executive put it, ‘a hardcore female brand on an alpha-male chest.’”
Sales of Lotus Herbals' SPF moisturizer were up 20% the year that they decided to sponsor the team.
It is a hugely important development.
Absolutely. They totally unlocked a new market.
Wow. Okay, so that's the first season. Everything goes to plan and just continues exponentially and perfectly up from there, right?
Yes, monotonically up and to the right, a straight line from there to today.
No. Year 1: incredible. Today: even more incredible, times 20. In the interim, a whole lot of zigs and zags, because the very next year the whole thing almost blows up.
Okay, so how does the IPL almost all fall apart in years 2 and 3?
7. The Scandal Nearly Kills IPL
Well, before it all almost falls apart in year 2, the offseason after year 1, Lalit Modi, the BCCI, all the teams, all the owners—they're all riding high. This was an enormous success beyond anyone's wildest dreams.
So, I foreshadowed a little bit ago in the TV rights deal with World Sport Group and Sony that Lalit had given them his word as a gentleman that if this whole thing doesn't work, I'll rip up the deal and I won't carry the IPL forward. You won't be on the hook for the $940 million for the next 9 years.
Well, this thing was such a success that all of a sudden, $940 million for the next 9 years is looking like a hell of a steal, which they should benefit from for signing a long-term deal. That's what you would think. Lalit rips up the deal.
Oof. Specifically, he engineers an excuse: he says that Sony had been allowing Reliance's telecom division to advertise during their commercial breaks, and that violated Vodafone's exclusivity over everything IPL because Vodafone was a central corporate IPL telecom sponsor. He also alleges that he has evidence that Sony had been, at least in certain markets, cutting away from the game early to squeeze in extra commercials and not showing all the balls that were bowled in an over.
Who knows if that's true or not? I don't know. It could be. Is that the kind of thing that means you tear up the contract, or do you call them and say, “Hey, we know you're doing this. Please don't do that anymore”? I suspect that if the IPL had not been such a huge success and Lalit were not looking to tear up the contract, he would not have caught these discrepancies, shall we say?
Yes. And of course, it's not until the end of the season that he points all this out. On the back of this, he strong-arms Sony and World Sport Group into renegotiating a new deal that is going to be direct with Sony. They throw World Sport Group a bit of a bone. I think maybe they let them keep the international rights, but Sony is now going to directly do a 10-year deal with the IPL for $2.4 billion. So, $240 million a year, quite a bit more than the $60 million that they had paid for year 1.
So that's 4× the actual cash out per year, and it's 2.4× what the theoretical value of the contract was going to be on an annual basis.
Yep. And it really just tells you everything you need to know about how much of a success this is, because Sony is willing to say, “Okay, fine. I'll let you rip up the contract, and I'll pay you roughly 4×.”
Right? Ultimately, they kept the same broadcast partner but started charging them 4× as much. And the broadcast partner was like, “Yeah, that's still fine.”
Clearly, it meant that there was a lot left on the table that Sony was benefiting from in year 1 because of how big of a success it was. As Lalit would point out, “I made a lot of money for everyone.”
Yep. So things start off well—I guess you would call that well from the IPL's perspective—during the offseason. But then, as we're getting closer to the season launching in 2009, general elections are happening in India, and elections are contentious. There are security issues, and the government and various state police organizations start coming to the BCCI and the IPL and saying, “Hey, I'm not sure that we can promise security at the matches this season.”
And so they go back and forth. They're like, “Are we going to move some of the matches and some of the states? Can some of the states provide security and not others?” Ultimately, they decide, “Shoot, we can't hold this thing in India at all.”
They go full NBA bubble, right? It's like the Disney bubble from COVID.
Yes. So on very short notice—I think about a month—they airlift the entire tournament out of India and move it to South Africa. Then they reset up all the teams in South Africa. You're now in Cape Town or wherever, reassigning teams to all the cities, and they restart the IPL and play it in South Africa. Amazingly, it goes pretty well, and this actually becomes a great thing for the IPL because it's still very popular in India and is broadcast back in India.
This is a TV product.
Yes. Local revenue for the teams, stadium gate receipts, and sponsorships for the local teams was never that much in India. It still isn't that much to this day. So you're actually not sacrificing much revenue by doing this. I think by our calculations, we tried to estimate a P&L for any given team. We're looking at something today like $66 million coming from a central pool and only about $4 million coming from tickets.
And satellite signals work just fine from South Africa to India. Maybe even better because it's close to the poles.
Yeah, maybe this really accelerates the IPL becoming a global phenomenon among the cricket-playing and cricket-watching countries of the world. The fact that you can airlift the tournament out of India, put it in another cricket-playing country, have it be just as successful, and have everybody be happy—you're only growing the game by doing this.
Yep.
On the back of that, heading into season 3, they decide, “All right, time to expand. We're going to add 2 teams to the league.” And I will say, only 2 teams does show some restraint. The NFL has 32 teams. The NBA—I could imagine a scenario where they think, “Let's double it. We're really feeling ourselves. Let's at least do 68 teams.”
Yep. They do only do 2. That does show some restraint.
The 2 franchises that they auction off are Pune and Kochi, and those go for $333 million and $370 million—a little bit higher than $90 million. Now, central revenue is higher from the new broadcast deal that got renegotiated—renegotiated, quote unquote—with Sony, but they are on the hook for paying $33 million a year and $37 million a year.
Yeah. So if you believe that the team value should go up exactly commensurate with the annualized value of the TV contract, then this is the correct price. They just had a big payment that they owed the BCCI right out of the chute in year 1.
Yep. So unfortunately, these 2 new teams don't make it. The Kochi franchise goes bankrupt after its first season in the league and withdraws from the league. The Pune franchise makes it 2 seasons and then also withdraws from the league, citing financial difficulties. And this is the first time, really, where the music stops playing for Lalit. Despite his incredible entrepreneurial success, he has made a lot of enemies along the way.
Yeah. Everything was up and to the right. Everyone was making money together to this point. There was some collateral damage from these other people who had lost auctions or people who lost out on the media rights, but nobody had ever actually lost money yet, right? And now, for the first time, people are losing money. This is when the knives come out for Modi, right? He's got all these enemies that were sort of dispersed but never had any real ability to come after him.
Yeah. This is their moment. So after the 2010 season, the BCCI suspends Lalit Modi from the BCCI board on 22 charges, including bypassing the governing council when making decisions, not following proper processes, and bid-rigging in auctions.
That's a big one. Who's going to get teams? Yeah, it's pretty hard to say that didn't happen.
They also accuse him of awarding contracts to his friends and accepting kickbacks on the broadcast deals. And then the big ones: first, secretly engineering for members of his family and close associates to have initial ownership stakes in 3 of the original 8 IPL teams. Now, another BCCI board member, N. Srinivasan, who I think by this time had become the chair of the board and was Lalit's main nemesis on the BCCI board, directly owned the Chennai Super Kings through India Cements. So, hey, pot calling the kettle black here, right? And then the last 2 are big ones: he's accused of betting on the league and money laundering.
So I referred a minute ago to the underworld of India being involved here. Gambling in India is illegal writ large. Back then, and still to this day, it is illegal to gamble full stop in India. However, as you might expect, much like the movie Casablanca, you would be shocked—shocked—to find gambling going on in this institution.
There is a lot of money gambled on cricket in India broadly, and on the IPL specifically after it gets going, in many cases through foreign bookmakers.
Yeah. So much so that the statistic is that just the trackable bets placed through, like you said, foreign bookmakers in countries where gambling is legal on IPL matches, I believe, are something on the order of $750 million per match. It's a big business.
Huge. And that's just what's trackable legally in foreign countries. Clearly, there is also a big domestic bookmaking market happening here, too. It's just happening through the underworld—the mafia.
Yep. So the accusations are that Modi is participating in this and actively betting on games. Obviously, these are really serious accusations. The courts in India and the legal system get involved. The police get involved.
As this is all going down, Modi ends up leaving India and relocating to London, where he still lives to this day. He has not set foot back in India since 2010, when all this went down. And in 2013, the BCCI bars him from Indian cricket for life.
I mean, this is the thing that he willed into existence. He created billions of dollars of value for all these other people, and he has been barred from it.
Yes. Modi, of course, denies all of this and defends himself vehemently to this day. You might ask, why did he leave the country when all this went down? He actually recently said on a podcast, and has said this publicly in several news outlets, that the Indian mafia had placed a hit on him and were looking to take his life, as he put it, because he refused to allow match-fixing to happen in the IPL. Obviously, the mafia wanted match-fixing to happen. They're facilitating all this illegal betting that's happening, and wouldn't it be great if we could also fix the matches?
Dark stuff. Again, the stories you hear are so divergent that it's impossible to know. There's no reconciling them. There's no truth that has converged upon. As we started off the episode, he's a colorful character.
I think what really happened here, and the major point, is that everything was working great as long as the music was playing and Lalit never lost money for any of his partners. And then that happened, and the knives came out.
Yep.
And it's interesting—quite interesting—that all these very serious allegations get brought up against Modi, and then ultimately the BCCI decides that he did do them and bans him for life in 2013. Because the chairperson of the BCCI at this point in time, and Lalit's great rival who is one of the forces behind ousting him, is N. Srinivasan, the owner of the Chennai Super Kings via his family's business, India Cements. Well, that very same season, in 2013, the Indian police run a sting operation and bust members of 2 teams in the IPL—the Rajasthan Royals and the Chennai Super Kings, owned by N. Srinivasan—for spot-fixing matches.
Oh, that'll kill a league quickly if you don't get that in check.
Yeah, already all the controversy from Lalit getting kicked out—the founder and driving force behind all of it. That's not good. The 2 expansion teams folding, and now you've got a police bust of actual spot-fixing happening.
Now, not match-fixing. Match-fixing would be throwing the whole match. That would be a big operation. You'd basically need whole teams involved. Spot-fixing is saying there's a betting line on what's going to happen in each over, like each set of 6 balls. So, saying, “Oh, I'm going to pay this bowler on this team to bowl poorly in this over so that the batter he's facing will perform better,” or vice versa on the batter.
Right. What's the real harm? It doesn't affect the outcome of the game.
Exactly. Arguably, but it's massive trust destruction among the fan base. Horrible for the league, especially when it's the BCCI chairperson's team that's doing it.
At first, Srinivasan denies everything and refuses to step down from the BCCI. This ultimately does become the best thing to happen to the IPL. I think if this hadn't happened and there had just been the forcing out of Modi, things might really have gone sideways here because they got so much worse.
This forces the government of India to step in. The Indian Supreme Court steps in. They basically take over the BCCI, spend 2 years investigating and restructuring everything, and then, in 2015, announce all their verdicts. They force Srinivasan to step down from the BCCI, restructure the BCCI, and suspend the 2 teams that had been spot-fixing—the Royals and the Chennai Super Kings—for 2 seasons.
Those teams are replaced for 2 seasons by temporary franchises based in Pune and Rajkot. Then the court institutes a whole new clean slate of reforms and governance.
I've been referring a couple of times to Manoj Badale and the book he wrote, A New Innings, about his experience owning and running the Rajasthan Royals, the other team that was suspended for 2 seasons. Does he write about this in the book?
Totally writes about this. This is his quote:
“This was a critical moment in the IPL's evolution and also in India's evolution. The IPL was fast becoming a microcosm of the challenges of doing business in India at large. For years, foreign direct investment into India had been slow. Historic concerns had included political stability, concerns about corruption, and the risk of retrospective legislation.”
The Supreme Court here is stepping in and basically saying, “We're going to backstop and fix all of this.” The IPL is by far the most visible industry where India is the global leader, with the world's most important global business brand entity. We can't be seen as if this is a whole sham run by the mafia. We're going to clean it all up.
And they basically did. I mean, from here on out, it's a professional organization.
Totally.
Another quote from our good friend of the show, Ed Cowan, who is an investor at TDM Growth. We did a great ACQ2 episode with them a couple of years ago. Ed was the perfect person for us to talk to during this episode because not only is he a good friend of the show, he's a former Australian professional cricket player who was coming up right around the time the IPL was started and was actively playing right through all of this happening.
Ed did the Business Breakdowns episode about the IPL, which has been an amazing resource for us. It was a great episode, and then we talked to him afterward. Here's Ed's quote about this:
“In many ways, the IPL was a bit of a bellwether for foreign investment at scale. And the government realized that it was in their best interest to promote a vision that proper governance really was at the forefront of the new modern India. And it was important for people to be able to invest in India.
“And in many respects, the current structure, where we have RedBird or CVC, big institutional investors in the IPL, which we will get to in just a second, wouldn't have been possible without the new governance structures that were put in place circa 2015 by the Supreme Court.”
I mean, this whole thing almost went down the tubes. It was this close, and the Supreme Court saved it. You had something on the order of $4–5 billion of enterprise value across all the teams that almost went to zero.
Yep. But the more important thing, though, is that, yes, there's the value and money aspect of it, but it's India's reputation. There are other industries where India is a global leader, but they tend to be more back-office-type industries, like outsourcing—Infosys, Wipro, et cetera.
You look at the biggest companies in India by market cap, and they are all either global outsourcing companies, back-office-type companies, or purely domestically focused companies. Tata, Reliance, et cetera—these are huge, huge conglomerates, but especially at that point in time, they're not particularly active as global leaders outside of India.
The IPL has, against all odds, become India's national champion here.
That's such a great point. That's kind of a crazy statement to make, but it's true. Wow.
Yeah. So, again, horrible moment for the league, for the owners, for Modi, for Srinivasan, but frankly, kind of necessary to clean this all up and make it ironclad enough that global private equity firms and global media companies in the ensuing years continue to come in and invest in this league.
All right. So, catch us up through the 2010s. There's another media rights deal, right?
Yep. So, 2017, after the dust has settled on all this, the original media rights deal is finally up—or the renegotiated, quote-unquote, original media rights deal, the 10-year Sony redone deal.
Yes, it's finally up. And Modi is no longer in the driver's seat here. So, who comes in and does the deal?
Rupert Murdoch's Star. Rupert finally, finally, after what are we now—10, 11, 12 years in—comes back to Indian cricket and does a $2.5 billion, 5-year deal. So, twice the value of the renegotiated Sony deal: $500 million a year in media rights.
Yep. So, $500 million a year in media rights.
The renegotiated Sony deal was $2.4 billion over 10 or 9 years. So, that happens in the first half of 2017, and then the other shoe drops in December 2017. Disney acquires all of 21st Century Fox for, I think, about $70 billion, inclusive of Star, all the operations in India, and this contract.
Obviously, that deal was about way more than just this contract, but this was an important piece of it.
It's so funny that it ends up being, 15 or 20 years later—I mean, recall all the way back—there was the Indian subsidiaries of Fox and Disney merged and got the cricket deal pre-IPL. And now you have Disney and Fox globally merging, and the IPL was a big part of this.
8. Reliance Supercharges The IPL
Because there's something else that happens in India the year before, in 2016, which is Reliance launches Reliance Jio.
Yes. Now I remember when this was happening. Facebook invested $5.7 billion for a 10% stake in this new subsidiary of Reliance. What is Reliance Jio?
It is a smartphone data provider. It's a telecom wireless data service for smartphones in India. Mukesh Ambani and Reliance Jio basically slashed the price of data plans to effectively zero in India.
Before Reliance Jio launched in 2016, smartphone ownership in India was minuscule. The active install base was 30 million handsets.
Wow. Out of 1.4 billion people.
Yeah. So, it's only just the upper class. In 2016, that's 9 years after the iPhone came out and 5 or 6 years after it became the de facto standard computing platform in the US.
Yeah, and there were already cheap Android phones everywhere.
This is like the version of India not getting television until the '90s. We're talking 2016 here, and smartphone penetration is still basically zero. And the reason was because data plans were still really expensive. Vodafone and the other carriers were pricing data in India at the same level as data in the US, so it was just totally inaccessible to the population.
Crazy.
Reliance Jio comes in with 30 million handsets when they launch in 2016. Fast-forward 6 years to 2022: an 800 million installed base of handsets.
This is the other thing that completely turbocharges the IPL and is why the IPL and IPL rights become so important for Disney, because smartphone adoption—mobile adoption—is happening in India.
What is Disney and Bob Iger's number-one strategic priority during this period?
Globalization.
Well, not just globalization. That's always a priority, but Disney+.
Oh, right.
And what are you going to count in Disney+? I mean, Netflix counts their subscribers all over the world as Netflix subscribers. Iger has those 3 big principles in his book. The first was around the best IP in the world. The second was around going global. And the third was about technology leadership and owning our distribution platforms 100%.
So, Disney+ is the major strategic priority. You've now got Star, which has the digital and terrestrial TV rights to the IPL—the biggest driver of media consumption in the country by far. Not even close.
Disney's trying to grow and juice Disney+ subscribers. What is the very best thing you could do? Get IPL rights and stream them on Disney+. Boom. There you go.
So, $500 million a year for 5 years, starting in 2017. That goes up until there's a new deal that comes online in 2022.
Yep. Before that, though, the other piece of this Star deal—the new deal for the IPL—was because it was a much bigger investment, and Star and Rupert were dying to get back into Indian cricket. Now you've got this mobile streaming opportunity happening, especially once Disney acquires the company.
They invest a lot more in production values for these IPL broadcasts. All the stuff that you see in North American or European sports broadcasts, they do. They mic up the players, put mics on the wickets, add graphics packages, and use way more cameras. There are little cameras all over the place on the field.
I don't know if it's called an umpire or a referee, but someone wearing a hat has a little camera on top of their hat.
Yep, exactly. Remember, before this, for all of Lalit Modi's entrepreneurial success and talent, he was getting broadcasters who weren't experienced in sports to come do this. This was Nimbus's first sports entry. This was Sony's first sports entry in India. You have Star, Fox, News Corp, and Disney coming in now and taking over. There's going to be a whole new level of professionalism coming in.
They also start marketing the matches differently. There's always been the incredible soap-opera story to the IPL, and that's the appeal to at least half the country.
Oh, come on. These storylines are so appealing to men, too. Just look at college football. Look at the NFL. It's the storylines, it's these dramas, it's the soap operas that captivate us. Any NFL football fan who pretends that it's not a soap opera is lying to themselves.
Oh, the ESPN alerts during the offseason of who's signing where.
Yeah, totally.
So Star starts marketing matches differently. They have Rivalry Week. They basically take the playbook from all the best practices of Fox and ESPN all throughout the world and bring them here to the IPL.
The other thing they do is the dynamics of language in India are super interesting. English is the lingua franca of the country, but it is almost everyone's second language. There are a whole set of big languages that are primary—different languages spoken by different regions in the country—and Hindi is the biggest of those, right?
Hindi is the biggest, yeah.
So the official languages of India are both Hindi and English. It can't just be Hindi, because then you're leaving out a huge portion of the population that doesn't speak Hindi. This is amazing for all the dynamics at play here, with these international companies and foreign direct investment. Not everybody speaks English, and it's their second language.
Remember, the whole genius of the IPL is that there's only 1 game going on at a given point in time. So Star takes the feed from whatever the live game is. They set up a central studio in Mumbai with 8 different floors and 8 different anchor desks, with commentators commentating in the 8 biggest Indian languages, which are then rebroadcast out to those regions in the primary local language.
And this 1-game-at-a-time thing is so genius, too, because the way that they make the whole thing work with this player auction, the players are moving around a lot. So you're a fan of a team, but your favorite player might go somewhere else. If you're a fan of a player, you're kind of a fan of multiple teams. So what ends up happening is you become a fan of the league. You have a team you like, you have players you like, but since the players are kind of everywhere, you just like IPL, period.
Yes, there is definitely some affinity to your—you know, if you live in Mumbai, you probably have affinity for the Mumbai Indians, but you probably have more affinity to Virat Kohli or MS Dhoni, et cetera. You're not going to miss those games.
Yes. And you may not speak that primary language there. In fact, you probably don't.
Yep.
So all of this works incredibly well. You've got the major tailwind of Reliance Jio. You've got the professionalization. You've got the local languages.
The 2019 IPL final match is broadcast on 17 channels across the country in different languages, plus digital over-the-top. The final viewership numbers—best estimates—are 300 to 400 million unique viewers watching the 2019 IPL final. Just for context, the most recent 2025 Super Bowl was the biggest Super Bowl ever, and I think de facto that makes it the biggest broadcast TV event in U.S. history. Ben, do you remember what the viewership numbers were for this 2025 Super Bowl, compared with the 2019 IPL final?
120, 130 million, something like that.
Yep. 138 million—
Wow.
—viewers for the biggest U.S. TV event in history. Back in 2019, there were already 300 to 400 million people—more than twice that—watching the IPL final. And it would only grow from there.
In 2022, the IPL regular-season uniques across the season were 361 million. In 2023, that would grow to 50 million. Then last year, it was reported that on streaming alone, 620 million people watched it.
I mean, so you're talking about close to half the country watching the regular season.
Yes, yes. This thing is so big on streaming.
So presumably once you put TV in there, too—
Yeah. That was the big bet and the payoff of Reliance Jio entering the data market in 2016 and smartphone adoption just exploding in India.
So then, in 2021, the IPL does expand successfully. This time, there are 2 new teams sold at auction. The Gujarat Titans are acquired by the big British private equity firm CVC for $750 million. That's the new high-water mark.
Before that, I think it was what, $300 million?
Well, it's the new high-water mark for a minute, because the other team, the Lucknow Super Giants, are bought by a domestic investor group for $950 million. So, just a hair under a billion—10 times the original purchase price of the teams in 2008.
Now, the payment terms are paid in equal ratable installments over 10 years. And then this time, those payments are redistributed to the other existing 8 teams in the league.
Oh, really?
Because the new teams coming in are diluting the central media-rights values.
In full, or 50% of it?
That's a good question. I don't know if it's 50% to the BCCI and 50% to the teams. Either way, the BCCI is still taking their 50% cut. However, post-Supreme Court reforms, it's a much more buttoned-up organization.
Makes sense.
Also in 2021, RedBird, a New York City-based, U.S. sports-focused private equity firm, invests in the Rajasthan Royals. So we've come so far here that the Rajasthan Royals, the cheapo franchise in the beginning, had the original foreign direct investment from the U.K., then were part of the spot-fixing scandal, got suspended for 2 years, and now you've got 1 of, if not the biggest sports private equity firms in the world. I think RedBird is like a $10 billion assets-under-management firm, coming in and investing in that franchise in the IPL.
Yep. Global stage.
And it really just speaks to how the Supreme Court cleaning things up in 2015 was absolutely huge for the IPL.
Yep.
So all that takes us to summer of 2022, after the IPL season. The Star deal is up.
Time for a new rights deal.
And the BCCI signs not 1 but 2 deals, separate deals for terrestrial television and digital streaming. They break it into a 2-by-2 matrix. They say there's international and domestic, and then there's streaming and TV. The international deals are small. Now, who wants to bid on which one?
The big ones are the domestic deals. Star re-ups on the TV deal for just over $3 billion for 5 years.
Yes. For the 5 years, Disney Star re-ups their deal, but they just get the TV rights, right?
And it's just on the Indian subcontinent, for $3.1-ish billion. So that's only $500 million more than the $2.5 billion they did the previous time in 2017. But that was both TV and streaming. This is $3 billion just for terrestrial TV.
Yes.
Now, the other side of this—the digital rights, the streaming—is Viacom18 for another $3.1-ish billion.
Yeah, actually slightly more than the TV deal.
Ah, do you know who Viacom18 is?
Oh boy, do I ever know who Viacom18 is. This is a huge part of the story. Viacom18 is a joint venture between Paramount and Reliance.
Yep.
So locally, that ends up being broadcast on what they call JioCinema, which is their streaming service.
When you say “broadcast,” you mean digital over-the-top—JioCinema on smartphone apps.
Now, we're just talking about the Indian subcontinent here. It's quite interesting that they're about the same price, streaming and TV. Streaming is small but growing way faster, and TV is very large but flat.
And it's really interesting. I think Disney wanted to also go for the streaming rights, but I think the assumptions you have to make about the growth and monetization potential of streaming are a pretty big leap to say, “Yeah, they're worth the same as TV now,” which has a lot of hungry advertising customers standing there with cash now saying, “I want to advertise on this product.” Whereas you're really betting on the next 4 or 5 years on streaming to materialize. But who better to bet on that materializing than Reliance Jio?
This is enormous. Disney—it was a real, real problem that they lost the digital rights in the bidding here. Remember, Disney+ was the cornerstone of Disney's strategy at this point in time under Iger.
Iger has come back.
That's right. 2022 was the return of Bob. He architected this before he left. He's now come back from retirement, and Disney+ has gone from the most incredible, greatest strategy, greatest thing since sliced bread, to this total albatross hanging around the company's neck. And now they lose IPL digital streaming rights.
So the next quarter, when Disney reports earnings, remember, Disney+ had been the cornerstone of the company's strategy for the last 5, 6, 7 years, and it had been growing. It would've been this great success story through COVID. It's now up to—people are talking about—is this a true competitor to Netflix? Disney's passed 150 million global Disney+ subscribers.
This turns the tide. I think it's the first quarter where they have a net subscriber loss, I think, of like 2 to 3 million Disney+ subscribers that they lose on a net basis. Something like that.
You can very clearly see in this chart, though, it's growing and growing and growing every quarter, and then it starts this 5-quarter slide right there in 2022.
And the interesting thing is, if you break it out, Disney+ Core actually does keep growing, but Disney+ Hotstar takes this huge hit and starts contracting.
That's right. They start breaking it out, I think, at this point to be like, “Oh no, it's India.”
Yeah, this is a huge problem for Disney. You’ve got these two $3 billion deals that don’t quite add up to $6.2 billion. We haven’t talked about the international rights yet. Interestingly enough, Viacom18 not only acquired the digital rights on the Indian subcontinent; they also acquired both the terrestrial and digital rights internationally. So part of that $3 billion deal that Viacom18 did is for the other three quadrants. It’s not just the Indian subcontinent digital rights; it’s that and all international rights.
It’s international in Australia, New Zealand, the UK, South Africa, and the cricket-playing countries.
Yep. There’s a second little carveout. This piddly little thing.
There’s a company called Times Internet that paid $26 million for the Middle East and $33 million for the USA. The current 5-year rights to watch cricket in the USA are only worth $33 million out of a $6.2 billion package.
And I will say, I tried really hard to go watch some full IPL matches. Times Internet’s US property, Willow TV, is terrible. I couldn’t find a single match to watch. Presumably, during the season, it’s easy to watch what’s currently live, but trying to watch last year’s matches on Willow in the US—$33 million is apparently not paying for a very good website to be able to do that.
So the real question, basically, right now is: what is that going to be the next time the rights come up?
Yes. In January 2024, so a year ago, the title sponsorship for the whole league came up again. Tata, the big Indian conglomerate, bought it for $60 million a year for 5 years, so a $300 million deal.
That brings us to today. Under these new media-rights deals that we were just talking about, you’ve got, call it, $1.4 billion in media-rights revenue coming in centrally to the league. Then another, call it, $150–200 million in total central sponsorships coming into the league, of which Tata is the anchor at $60 million a year. Round that up to call it $1.5 billion annually coming in centrally to the league. Guaranteed revenue. Guaranteed long-term rights deals, asset-light, so to speak.
You can now start to understand why the league has most recently been valued at $16 billion and why the most successful teams, like the Mumbai Indians, are around $1.3 billion. Average teams are about $1 billion in valuation. There’s real revenue here to support those numbers now.
Absolutely. So this is a TV game. Media rights and central sponsorships are still by far the lion’s share of total revenue coming into the league.
Local revenue that the franchises are generating—this is ticket sales, luxury boxes, such as they exist, suites at the stadiums; we’ll get into that in a minute; local sponsorships, et cetera—that’s probably 15-ish percent of total revenue in the league. So, 85-ish percent of revenue comes from the central media rights and sponsorships, and 15-ish percent is local.
Yep. Add all that together, you’ve probably got $1.6–1.7 billion in total revenue flowing into the league annually.
Now, here’s the kicker: all of this is for a league that currently only plays 74 games in a season that only lasts 2 months. One way to benchmark different leagues against one another by scale, impact, revenue, value, et cetera, is to adjust for how many matches they play.
There’s a difference between the IPL, which only plays 74 matches, and Major League Baseball, which plays—what did you say, Ben?—2,000-some-odd games?
About 2,500.
So if you look at the revenue coming into the league on a per-match basis, the IPL is already the second-most-valuable league in the world, behind the NFL. It has the second-most revenue per match in the world. It’s like $16–17 million per match in media rights that are sold.
Ben, I think you have the whole list here that you built out.
Yeah. I read so many articles about this that all seemed to contradict each other. From our NFL episode, I felt like you and I had a pretty good understanding of all the different ways that the NFL had sliced its revenue. I thought these people were all misreporting this information, so I went and added all the deals together from each league and divided it by the number of games played in each league.
The NFL is so far ahead of everything else that it’s a little bit farcical to say the IPL is second. If you include the NFL Network, which I think you should, even though some of that is non-game content—the reason people care about NFL Network is that it has RedZone—I included that. So you’ve got ESPN, ABC, Disney’s deal, Fox’s deal, CBS’s deal, NBC’s deal, Amazon’s deal, Google’s deal with YouTube, Netflix’s deal, Peacock’s deal, and the NFL Network.
The NFL does a total of $14 billion a year in media-rights revenue across not that many games: 285 total games. So the NFL does somewhere between $45 million and $49 million per game in media-rights revenue. Now, sure, IPL cricket at $16–17 million is number two because the English Premier League is somewhere in the $15–16 million range, but the NFL is 3 times the next highest, right?
If you look at it on a total-revenue basis, the NFL’s total annual revenue, everything local and central added up, is on the order of $20 billion a year. And then, like we just walked through with the IPL right now, it’s, call it, $1.6–1.7 billion a year for a 16- or 17-year-old league that only has 10 teams and only plays 74 games a year.
All of this is incredible already. If you look at it on a per-match basis, it’s number two to the NFL, and everyone else is really far behind. We should say the English Premier League is the only one that’s sort of rivaling IPL cricket. But the NBA is the next closest at $5.3 million, so a third of soccer or cricket. Then you’ve got La Liga, which is the Spanish soccer league, and Germany’s league, the Bundesliga. Those are also around $5 million. But MLB is like $1.7 million per game. The NHL is $800,000 per game. Major League Soccer is $500,000 a game.
The quote-unquote Big Four in the US—it’s really the NFL and everyone else in terms of media-rights revenue per game.
Yep. So the per-match thing is an interesting way to look at this from an advertising perspective. It’s interesting if you were renting the facility and trying to get the most money out of your facility rental for that night, or some sort of classic unit economics like that.
But really, if you’re a team owner, the interesting thing is not how much revenue or profit is generated per game from media rights. It’s the absolute economic impact of this, right? I don’t care how many games they play at all. I care how valuable the franchise that I own is and how big of a business I can build around owning the franchise.
Totally. It’s a tenth the size of the NFL today by that respect. Right now, the question is: what is the total value of MLB if the total value of the IPL is $16 billion? How does that league value compare to other league values? I think that’s an interesting way to look at it.
But again, nobody owns a league. People own teams. So probably the most interesting way to look at it is: how does a $1 billion valuation for the average IPL team stack up against other leagues around the world? It’s not the NFL, it’s not the NBA, but it’s kind of amazing that in 16–17 years, these things are in the billion-dollar conversation.
Remember, the Clippers, when Steve Ballmer bought them, were only $2 billion. NBA franchises today are like $5 billion, $6 billion, $7 billion, something like that. But it is sort of quickly entering that conversation, and half of the revenue gets taken before you even get to see a dollar by the BCCI.
Yes. I mean, yes. It’s crazy.
So maybe put another way: is there a world where these are actually $2 billion teams if the BCCI wasn’t taking half of it?
Yes, absolutely. You would have a lot more costs, like player development and stadiums.
So anyway, that’s the few different ways to slice it. There’s the per game, there’s what the league is worth, and there’s what the individual teams are worth.
I also wanted to try to figure out, on a multiple basis, how reasonable these valuations are. It’s a billion-dollar valuation for anyone buying into these teams. Again, on average—I suspect some of them will go for more—what does the actual income statement look like?
It’s impossible to know for sure because none of this is public and reported. It seems reasonable that they would do $70–80 million in revenue. That’s after the BCCI’s take, and it’s inclusive of the local revenue.
Think about a business that’s doing $70–80 million in top-line revenue. The salary cap is $17 million, you’re not paying for a stadium, and your only debt service is if you’re still paying a franchise fee back to the BCCI. You have almost no costs in this business. There’s no depreciation, and the other costs aren’t material anyway.
Exactly. So as you’re comparing business dynamics here versus other leagues, and particularly the NFL, on the one hand you’ve got this albatross, if you will, of the BCCI taking 50% of central revenue. But you don’t have the players taking 50% of your revenue the way the NFL does, and you don’t have the capital-heavy nature of the stadiums, which creates both risk and opportunity, as we’ll get into in a minute.
Exactly. So I think team net income right now is about $50 million on a pre-tax basis. There’s no depreciation, and the other costs aren’t material anyway. So you’ve got a business that’s doing $80 million top-line revenue and $50-ish million on the EBITDA line. This is a 60–65% EBITDA-margin business.
They’re growing really quickly. Every 5 years, there’s this massive step-up in media rights. Because these businesses have crazy operating leverage, it all kind of does fall to the bottom line. Again, the reason for the operating leverage is that the player contracts just don’t grow that fast, but the media-rights revenue is growing incredibly fast.
There’s this ridiculous operating margin that has kind of kicked in this media cycle. They used to break even, then they were pretty profitable, and now they’re really, really profitable. As revenue keeps going, they’re going to get really, really, really profitable.
Right. So right now, at a $1 billion valuation, that’s 20 times EBITDA—pre-tax earnings, whatever you want to call that—and it’s, what, 12 times revenue? That’s a pretty attractive valuation as an investor.
Whatever they are, they’re market-valued right now. There is a competitive market both to buy and sell equity in these teams. We aren’t saying that something’s high or low; it’s just interesting to see what the market values it at. There is a reasonable financial valuation here, unlike many of the other leagues where the teams trade primarily on asset values instead of on P&Ls. It’s scarcity value.
So, David, we’re sort of arriving here in the analysis, and to start, there’s an idea that you planted.
Yes. I proposed to you a couple of days ago that we bring back a version of the bull-and-bear case that we used to do here on Acquired. In this case, I think we should do the bull, bear, and megabull case, because I think there is a megabull case here.
And the question specifically we should address in this should be: Is there a reasonable path that the IPL could 10x in revenue and economic impact over the next period of time and be equal to, or perhaps, in a Megabull case, greater than the NFL in terms of economic value and revenue generated—to be the number 1, or tied as the number 1, sports league in the world?
And the reason I think this is a particularly interesting conversation, coming out of the valuation conversation we just had, is that the number 1 thing that matters in valuing any asset is what assumptions you are making about its future. And so you can't say that something is expensive or inexpensive unless you talk about what your inputs are to guide that future.
So the most important input in the IPL team P&L right now—there are sort of 3 big levers, as I see it. One is: Are the media rights deals going to keep growing at the rate that they have been growing? On the media rights, our good friend Arvin Navaratnam at Worldly Partners has actually done the math to look into this. And, as always, we will link to his excellent report in the show notes. From 2008 to 2023, the media rights have grown at an 18% compound annual growth rate, from that $100 million-a-year mark—not the $60 million headline—to the $1.2 billion that we have today. Legit math.
And so then the question is, will it keep at that 18% growth rate? The second big lever is: Is the BCCI permanently going to be taking 50% of the revenue? It seems like they will, but I think it's worth examining what could cause that to change. That's a big swing, one way or the other.
And then the third one is: Is there any natural force that will cause the salary cap, or the player cut of revenue, to grow as fast as the top line? Or is it going to keep getting smaller and smaller and smaller on a percentage basis, or even stay the same if it was just sticking around at this 12%, 13%, 14% of total team revenue?
Yep. From a team owner's basis, that's fine, right? I think this is intrinsically linked with the BCCI conversation, because it's almost like, in the IPL, not only do you not have a player union. First of all, let's just say there's no equivalent of the NFLPA or the MLBPA. There's no players union to bargain.
Do you know that there actually is a players union?
Yes.
Do you know what the players union is?
Yes.
It was put into place by the Supreme Court ruling, and the players union is only retired players.
Yes.
It is the union of retired players. It's the pensioners from the BCCI. It's unbelievable. No current players are allowed to be involved. Amazing.
So not only is there no ability to bargain—and clearly it's in no player's direct interest to walk away, because it's life-changing money, it's fame, it's like your childhood dream: You're going to play in the IPL—there's the element that you can't go play outside of India, or else then you can't play on the national team. So that's a big hammer or stick.
But there's actually a third and a fourth thing. Your income is determined by the BCCI, which determines your income if you play for the national team or other Indian leagues, or indirectly the IPL.
Yep. Yeah, because the BCCI sets the salary cap or the auction purse size, right?
And then there's the fourth thing, which is: Okay, cool, there are these other leagues popping up. There's South Africa, there's the US. The IPL team owners are starting to own or have partnerships with the other T20 leagues that are popping up. And so it's very easy for them to be like, “You guys shouldn't allow a players union, and we won't allow a players union.” “Okay, great. You guys shouldn't pay higher salaries. We also won't pay higher salaries.” Okay, great. And this sort of happens at the international governing body level anyway.
The effective state of play right now: They are all effectively serfs to the BCCI and the IPL, which is crazy. This whole thing is effectively 50% owned by a quasi-governmental regulator. Amazing.
So I just lay those things out there because I think those are sort of the big levers as you consider valuation and what's going to change.
Okay, I love it. That is the right backdrop, investor mindset, to think through evaluating these cases.
The first bull case is simply media rights expansion, which is simply demographics. If nothing else happens except that India and the Indian middle class keeps growing like it has been and is projected to—both in absolute size of the Indian middle class and relative wealth of the Indian middle class relative to other countries in the world—that alone is probably the biggest lever here. And to put some numbers to that, remember we were talking about the advertising market was just $2 billion, I think. Was that 2007?
Yep. Somewhere around there.
That is expected to be $20 billion this year, growing 6–7% per year. It's interesting: In 17 years, it's 10x'ed from $2 billion to $20 billion, like you were pointing out a couple of hours ago.
The thing that matters for the valuation of these teams—and you keep following it back for the revenue for these teams—is the media rights. And what do the media rights need? They need to be able to advertise to consumers. What do you need for advertising to consumers? You need consumers to be able to buy things and have disposable income, right? You need the cost of acquisition to actually make sense for the advertisers on these media rights.
And so far, the growth of the purchasing power of consumers in India totally supports the increased media rights purchases and thus the valuations. And if they keep growing at 6–7%, then it should continue to support 6–7% growth in the media rights per year. Does it support the 18% growth that we had seen historically? No. So the media rights packages probably will grow slower, and they probably should grow at the rate of the Indian advertising market, at least in the case that you're scoping this to right now, which is the Indian bull case.
Yep.
So if that current growth rate in the domestic Indian ad market, call it 6–7% per year, sustains over the next 20 years, I believe compounded over 20 years that is about a 10x growth. If that happens with no slowdown, great. There's 10x right there. So that gets your media rights to $12 billion 20 years from now—to NFL size. And obviously there'll be growth in the NFL, too.
But here's why I think demographics is actually the single most important thing. The NFL has basically already saturated its TAM. The total addressable market of people who care about American football is at most 500 million people. It is all of the US. It is arguably Canada—you could throw that in there, although to a lesser degree, I think, than the US. And then maybe you find some pockets of other people around the world, but there's not a lot. You have to stretch to get to 500 million.
And this is the NFL's big initiative. They are trying to figure out how to make people outside the US care.
But I think that's right. And they have been trying for a long time, and they have not thus far been succeeding to any meaningful degree. Right.
So they would need to expand the number of people who care, or they would need to expand the monetization potential per person who watches.
Sure.
Americans are getting wealthier, and have gotten wealthier, every year for a long time. Certainly the NFL will grow. I just don't think it will grow that much.
So I think there's a plausible argument to make on demographics alone that the Indian ad market will support 10x IPL media rights revenues, which gets it into the ballpark of the NFL today.
Well, let's put it another way. The total US advertising market today is $450 billion. We are already an absolute behemoth. India, over the time of the IPL, went from $2 billion to $20 billion. There's a lot of growth left, right? There's a lot of room left to run.
That is the case for how it becomes NFL scale if it just keeps matching the growth of the advertising TAM in India. As I was thinking about this before recording, I was using more population numbers, and there are estimates that the middle class is supposed to double over the coming 10–20 years in India. The middle class in India grew 6.3% annualized between 1995 and 2021. So that just matches every other stat that we're talking about.
GDP per capita is growing 10% per year. So if GDP per capita grows at 10% per year, do you think advertising continues to grow at 6.5%?
Sure. I think advertising tends to index GDP.
Yep. Okay. Biggest lever number 1. I sort of haircut that in my analysis to, let's say, 5x. I think you then basically immediately double that—multiply by another 2x and get to 10x total—simply by the IPL expanding.
I think it is almost a foregone conclusion, a no-brainer, that the number of matches that the IPL plays will expand, likely in multiple ways: number of teams and lengthening of the season.
Number 1 is simply extending the season and extending the window of the season with the existing teams that they have, playing more matches over a longer period of time. Right now, this is only an 8-week season. It's the shortest season of any major sports league in the world, and there's a reason for that: They had to work around the international cricket calendar. The BCCI also controls international cricket for India, so they care about this. But as the IPL becomes bigger and bigger and bigger, and all of the international players are playing in the IPL, it's going to expand the window here.
Yep.
So that's one: The main window is going to expand. Two, team expansion. India, as a country, geographically and certainly population-wise, can support more than 10 teams in this league. No-brainer. At least 2 more teams are going to get added in the next X period of time here.
The real wild card here is that there is talk of a second IPL window, which would be interesting. This is kind of a risk. Have the first part of the season happen when it currently does, between March and May, and then have the second part of the season—or maybe the playoffs—happen after the international calendar over the summer, and then come back at the end of the year.
Weirdly anticlimactic, almost. I don't know how you would design the media product. I think this is a wild card. It doesn't sound that compelling to me, but I don't know. The IPL has designed incredibly compelling media products, so maybe they could find a way to make this really interesting.
Yep. So, that's a wild card. I don't think you can bet on that, but I think you definitely can bet on 2× expansion of simply the inventory of games played. Combine that with 5× expansion in the ad market—boom, there's your 10×. That's going to take you to roughly the same scale as the NFL.
A supporting point on this, which I don't think grows revenue necessarily but makes it more likely to happen: as we've alluded to, the IPL has basically become the national champion of India. The Indian government is highly, highly, highly incentivized to make this continue to be a shining success story for India.
With Reliance so deeply involved now—I mean, Reliance is the largest telecom operator in the country and one of the largest diversified companies, period—they're also an advertiser of their products, they own the biggest team, and they're deeply involved in the league. The Ambanis and Reliance are not going to let this thing fail domestically or internationally on streaming.
Yep. Exactly. So, that now brings us into the most obvious revenue-stream expansion opportunity here, which is the stadiums—to come back to that—and local revenue. Right now, it's kind of a pittance.
Yeah. I think it would be an exaggeration to say that the stadiums are crappy. They're not crappy. You watch IPL games and they're fine. They kind of look like American sports stadiums from the 1970s or something like that. It's not dirt fields, but it's also not Chase Center or U.S. Bank Stadium or any of these new NFL stadiums that are just gleaming, multibillion-dollar palaces.
And there's good reason for that. They make 10× more revenue. Also, because the IPL is so short right now, it doesn't even make that much sense to flip over to having teams build and own their stadiums or be more deeply involved. They just don't play that many games. They only play 7 home games right now, right?
But as you expand the league and expand the number of games, this starts to make more sense. So, I think if you can find a way to smartly upgrade the infrastructure and the stadium infrastructure here without risking the economics of the league, there is just so much low-hanging fruit. I mean, all the playbook that is run in the NFL and the NBA—luxury suites, seat licenses, fan experiences, mixed use of the real estate, dining, shopping, cinema, Bollywood—huge opportunities.
You sound like Jerry Jones over there. Just basically send Jerry Jones to India and take care of this. So, what's the opportunity there? Right now, IPL teams are making 15% of their revenue locally and 85% is central revenue. If you could get to an NFL-type model where it's 40% local—35–40% local for the best teams—that's a whole other significant amount of revenue coming in there.
Yeah. Hundreds of millions for the league. I think if you do that and you have the media rights on par with the NFL, then you bring the rest of the revenue streams up to on par. Now you're definitely on par with the NFL.
And this is still all domestic.
Totally all domestic. So, that brings us to, I think, one of the 2 biggest wild cards here for the IPL, and that's the Saudis and Middle East money. They absolutely want to get involved here.
Yeah. Yeah, there was a new story in 2023, I think, about them trying to invest in the IPL at something like a $30 billion valuation, which is 2× even the highest number I've seen. The most recent IPL mega auction that just happened was held in Saudi Arabia.
Really. Not only do they want this to happen, but inroads are being put in place that something will probably happen here.
Now, this could go either way. It's sort of like a carrot and a stick, a threat and an opportunity. The threat is that you have a LIV Golf situation, where they say, “Well, they have basically unlimited money. We can set up a competitive league here.” The ICL tried this, but the ICL didn't have Kingdom of Saudi Arabia money.
It would be very interesting to see: could you actually just go completely around the ICC, the BCCI, and the existing cricketing system and say, “Look, there's so much money that we are actually just going to get all the best players in the world”?
Yep. I think that is unlikely because of the hammer that the BCCI has: “Hey, you Indian players, if you do that, we'll ban you from international competition.” They would also not be able to play domestically in India. They would have to play in the Middle East or South Africa or somewhere else, and so that would also hurt Indian viewership.
I think it is unlikely, but I think it's more likely that the Saudis or some other very large sovereign wealth fund can come to an agreement that keeps everyone happy.
Uses this as negotiating leverage.
Exactly. Yeah. And I think interests are really aligned here on my prior point around infrastructure. I think the Saudis—or sovereign wealth funds generally—want to get involved because they see this as a great long-term growth investment. Also, investing in physical infrastructure in India is probably a great long-term growth investment that an investor like the Public Investment Fund of Saudi Arabia is well set up to make.
So, if that happens, there's certainly plenty of upside on every revenue stream that can come from that. But I think, at a minimum, that makes the local stadium real-estate revenue streams an almost certainty of happening if the Saudis get involved.
It's interesting, right? Because what do you do with that money? What do you do with billions of dollars if it's thrust upon just 10 teams?
Totally. The Saudis don't just want to invest in the league. They want to invest in the whole ecosystem. They want to invest in the infrastructure projects. They want to invest in the stadiums. They want to invest in the buildings. They want to invest in the retail going in around it.
Yep. All of that.
9. The NFL Sized Future
So, coming into doing this and starting the research, if you had told me that bull case, I would have said that's insane. I know the IPL is big. I know India is big. I know it's an exciting, compelling product. But really, in 10 to 20 years, this will be as big as the NFL?
You go around and you talk to people who are in the sports industry and you put this question to them. You talk to executives at teams. You sanity-check this with people who have thought about this.
Crazy things started 17 years ago. In theory, by the time it is, call it, 30 years old, it could be as big as the NFL.
Yep. It's riding this incredible demographics wave, this development-of-the-middle-class wave, and this globalization-of-sport wave. I think also just the development of India, period, which plays into demographics, too.
But there's such an infrastructure opportunity here, too, that makes it really attractive to the Saudis or whomever else, right? Tangible assets where you could park billions and billions of dollars.
It may end up being that this grand plan of being asset-light and debt-free, with no stadiums in the beginning, in the long run was actually just a temporary thing. But you might have needed that to get it started.
Right. But you might have needed that to get it started.
Yeah. Okay. So, this is not your extreme bull case.
No, that's not the extreme bull case. That's the bull case. Next, we'll do the bear case.
Okay, so bear case?
I think there are basically 2 big things in the bear case. Number 1 is just the challenges of doing business in India, period. I mean, I think if you talk to anybody who invests in India, this is the number 1 challenge for everything, right? The low-trust environment.
They have to change that reputation, and they have been. It definitely has been changing. It definitely has been getting better as you talk to folks, and it almost assuredly will continue to do so. However, in order to support an NFL-size business, this needs to operate in an NFL-like environment.
Yep.
And right now, I think we're basically there. Institutional money is now coming in, foreign direct investment is coming into the IPL and into India at large in a big way. So, I think we're there, but if there's any backsliding, that's going to be a real big problem.
Yep. Okay. That's the biggest one, kind of writ large.
And I think the specific one to the IPL—we haven't talked about this yet—is that in November 2024, Viacom18 and Reliance and Disney Star merged in an $8.5 billion deal.
Oh, I actually didn't realize that.
Really?
Oh, yeah. So, they lost their competitive environment.
So, basically, we are now down to 1 viable, at-scale bidder for all the domestic media rights, terrestrial and streaming. Who knows how that is going to play out? Lalit was a genius at finding and engineering the creation of alternative bidders.
On the other hand, this is now at such a big scale. Could you really engineer a competitive bid? The next bidding cycle is going to be $1.5–$2 billion of media rights a year. Who else can do that?
Google and Facebook are extremely credible bidders here. In fact, Google did at one point have a deal in 2010. YouTube did a media-rights deal with the IPL. And in 2017, Facebook bid on the digital rights and lost.
Now, you might say, “Well, is that for real? Google and Facebook—you could say they're credible bidders for any media rights anywhere in the world.”
True, but they also particularly care about India. India is YouTube's largest country by user base.
That's so crazy. Isn't that wild? India's number 1. The U.S. is number 2 for YouTube.
So, yeah, Google cares a lot. And then Facebook and Meta probably care even more because India is, I believe, the largest user base for WhatsApp and also Instagram. India has the largest population of users on Instagram.
Interesting. So they both care a lot, and they have a lot of money. I didn't know they had emerged.
Yeah. You do not want your 2 legitimate competitive bidders to merge.
Yep. Basically, I think you have to get Google and Meta bidding. Sometime in the next 5 years, a competitive bidding environment will emerge.
That's the nice thing about these deals being that long.
Well, the size of the prize is just so big that if people thought the auction price might drop low enough that you could really make a guaranteed win here, other bidders would emerge, right?
It's funny, the bear case that I was thinking of is sort of a valuation-based bear case. Viacom18 paid $3.1 billion for the digital rights. There's a lot of sensitivity in that model to how fast streaming grows and how fast streaming monetization grows. The TV rights that Star owns are fine and very predictable, but it's not like you're buying equity in something and if it happens in year 8 instead of year 6, that's fine. They really need all this growth and monetization to happen in years 2, 3, 4, and 5, or else, if it happens 2 years later than they thought, that's really bad news.
They're underwater for that $3.2 billion, which again, if they're the only bidder in the next auction, means that price is coming down, right? So, I mean, all of the revenue and all the valuation is really based on these media rights. And these media rights, at least as paid in this last auction, are really sensitive to that future happening real fast.
So that brings me to the mega-bull case. Here's the mega-bull case: this thing goes global beyond the traditional cricket-playing countries and the US. Maybe China, maybe other countries around the world that historically have not cared about cricket get really into the IPL.
There's some interesting stuff to talk about here. How likely do you think it is that people in America actually start tuning into the IPL? India's 12 or 13 hours off. It's really hard.
Yeah, this is the biggest challenge. In England, it's actually great; it's only 5 hours off, so there's this nice thing where you could do it as sort of a day-night game on the weekend. In the US, you're tuning in at 8:00 in the morning. If you want to watch something that's happening in India, 8:00 p.m. in India is, I believe, 7:30 a.m. on the West Coast of the United States.
That is the single biggest challenge. So this is the argument for a domestic cricket market: Major League Cricket.
For listeners out there, I spent a good amount of time with Soma Somasegar, who is the former Microsoft executive now at Madrona and a co-owner, with Satya Nadella, of the Seattle Major League Cricket team. It was very interesting getting his perspective on developing Major League Cricket in the US, because I think the whole bet with Major League Cricket is, we have to build cricket fandom domestically in a grassroots way, with players here, slowly over time.
This is not going to be this big explosion out of the chute, and frankly, Americans are just not going to start caring about IPL cricket. They need to start caring about US-based cricket.
Yeah.
Okay, a whole bunch to talk about here. The biggest swing on this is going to be a single event that's going to happen in 2028.
Oh, the Olympics.
Which is the Los Angeles Olympics, where T20 cricket is going to be in the LA Olympics. It's the first time since 1900 that cricket has been in the Olympics.
Yeah, the first time in 100-plus years that cricket is back in the Olympics.
Essentially, it is cricket for the first time in the modern Olympics here in LA, in America, in a big way. A lot of vested interests are going to be riding on these Olympics.
Yep. So time zones are definitely the biggest challenge here. But if you put that aside, cricket is actually, I think, totally poised to take off in the US for a couple of reasons.
One, most importantly, baseball is stagnating. We've alluded to it a little bit on this episode, but Major League Baseball has serious problems.
Hey, man, the pitch clock really changed the game experience. I actually think managing Major League Baseball is really challenging right now. And they're arguably doing a pretty good job of maintaining value capture over the long run while there's just a whole bunch of factors fighting against them.
You just think it's an inevitable decline, and they're doing a nice job managing the pace of that decline?
The issue is that because teams can have their own media deals locked into long-term contracts, and then because there's no effective salary-cap competitive parity, every wealthy team is going to be wholly and intrinsically against any major structural change to the sport.
Yeah. And the structural changes that need to happen are at multiple levels. There's the way the business is organized, and there's the product itself. They've done a good job with the pitch clock. I think that's actually good. But the biggest problem is 162 games.
Baseball was built for an era when the revenue model of sports was tickets at the gate. It was not built for the TV era, and certainly not built for this era. They've also done a really nice job with MLB.TV and their owned-and-operated streaming product.
BAMTech is a huge success for MLB, but again, you're basically just extending out the current state of play as long as possible.
Interest in the game, and particularly interest in the game among young people, is entering a scenario that could end up looking like cricket in England before it got so bad that they had to introduce T20.
Oh, that's interesting.
So then, at the same time, cricket has already gone through this cycle and come out the other end with T20 in the IPL. They have the right product and the right business model coming out the end of it.
That's one. Two, there is a pretty significant Indian diaspora population here in America. I mean, it's not huge in terms of all of America, but it's several million people. And actually, right now, Indian Americans are kind of at their pinnacle in terms of influence on the country.
So you've got CEOs like you mentioned: Satya Nadella, Sundar Pichai, Shantanu Narayen at Adobe.
Yep. Just look at the percentage of market cap in America. Neal Mohan at YouTube.
Absolutely. Indian-American CEOs control a ton of it. And as we've talked about in every episode on this show, basically, the influence of tech on culture is becoming hugely outsized.
So, okay, that's one: the business community and the influence there.
Two is actually entertainment in Hollywood. You actually have Indian Americans who are becoming stars and A-list stars in Hollywood.
Bigger, though, three is politics. I mean, just look at this last election cycle.
Well, you've got Kamala Harris. You've got J.D. Vance's wife, Usha, who's second lady of the US now. Nikki Haley—she's Indian American.
There actually are quite a lot of Indian-American politicians now.
So anyway, all that to say, relative to their size as a minority within America, Indian Americans have quite a lot of influence on the country.
Is the Indian-American diaspora really that small?
Yep. It's about 5 million people.
Wow. I would have expected it to be bigger. And you said there are 20 million cricket fans in the US currently?
Yep.
Huh. Interesting.
So that's two. Point 3 is just that the IPL is actually genuinely a really compelling product.
Right. This feels like the biggest reason to me. If it's super entertaining and it's well engineered to be entertaining, it will continue to spread.
Yep. So time zones are definitely the biggest challenge. Could you imagine a future, especially if sovereign-wealth money gets involved in the IPL, where they borrow the NFL playbook and start staging matches here in the US?
Absolutely. That's the number-one biggest mega-bull case: Americans actually start to care about cricket, and not just Americans, but other markets around the world outside traditional cricket-playing nations.
Related to that, number 2 is IP. It is the great irony, as you talk about the sort of Indian expansion of influence around the world, that it was British imperialism that brought cricket to India, but it may be cricket that expands India's influence on the world.
Totally. Cricket imperialism, I guess.
Yeah, Indian imperialism, which is sort of happening with the leagues that they're setting up around the world.
Totally. I think 4 of the 6 Major League Cricket teams in the US have IPL ownership. I think all of the South African teams have IPL team affiliation or ownership. It kind of feels like the Big Bash League in Australia is the only T20 league around the world that doesn't have any sort of ties to the IPL.
Yeah.
And I think that's simply because it was set up around the same time, or maybe even slightly earlier, than the IPL.
Totally.
But yeah, I think that's the other path that the IPL could come to the US. One is the NFL playbook: you adjust match times, stage some matches here, and try to drum up interest in the main teams in India.
The other path—and maybe you marry this with the second-window idea—is that because the season's short, you keep the season short in India, and then you have the same players with effectively the same organizations come over here in the fall, or at a different time of the year, and stage another tournament here with US-based city teams.
Or, wildcard, you do an American League–National League thing, and then you have the American teams and the Indian teams play each other in the playoffs.
Yeah. And maybe this all ends up coming together through the Olympics and the World Cup and all that, and it's a more grassroots, over-time development. The ground is fertile for cricket in America right now, especially because baseball is declining.
Totally. There's a vacuum.
Yep.
Okay. So then the next kind of big mega-bull thing is IP. And IP basically boils down to 2 things, with one kind of in the middle. There's non-game media and streaming. This is F1: Drive to Survive or Full Swing, stuff like that—documentaries, professionally produced content, and social media around the league.
So there actually was a Netflix cricket documentary that came out in 2019 called Cricut Fever.
Yeah, you mentioned it. I couldn't find it. I watched it back in 2019. It's not on Netflix anymore, which sucks. It's super compelling. This documentary, Cricket Fever, was part of what turned me on to the IPL itself being a big thing. I'd always been interested in cricket because of my British DNA, but I didn't know the IPL was so big until I watched this documentary. For some reason, it's not on Netflix right now.
Actually, I think I know the reason, which is that it's basically flawed. The problem with the existing documentary, Cricket Fever, is it only follows the Mumbai Indians. It doesn't follow the whole league.
But I think if you were to—and I'm sure people are in development on this—produce a Drive to Survive–style, full-league narrative, full-production-value Netflix ongoing annual season special about the IPL, it would crush globally. Like, absolutely crush. The whole league is architected as a soap opera, and then you make a soap opera about the soap opera. It's going to be so good.
Yeah, to validate this point, I used to think Bollywood stars were the biggest stars in India. Shah Rukh Khan has 48 million Instagram followers.
Oh, that's a pittance. Virat Kohli, the top cricketer in the world, has 270 million, and he's approximately tied with Taylor Swift.
Yeah, I mean, the cricketers are the stars in India. And actually, it's kind of weird. If you scroll through Virat Kohli's Instagram, all 33 of the last 33 posts are sponsored. It's him with a product. I can't figure out if it's just the Indian tolerance for commercial placement is much higher than the American audience's tolerance for it, or if Virat just lost the personal credibility himself and his business manager is the only one posting to the account, or what the deal is. But you've got a 270-million-follower account only posting paid posts.
Wow, that's wild. I mean, that just speaks to the demand to follow him.
Yeah, his influence is insane. Interestingly, during the season, the way the IPL rights work, the teams actually own the IP of the players during the season and can monetize them. You'll get multiple commercials in a row with star players on that team during the match.
That's amazing. Anyway, that's one side of the IP, and then the other side is gambling. So, again, mega, mega, mega bull case. Gambling becomes legal in India—game over. You know, if there's $750 million, there already is a good amount of fantasy. Now, it's technically a game of skill, but there is the equivalent of DraftKings for the IPL in India. It's a company called Dream11. There are 11 players on a side in cricket, so it's Dream11, and it operates just like DraftKings, but it is classified by the government as a game of skill, not a game of luck. So that's how they get away with it.
Dream11 has 200 million users and is valued at $8 billion. RedBird, the big sports private equity firm in New York that's an investor in the Rajasthan Royals, is also a big investor in Dream11.
Interesting. That said, it's still kind of in this gray area right now. I don't know what the likelihood of this is, but if true gambling were to become legal in India, given that $750 million of betting is already happening on foreign bookmaking markets per match, that's a huge revenue unlock there.
Yeah. So, all that to say, I don't know how likely it is that either the US or other non-cricket-playing countries around the world get interested, and/or that IP and gambling develop. I could totally see some of that happening.
We may have some hand in this. You know, the week after this episode comes out is the start of IPL season. We'll have to see if all of our US listeners are cricket curious.
It's like we timed this. All right. Should we do Power Playbook and then our quintessence?
Yes, let's do it. Power is a section that we always do that takes Hamilton Helmer's framework of what enables a business to achieve persistent differential returns on a sustainable basis, and we kind of apply it to the business we're studying.
To apply this to the IPL, the question is: who are the IPL's competitors? And I think because they are so N=1 at this point, you kind of have to think about it as their potential competitors, or potential competitors in the past that they have since vanquished.
The biggest one—the reason that the IPL gets to be so much more profitable than any other league in the world, or potential league—is clearly a cornered resource, and it's the players.
Yeah, 100%. That's the big one.
And so, David, the question I have for you is: why does the IPL have a cornered resource on players? Because while there are a lot of good Indian cricket players, all the best cricket players in the world are not Indian. And conversely, it's not like the only people who watch cricket are in India. I think 35% of the people who watch cricket in the world live in India.
Yeah. Cricket is actually the second-biggest sport in the world, with 2.5 billion fans, behind soccer.
Right. So there's a lot of fans elsewhere. So plausibly, they could have set up a league elsewhere.
Yeah, totally. Great question. I think the issue is just that India is, by far, the center of gravity. By which I mean, the other billion cricket fans in the world are too dispersed among other countries.
If you're going to set up a rival league, you've got to set it up somewhere. So where are you going to choose? Are you going to do Australia? Are you going to do Pakistan? Are you going to do the UK? Are you going to do the West Indies? And there are rival leagues in all of those countries.
But the percentage of mind share that you're going to be able to get of the global cricket audience caring about your league, and the cornered resource that you would then have of your domestic cricket board, of those players in that league, you're not going to be able to attract enough talent density of players relative to a fan base in any other single country in the world.
So it's almost a tipping-point thing where whoever was the biggest, even if they weren't the biggest by a lot, was able to basically have a pretty large group of people who cared the most about their domestic players and therefore start this flywheel of: we are able to attract people from other areas to come and play here.
If you get someone from the West Indies, you get all the small countries. Then suddenly, you build from 35% to maybe 45% or 50%, and then these blocks of 10% and 15% are kind of dominoes that fall into you, because now you've, as the biggest player, aggregated all the small ones, and now you start the flywheel.
You can add in additional constraints on top, like Indian players aren't allowed to play elsewhere. Well, okay, that just kind of creates lock-in.
Totally. That's the biggest thing. And then you build the IP around those teams, the viewership, the media rights, and it becomes really hard to dislodge it.
The West Indies Cricket Board could say, “Chris Gayle, you can't play in the IPL.” And at one point in time, they did try to say that.
Huh.
But they don't have enough leverage. It doesn't matter, right? The Indian market would say, like, “Okay, fine. We don't need Chris Gayle. We'll still watch without him.”
And then, because they had so much leverage and there was so much money, I think, if I remember right, when discussions were being bandied about about this happening, Chris was like, “I'm just going to go play in the IPL and no longer play international cricket for the West Indies. What are you going to pay me that's going to come close to this?”
So this is the argument for a potential LIV Golf–type situation.
Yes.
Everyone would react in that way if the prize was big enough. What's the phrase? If you're going to go, go so big you never have to go again. You better get enough cash in just a few years of playing in some new league that it doesn't matter if you ever need to do anything else again.
Yes, exactly. But to your point, counter-positioning: initially, in the takeoff phase, T20 had counter-positioning versus ODI.
Yeah, but that wasn't an IPL or a BCCI innovation. They just borrowed it.
Right. In a way, the media rights deal is a scale-economies thing.
Oh, yeah. Production value.
And then, if and when they do get into local revenue streams and stadiums, that absolutely becomes scale economies. But the production value associated with the broadcast of the IPL are now—you know, again, are they quite at NFL Monday Night Football levels yet? Maybe. I don't know. They're pretty close. You're not going to do that anywhere else.
So one question I have for you that I was thinking of after Power—this is a good time to do this—is: why can't other leagues make big money like this during the other 10 months of the year? The world's not paying attention to the IPL. You would think you could get all the best players in the world to go play in matches that you could sell the media rights for a lot of money, right?
That's a good question. International cricket and Test cricket are still a thing, and the Indian national team playing is still a big deal. But not $1.2 billion of media rights per year big, right?
Exactly.
I think it's kind of the same reason as the cornered resource and the players: if a rival, true rival league in another country were to try to do this, you just can't attract the critical mass of advertising dollars to make it worth it, given that so much of the market is in India.
That said, I do think this is a version of the mega-bull opportunity of the IPL either itself directly or through its surrogate leagues that it has investment in, like Major League Cricket or The Hundred in England. They say, “Yeah, we're going to do this, and we're going to send our players.”
As leading the witness here, you brought up The Hundred. For listeners who've never heard of it, which is probably most listeners, there is a new fourth version of cricket after T20 that, instead of 120 balls, is just 100 balls bowled per game. There's an English league called The Hundred, and they have managed to attract some superstar investors and raised, I think, $1 billion or close to it.
Yep, obviously at a valuation significantly larger than that for these teams in The Hundred. The Hundred is a 4-year-old cricket league based in England. Now, you have a lot of reason to believe, because it’s sort of a native sport there, that it can be successful, and there should be some cross-pollination with India because they’re only 5 hours apart. So there’s time-zone stuff that could work.
But I think The Hundred will be the first challenge of whether you can create something IPL-like in another country during another time slot.
Yep, except it’s not really a challenge because a whole bunch of the IPL franchises are invested in Hundred franchises. So it’s sort of half a challenge, half a further exploration of whether IPL uses the other leagues to effectively build its own other windows.
Hmm. We’ll have to see.
Okay. So, Playbook: you texted me an interesting question saying, for Playbook, why don’t we just ask the question, “Could the MLB or NBA be disrupted like this?” Did you have a thought on that?
When I texted you the question, I obviously was leading the witness and would have said absolutely, 100%. I now think it’s a little more gray. And when you said “like this,” did you mean what the IPL did to traditional cricket?
Yes
the combination of T20, a new format of the game, and a new league that is run with a different business model.
Right. So could someone do that to baseball? And I think, reflecting on your comment earlier, you think baseball may not be in bad enough shape in order to warrant this yet.
Well, now, after totally uncovering the IPL story, I think there were enough unique, one-of-one dynamics about cricket, the BCCI, T20 coming in, and just the state of the primordial soup when IPL was formed that do make it difficult to replicate directly. Probably the biggest of those is the BCCI’s overarching control of the sport within India, controlling the resource of the players and being able to ban them from playing in other leagues. That obviously doesn’t exist in the US.
I think what is a total analogy is MLB, and there are some potential risks and early signs that the NBA, too, are going in a direction that long-term will not be good. I don’t know why I would watch one of the first 3 quarters of an NBA game, or the first 3 quarters of the season, or the first 95% of the season. I grew up a Cavs fan. They’re the best team in the league, and I haven’t watched a game yet. There’s a huge problem there—huge, huge problem in the NBA.
Now, the NBA is in a better position than MLB because they have a soft salary cap. So, not as good as the NFL, but better than no salary cap in the MLB. And they have now moved to mostly a centralized, revenue-sharing media-rights deal.
And so next they need to shrink the number of games. Then they need to make sure the stars are playing whenever anybody’s going to watch a game. They’ve got to make every game count, and they’ve got to make every quarter count. Then it’ll be a great sport. The problem is those are hard things to do because it’s in direct opposition to the media rights. Every minute less of basketball that is played is many dollars lost.
So, armchair quarterback, armchair GM right now: I think I would diagnose the NBA as fine, and in some sense doing better than ever, but with some early red flags that, in the long run, if they don’t manage the game well, worst case, they have 30 more years of success. It’s not an immediate problem. It’s a problem for 2 commissioners from now.
MLB, I don’t know that it’s a this-commissioner problem, but they’re farther along the decline curve. The rubber is going to hit the road for MLB once enough generational shift happens that there’s just no longer enough supply of players and fans.
But all that said, there is 1 thing really, really going for MLB, which is international. Baseball is an international game, and it would be devastating to the sport if American interest continues to decline, both in terms of players and fans. But it’s still very strong and vibrant in Japan and South Korea.
But that doesn’t help the MLB.
Well, it helps them on the player front, and it does help them on the audience front, too. I mean, Shohei is a very valuable commodity, both in terms of playing on the field and the market that he generates in Japan.
Yep.
Anyway, all that to say, baseball is the obvious one, and I think you have the first example with the Savannah Bananas.
We’ve got to do an ACQ2 on the Savannah Bananas.
Oh, we’ve got to.
So, for folks who don’t know, we alluded to it earlier, but it is a totally zany, incredibly fun product. Everything that is sort of a problem for baseball, the Savannah Bananas have fixed, except that it is not an actual sport, right? It’s a pure entertainment product right now.
Yep. But the fact that it exists at all should be very alarming to MLB.
Yep. Agree.
Okay. I’ve got 3 Playbook themes in addition to everything we already covered on the history.
One
assets can get more valuable with the right owners. Shah Rukh Khan deciding to own that team made it much more valuable. This is almost obvious. We started the show, it was called Acquired, and we talked about when you could buy something and the right buyer would make it more valuable.
But think about if passive money had bought the Kolkata Knight Riders versus Shah Rukh Khan buying it. It’s existential. I know that Shah Rukh Khan was made whole right away through the deals—the $5 million we talked about earlier—but he was in the black on brand value for that thing as soon as he bought it, because his association is worth so many millions of dollars, and him putting his face on it and doing the anthem video and all that great stuff.
It’s just a smack-you-in-the-face reminder that assets need to find the right owner to maximize their value. Sometimes it’s just a gigantic multiplier versus passive dollars.
My second one is from Arvin at Worldly Partners. Sports teams are an amazing asset to own. In the write-up that he did, which I read to prep for this episode, he highlighted that the big 4 sports leagues in the US—the MLB, NFL, NBA, and NHL—have meaningfully outperformed the stock market. Over a period from 1961 to 2024, it’s 13% annualized versus 10% annualized.
I know it doesn’t sound like a lot when I build it that way, but that’s a long time period. The stock market has grown 550× during that period, while an index of sports teams is up 2,300×. That’s massive. And on top of that, the stock market has these big drawdowns. That doesn’t really happen in an index of sports teams. They’ve also historically been very uncorrelated with the stock market.
So these are very scarce assets that sure are nice to own if you can get one. I was thinking a lot about it: should everyone have been an automatic yes in the 2008 auction? Probably. I mean, I think everybody who was invited to bid was.
There are these examples of failed sports leagues: the USFL, the XFL, the Overwatch League. So you’re not guaranteed that you’re getting into one of these great leagues. But, man, once they start to become the dominant league for a sport that people really care about, it’s one of the best assets you could own durably.
This is another bull case, at least valuation-wise, on IPL franchises that someone made to me in the research. India punches far above its weight relative to its GDP when it comes to billionaires. There are a lot of billionaires in India, so there are a lot of potential buyers of sports franchises in India, and there are only 10 viable major sports franchises: the 10 IPL teams. Let’s say they expand to 12 or 14 or 16—whatever. There’s going to be more demand for those assets relative to the supply.
My last one is probably the most important question of the episode. You couldn’t have the IPL without Lalit Modi, period. So how path-dependent was this? Could you have something of this scale and success without taking the good with the bad of everything Lalit accomplished?
No way. You needed Lalit.
But did you need every business practice? Would it have been possible for him to create something so valuable and to align so many interests without having allegedly had stakes in 3 teams?
Capitalism is great because when you have an incentive to succeed, you succeed. And if everybody is pushed to succeed, you create value in the world. There’s kind of this question of: if he was hired into a regulatory bureaucratic organization, could you have created something so valuable without dealing some cards to yourself? I don’t think so.
The only example I can think of from our sort of Acquired canon here is Visa and Dee Hock, a founder of something of this magnitude who did it without really realizing any equity for himself. I mean, I guess Morris Chang and TSMC, too, although Morris, over time, did get quite a significant stake in TSMC through equity grants, and Dee, I think, got paid quite a bit at Visa, too.
So it’s not to say it couldn’t happen, but I think it’s pretty rare. And that BCCI structure was really a blocker for the incentives here. So it’s like you almost needed a Lalit to come along and be like, “Do this on behalf of the BCCI while wetting my beak, so to speak, on the side, too.”
Right.
Yeah. They’re a partner with me in creating this.
Yeah. You really do need these crazy, Dee Hock-type, above-reproach people to walk into a low-trust environment, a low-trust ecosystem, and need to do these deals to create something from nothing without crossing any lines. And it’s a rare bird.
Yep.
All right, let’s land the plane. I have 2 points to my conclusions.
One is that Ed Cowan put it best: if you were to design a sports league to maximize the bottom line, this is how you would do it.
My second one is: this is the product, and I mean that in a mathematical sense. Multiply these things together—the Indian middle-class emergence, TV penetration, and smartphone explosion. TV penetration went from 40% to 74% during the IPL’s run. Internet usage went from under 5% to over 60% today.
The population—the literal number of people—increased by 230 million. That is the adult population of the US stacked onto the existing population since the IPL was created. It is just this perfect storm of tailwinds for this to exist.
Yeah, 100%.
All right, I've got a quintessence for the IPL, and then I have 2 related, broader takeaways associated with it. My quintessence for the IPL is that they—and by they, I mean specifically Lalit Modi and IMG—designed the thus-far most perfect sports entertainment product that mankind has ever known. Previous to the IPL, that was the NFL, but they actually managed to improve the sports entertainment product.
If you are designing a sports entertainment product for the modern media landscape, the NFL, because of its history, actually started in the previous, pre-television world and certainly pre-streaming world. It's kind of an accident that the NFL was able to massage the product enough, and Pete Rozelle made enough great decisions to make it so compelling as it is now, but it's only 75% of the way there. The IPL, though, from whole cloth, was designed as a major league in the post-television world, anticipating streaming and social media.
And so, this architecting of one game every night—every match matters. I mean, it's Monday Night Football every single night for 2 whole months. And then explicitly bringing in the Bollywood, the Taylor Swift element. We've seen what Taylor Swift did for the NFL accidentally, on a one-off basis, right? This was architected from day 1. The fact that viewership of the IPL is truly 50/50, gender-equal—there's no other men's sports league like that in the entire world.
Yeah. It is astonishing that they managed to make something that, for your argument, is the perfect entertainment product that is not physical like the NFL is. I always assumed the brutality was actually part of what was required to be that entertaining.
No. And in fact, thinking about it through this lens, it totally holds the NFL back. Whereas the IPL was architected from day 1: We need to sell shampoos and beauty products here.
Totally. The brutality definitely holds the NFL back from its future. It's so core to the sport, but also a hindrance to it. Concussions, et cetera.
Okay. So, that is my quintessence on the IPL. And then my 2 takeaways are: this is an amazing case study of why sports truly are—we talked about this in the NFL episode—the most important media property in the world today, because they are the only property left where there is true uncertainty and this true appointment live viewing has to happen. There's nothing else left.
Yeah, it's that and award shows—the Oscars. You don't know who's going to win.
Yeah. The Oscars, sure, but that's 1 time a year, right? But the fact that they were able—and this comes back to the IPL being the perfectly designed sports entertainment product—sports are king in live content in the modern world.
Fun fact: Bollywood studios are now very, very, very reticent to release movies during the IPL season because they don't want to go head-to-head. And this 2-month period is effectively their summer. It's when kids are out of school. Bollywood is no longer releasing its blockbusters during the best time to release blockbusters because it doesn't want to compete with the IPL. That says it all, right? The best Bollywood product is the IPL games right now.
Amazing.
And then my second takeaway is that even I, before doing this, had no idea. You may listen to this and think my bull case, and certainly my mega bull case, is crazy. I actually don't think they're crazy. There is a possible future here where this thing is as big or bigger than the NFL. I hope Acquired keeps going for another couple decades so you and I can test this thesis and we can see.
Yeah. Awesome. I'm so pumped we did this episode.
Me too. This was so fun. Of course, as a cricket fan, I'm biased.
But you're going to have to let us know what you think in the Slack. How off his rocker is David?
Carveouts.
Carveouts. Let's do it.
First one I have is Severance, season 2. By the time this airs, I think Severance will have just ended, but season 2 is just exceptional. This is a work of art. It's brilliant cinematography, brilliant story. The whole thing is incredibly high taste.
And I coincidentally also just rewatched Lost, which I will say was a mistake. Lost didn't go anywhere. It was a great journey, and then there was no reward. It turns out that the writers didn't have a cohesive plan. I feel like with Severance, I'm in good hands. Maybe I'm overtrusting right now, but I feel like I have some guesses. I can see where it's going, and I've been afraid of mystery-box-style shows since Lost disappointed me.
I think Severance is going to give me a warm, nice embrace. So, thanks to Ben Stiller and the crew there.
It's why sports are king. True uncertainty. You can't count on scripted television anymore.
It's true. Maybe Severance will bring it back.
Yeah, Severance is so great.
My carveout is an oldie but definitely a goodie, at least as far as Acquired is concerned, because I think as much as anything it was our original inspiration for doing the show, and that is Stratechery and Ben Thompson.
Yeah, he's been killing it recently. Obviously, I've been a fan for a decade, but he's just killing it. Both Stratechery itself, but I'm also loving Sharp Tech, the show that he does with Andrew Sharp, the biweekly show as part of the Stratechery Plus bundle. I just think he's doing some of, if not his best work of his career right now, which is saying a lot. This is the man who invented aggregation theory, and I'm just loving the work he's doing in his second decade.
Yeah, I agree. It's his best work yet in the AI era. I would say he was an inspiration to us when we started Acquired, and he continues to be an inspiration to us as we get ready to enter our second decade here.
Yep. Okay, that's carveout number 1. And then I got parenting carveout number 2. We went on a family trip to Dallas recently, and for the first time, when traveling as just our own family of 4 here, we rented a minivan. I have rented a minivan in the past when traveling with multiple families and groups, but we bit the bullet, rented one for a trip, and I got to say, it was freaking amazing.
I'm not going to buy a minivan. I'm not going to drive one on a day-to-day basis here in the city in San Francisco, but my God, traveling as a family of 4, the thing is a beast. The sliding doors and loading up the car—
Dude, you got to get Priscilla's Porsche minivan.
That is exactly what I need. I need the Priscilla minivan. That is my car.
Awesome. All right, next time I'm down, I'll send her a WhatsApp. Let's rent a minivan and we'll go for a ride. Yeah. All right. On that note, thank you to our partners this season, JP Morgan Payments, Service Now, Fundrise, and Crusoe. You can click the link in the show notes to learn more. Special thank you to all of the cricket fans that we talked to and people who helped who are in and around the game. A few that we want to thank in particular on air are Soma Seagar, one of the owners along with Satia Nadella of the Major League Cricket team in the US, the Seattle Orcas. He is of course a partner at Madrona Venture Group here in Seattle and a former Microsoft exec who helped us on those episodes too. Arvin Navaratnam at Worldly Partners for his great writeup linked in the show notes. Ed Cowan. David, you want to say a few words about Ed? Yes, Ed is great friend of the show and former professional test international Australian cricket player himself and did the great great business breakdowns episode on the IPL that we'll link to next to Finn Bradshaw. Finn is the head of digital for the ICC and was super generous to talk to me. He's based in Dubai and stayed up very late at night to chat with me about how the ICC works and the BCCI and all the dynamics there. This is so fun. I actually had no idea who you talked to other than Ed. Yeah, Finn was great. And extra thank you there to the management team at the Golden State Warriors who connected me with Finn. And then finally, thank you to Parog Morate, the president of the 49ers. Parog is awesome. His day job is literally president of the 49ers. Some relevant experience. His evening job is chairman of the leads football club, the soccer team in England that the 49ers are the majority owners of. Huh. And then for a long time his night job was basically leading setting up major league cricket in the US. Paragua is awesome on so many dynamics, but especially sanity checking and talking through this crazy bowl and mega bowl case for IPL. It's awesome. All right. Well, if you like this episode, go check out our other episodes on the NBA or the NFL. If you want more Acquired, check out ACQ2 recent episode with Bill McDermott, the CEO of Service Now. And after you finish this episode, come talk about it at acquired.fm/slack. With that, listeners, we'll see you next time. I'll see you next time. Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Huh? [Music]