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The spin and substance of the Indian Premier League

Soutik Biswas | 11:00 UK time, Tuesday, 30 March 2010

IPL cricket matchIs the Indian Premier League (IPL) too much of a good thing? Will cricket and commerce both suffer if it is overdone? Is spin dominating substance when it comes to selling the world's most expensive cricket tournament?

If you believe Lalit Modi, the man who runs this heady cocktail of hit-and-run cricket, Bollywood and glamour, Indians can never have enough of the IPL. In its third six-week season, everyone in India, according to writer Jug Suraiya, is "playing, reading, breathing, eating, talking and bidding cricket." Cricket and capitalism have never had a more torrid relationship. The talk of the town is the addition of two new teams who have paid about as much as the eight teams did two years ago when the IPL was born. So next year we will have 10 teams instead of eight and 94 matches instead of 60. Happy?

I'm not so sure. Let us not get deluded by the market's response. It's a no-brainer for businesses to hitch a ride on the IPL gravy train in a cricket-crazy country.

Even his critics concede Mr Modi was clever enough to cash in on an idea which was waiting to be exploited. He has seemingly created enough revenue streams to impress market experts and help teams make money.

Mr Modi has sold theatrical rights to cinema halls and bars to screen matches (not working yet, going by the empty halls) and internet rights to You Tube (slow broadband speeds mean that the reported two-year $7m deal is yet to become a winner in India). He is selling after-match parties (but it is unclear how long the interest will last). A TV channel has paid up to $22m for IPL-branded TV shows - a sharp idea. Then there is advertising in stadiums, mobile phone rights and ground sponsorship. Teams get a share of all these revenues. They also mop up their own revenue by picking up local sponsors, selling team merchandise and gate receipts.

No wonder IPL cheerleaders are calling it the "billion dollar baby". Rahul Bhattacharya, India's finest cricket writer, says India will accept the IPL with all this and more because it is not a sporting society. "Its [society's] relationship with sport is not of participant but consumer. It holds nothing sacred. The IPL knows that it competes not against sport but general entertainment," he says.

But, amid this hype, there is absolutely no way to verify the spin about the IPL's fortunes. Lalit Modi says it is India's biggest global brand and valued at over $4bn. I have asked many friends in the valuations business and they say they have no clue about the basis of this figure. Mr Modi also insists that the tournament will generate up to $140m, translating into earnings of $18m for each team.Cheerleaders at an IPL cricket game

Yet, three editions later, one hears that most teams are not making money. This is despite the fact that the team owners are paying IPL for their teams in 10 yearly instalments. Most agree that to become truly profitable, the teams have to build a loyal city-based fan base. The tournament's move to South Africa last year because of security concerns at home was a big blow to this ambition. Building a loyal fan base is going to be tough in a country which has systematically neglected its domestic tournaments. These offer the best opportunity to build up captive fan bases. At a recent match between Delhi and Mumbai, which featured the redoubtable Sachin Tendulkar, I saw spectators waving India flags - instead of local team flags - in the stands.

All this makes me uneasy about the commerce of the IPL. Is it an oversold event, a bubble that is going to burst one day? What if the phenomenal projections for its future - on the basis of which sponsorships are sold - fall short? And as writer Tanya Aldred wonders: "The IPL is a huge sticky and sickly and delicious pudding that gives an instant sugar hit, and is a guilty pleasure. But the question is, will greed overtake us and will we stop in time?" It's a good question.

Comments

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  • 1. At 12:40pm on 30 Mar 2010, U14366952 wrote:

    JOKE OF THE DAY:’ I SHOULD NOT WAIVE THE FLAG OF INDIA IF I SUPPORT CHENNAI SUPERKINGS?’

    “At a recent match between Delhi and Mumbai.., I saw spectators waving India flags -instead of local team flags- in the stands”

    So Mr Biswas,Because I support Chennai Superkings.Should I wear a South Indian attire of veshti(dhoti) ,then besmear myself with holi ashes(vibhuti) and have a Chennai superkings T-Shirt and a flag to enter the Stadium?

    PERTINANCY OF THE IPL JUGGERNAUT:

    As a GAME:

    The IPL has been a hilarious entertainer.T-20 cricket has given breather from Bland Saas Bahu soaps, Sensational news channels. It has further invigorated a nation that loves this sport. It has opened the doors for youngsters’ to showcase their prodigy. It is strewed Bollywood into the theme, brought together the people of these cities and the nation in an sizzler event with intertwined energy of love for the states and the country. I would love to see a team from Kashmir and kudos to the new teams of Pune and Kochi.

    As an Enterprise:

    It has proven that Indian Enterprise has the spunk to start such a colossal venture and succeed, shown resilience by shifting to South Africa after the Mumbai attacks and being a success in a foreign country. I can recollect the stadiums filled with African and Indian spectators last year.

    You have raised some good questions on the commerce of the IPL.It is a private enterprise and the profit or a loss of the teams may not be disclosed and rightfully so to avoid an unnecessary hoopla in the media.

    As a businessman,Mr Lalit Modi has displayed very good operational capability.He has fastidiously taken care of minute details, not embroiled himself in the manufactured controversy over the Paksitani players, refused to bow down at security fears. He has openly admitted mistakes when he concurred that this year’s inauguration ceremony could have been better.

    If the IPL fails, the people of India may be disappointed, but will take it in stride and something new will find its place and evolve in this fast pace country. Or if it succeeds this year, it would be rebuke to cynics and armchair fore-tellers who live in doubt and gloom.WE WILL BRING FORTH IDEAS LIKE THE IPL IN FUTURE which entertain us,unify us and the world reckons to it.

    India confronts terrorist threats,environmental,socio-economic problems,but it will not stop marching ahead. We are no oblivious to the challenges we confront, but shying away from them is not silver bullet or the panacea.Our ingrained nationalism to stand up and walk when knocked down will evidently be the ticket to making this country as prosperous as it was, and hub for anthropocentric world.

    Your articles often seem to carry deep rooted skepticism and pessimism. JUST ONCE ,AND JUST ONCE, I will wait to see an article that understands we the ‘PEOPLE OF INDIA’ and reflects our vibrancy, our volition, and our spirit.

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  • 2. At 1:28pm on 30 Mar 2010, ghostofsichuan wrote:

    The false global economy created by the banks was fired with excess money in many areas. The hangover from these events are still being seen and those who determined that the gold rush would be never ending are now having to confront the realities of what has happened. Greed knows no bounds and there is always someone tryng to attract the money of others. Looking around the world at the many homes that are foreclosed, empty commerical ventures, vacation homes and luxury items being advertised for less than the purchase price we can clearly see the fallout of the boom. The rich always survive but the impact on the lower ends of society will be felt for many years to come in children that could no longer afford an education and families in despair. Fascination with the rich detracts from discussions about the poor. The world has moved toward class structured societies of the past. Human progress is never in a straight line.

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  • 3. At 3:21pm on 30 Mar 2010, CricketBuster wrote:

    >> Internet rights to You Tube (slow broadband speeds mean that the two-year $7m deal is yet to become a winner in India).

    This statement really sums up Soutik's ignorance about IPL. youtube deal was hardly meant for India, in fact it is meant for people who cant watch it on TV in different parts of world.

    Carry on Southik .... you may finally make a point someday though

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  • 4. At 3:58pm on 30 Mar 2010, elke wrote:

    "Yet, three editions later, one hears that most teams are not making money. This is despite the fact that the team owners are paying IPL for their teams in 10 yearly instalments..."

    Southik, I am amazed how anyone can be writing such nonsense on BBC.
    Whatever maybe your views on IPL as a cricketing event, or your prophesies, write as much as you want...you are entitled to it. But please don't expose yourself to ridicule by reproducing here what you heard someone comment last night. There has been a queue of business houses wanting to en-cash in on this cash rich extravaganza. Just a few days ago huge investments were made in two new teams.

    Your article is absolutely ridiculous and the only highlight is what you quote from Rahul's or Tanya's blog.

    In future avoid commenting on facts, just quote other writers, and make prophesies ...at least you won't risk being contradicted. Also we are well aware of your talents at projections ...still remember how all the experts at BBC went gaga over one Sir Stanford and the lofty predictions that were made ...and so you too are entitled make any prediction you want.

    I also wonder what's wrong with BBC?! The only coverage of IPL is all that they can dig up as negative ...This despite the fact that IPL is getting a very high viewership in UK (on ITV) is the most commented sport on 606

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  • 5. At 4:00pm on 30 Mar 2010, BakedBeans wrote:

    NM

    Never take author seriously he is writing for English readers...

    Google IPL deal was never published offically but I read in some newspapers it is about 19mn usd not as 9mn$ as reported by the author.


    where is the your source for google ipl deal ..?




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  • 6. At 4:06pm on 30 Mar 2010, BakedBeans wrote:

    1. British media are inherently jealous of any success whatsoever. I often joke, ‘that shouldn’t be allowed‘, when I hear someone has made a pile of cash. I am being ironic, but it’s fascinating to watch the number of people who actually nod along with the statement.

    2. Know your place. British media need to ‘place’ you in society. They need to understand where precisely you are in the hierarchy. And if you’re seeking to change that hierarchy — by doing something entrepreneurial, well, that’s your fault. See point 1.

    I read this comment somewhere .very true.

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  • 7. At 5:03pm on 30 Mar 2010, Yash Patel wrote:

    The ONLY problem I have with the IPL is the insane amount of advertising going on every minute of the match. Apart from that, I think the IPL is a wonderful enterprise, although it could do with some more transparency. And Southik, I can understand what point you wanted to put across when you said you saw Indian flags being waved - but as my friend above pointed it out, it turned out to be the joke of the day for me too. Do not forget that this is IPL 3. There are many more to come.

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  • 8. At 10:08pm on 30 Mar 2010, Collins wrote:

    Wow !! what a load of Rubbish stuff in this article .

    As per Soutik Biswas ,English premier league must be watched only in England ,

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  • 9. At 04:44am on 31 Mar 2010, Ananya78 wrote:

    There are a lot of very interesting and valid points that this post touches on. Many of the team owners have openly spoken about the need to build up loyal fan bases in order to become profitable. That, as Soutik rightly, says is facing a lot of obstacles - the IPL had to move to South Africa last year, and this year, at least two teams - Hyderabad and Rajasthan- are playing away from their home grounds due to turmoil at home - the Telangana movement in Hyderabad and local politics over the control of the cricket association in Rajasthan. Also, ironically, the team which has built up some fan base loyalty, Kolkata, is faring very badly for the third season in a row, and thus some of the local suppor/enthusiasm will evaporate.

    Re Collin's idiotic comment on whether the English premier league must be watched only in England, I can only say that the English premier league built up a huge fan base in England and then became popular abroad. Today it has global appeal, but what would it be without fanbase support at home?

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  • 10. At 07:41am on 31 Mar 2010, RaniV wrote:

    Why is cricket so popular anyway? Nevertheless IPL is overexposed.
    It is preposterous that a country with so many problems is spending its time watching cricket and Bollywood. One solution to the population problem would be to intice people to cricket stadia, and let them watch cricket permanently, until their reincarnation, whilst a level of anarchy continues in the streets. More escapeism....

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  • 11. At 10:01am on 31 Mar 2010, hackerjack wrote:

    This despite the fact that IPL is getting a very high viewership in UK (on ITV) is the most commented sport on 606
    ------------------
    Open mouth, insert both feet.

    To even consider the IPL particularly well commented on 606 is ridiculous. Most football league clubs and plenty of minority sports get far more comment than the IPL does.

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  • 12. At 10:16am on 31 Mar 2010, Prithvi wrote:

    I think the whole concept of brand valuation is faff to begin with and this whole IPL charade (make no mistake, I watch it just as closely as the next average joe) just reaffirms it.

    Where did Modi get his figure of $18m/team from? I cannot for the life of me fathom what revenue models these numbers are based on. For one thing, is BCCI seriously sharing TV revenue with these franchises? I doubt it, and without this source it is extremely hard to see where the money's coming from. There is, to start with no transparency whatsoever regarding financial matters.

    Going further, this phenomenon is relatively new and I am quite skeptical about the extent to which contributions from revenue earning activities like merchandising, in stadia advertising, local sponsorships etc account for a sound ROI. At such a nascent stage numbers like $18M a team sound unrealistic, given how this is an exceedingly short window of to be earning such big sums in.

    Lastly, what is the basis for such unrealistic valuations of these teams? All we see are potential revenue generating opportunities which need to developed further to even expect breaking even anytime soon. I am reminded of the dotcom bubble that burst at the start of this decade, a lot of hype and very little substance.

    Of course, I read an article in Cricinfo the other day where the author made a valid point regarding the sale of stakes in these teams. That could possibly generate greater revenue while diluting the stake of the owners, but Modi makes no mention of it. The astute marketer that he is, he instead manages to sell the event as less of a sport and more of generic entertainment, and India's newly rich (as well as the image conscious old guard) cannot help but fall more to the ritz than arguments of financially sound investment. It's gotten to the extent that the wealthy were willing splurge ludicrous amounts for a franchisee like Kochi (valued more or less at par with Mumbai). I have nothing against Kochi, but who in the right minds would valuate it at par with Mumbai? What is the rational behind this valuation?

    To everybody who's gone of their rocker regarding the author, get a grip on yourselves, this is not a critique of IPL the tournament, this is a critique of IPL the business venture and the flimsy claims it is based on.

    It might get to that stage (as claimed by Modi) one day (another 4 years methinks) when the IPL biz model will mature and reach newer audiences (both national and international), but as of now this is in my opinion a load of hot air.

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  • 13. At 11:11am on 31 Mar 2010, CricketBuster wrote:

    RaniV you make no sense. Why should people stop watching cricket just because there are issues which every country has?

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  • 14. At 11:22am on 31 Mar 2010, Gav wrote:

    There is no such thing as ‘valuation businesse’ – valuation is just an exercise you can carry out on an entity generating cash. It is simply the discounted value of all cash flows generated by that entity over a period – so for IPL it will be, say over 12 years. Say 18m per team owner means180m for 10 teams over - 12 years is just over £2bn – discount that to today’s money!). Then include the cut for BCCI, players and those stadium take (may be others) I can see how £4bn is calculated. Some of the assumptions may be toppy but that happens in pretty much every valuation exercise. And yes I do that on daily basis. In my opinion – you quoting ‘some friends in valuation business who don’t have a clue’ is just a ridiculous statement. Surprised bbc published it -

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  • 15. At 11:34am on 31 Mar 2010, ravi metta wrote:

    Soutik Biswas showing his jelousy to impress British Media. Dont worry Soutik Biswas if India develops you will stll have your Job, May not be with indian media might be with same Jelous BBC.

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  • 16. At 11:58am on 31 Mar 2010, Gav wrote:

    Also Mr Biswas

    From a valuation perspective – the fact a corporate made a bid of over 350m recently is the biggest proof of market value. Having been in the market for so long, I can tell you this wouldn’t be based on some mickey mouse calculations. It is backed by proper business plan and cash inflow streams done by business analysts and most probably externally audited (and I’m confident these guys know more than you Biswas – because they put the money where….) . If you had any idea what goes behind such bids your article would be inherently different. The 4bn valuation Mr Modi is referring to was done by an external independent organisation who also valued our premier league. What actually happens in future – is everyone’s guess and a valuation exercise would discount the associated risks.

    If I was Mr Modi and had been asked to set up something like IPL – I would be proud of myself having achieved what he has in 3 years. I see stadiums packed with families accompanied with kids – who will grow up and become loyal fans. In my opinion it is a matter of when not if !

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  • 17. At 1:05pm on 31 Mar 2010, Prithvi wrote:

    Gav

    I am interested in how Kochi is pegged at par with the Mumbai franchise. Can you explain the basis for this? In terms of valuation anyway.

    Also, the following statement

    "the fact a corporate made a bid of over 350m recently is the biggest proof of market value." is a bit misleading. Market valuation as we all know from Satyam is not truly a financial yardstick to measure a feasible revenue generation opportunity.

    Many factors can contribute to this, the foremost among them being supply and demand.

    This can skew the economics and distort the real worth of the asset..

    More on this later. I await your replies on the matter.

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  • 18. At 1:42pm on 31 Mar 2010, Pritam wrote:

    Another pointless, ill-informed blog-post with gaping factual inaccuracies. Its a pity that BBC reporting now sees remarks by "friends in the valuation business" as credible sources of business intelligence. Refer to Gav's comment above to see how basic valuation is done - its a pity your friends didnt teach you this. The owners of teams include a number of businesspersons who have been extremely successful on the global business scene - maybe Soutik Biswas has a whole new paradigm that the rest of us should hear? It will probably pull the world out of its economic slump - all hail Soutik the business messiah!

    A stock price is nothing but the "present value of estimated future earnings/cash flows" - so by Mr. Biswas' logic, we should all avoid buying stocks! The IPL is a private enterprise, and like all private enterprises that aren't listed on stock exchanges, there is no need for them to disclose finances to anyone, let alone ill-informed bloggers like Soutik Biswas.

    Also, broadband speeds in India are on average between 2-4 mbps (basic residential service provided by Bharti and Tata Indicom - the 2 largest ISPs), the BBC itself reports that the UK expects to have 2 Mbps speeds by 2012! So what yardstick do you use to measure "slow broadband speeds"? Here's the article: http://news.bbc.co.uk/2/hi/technology/8171074.stm

    Also, the Youtube deal was meant for overseas audiences in countries where the IPL is available only on Pay TV platforms - domestic audiences in India watch it on free-to-air or basic cable packages. This is standard sports-marketing practice where you ensure your core audiences are covered for a reasonable price and sell telecast rights and other royalties to fringe audiences (like youtube viewers in the US for example) to enhance broadcast revenues. Again - ask your BBC counterparts for some information. I think they do run television channels covering sport!

    Its a pity the BBC still makes this joker their India face!!!!

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  • 19. At 3:23pm on 31 Mar 2010, Gav wrote:

    Prithvi

    You can compare Kochi with pune, (sold at same time), not with Mumbai. The fact Kochi and pune went for as high as Mumbai shows market’s increased appetite for IPL assets. It also means if Mumbai went for auction now, it would go for much higher price (twice as high?) – hence the fact IPL was valued at 4bn up from 2b.

    Market value is the price that someone is prepared to pay for an asset in today’s market. Valuation looks at future expected cash flows – in Satyam’s case market valued the shares based on current/future expectations shown by Satyam – which turned out to be lies and hence the legal proceedings and price crash. Markets may not be perfect but they are very close to it. and yes, demand and supply does affect market price. It is fascinating to see – IPL is only 3 year old. And the fact you can probably sell Mumbai and Pune franchise today and buy the bottom half of the premier league(Portsmouth up for grabs for 38mil?).

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  • 20. At 3:24pm on 31 Mar 2010, Prithvi wrote:

    "Also, broadband speeds in India are on average between 2-4 mbps (basic residential service provided by Bharti and Tata Indicom - the 2 largest ISPs), the BBC itself reports that the UK expects to have 2 Mbps speeds by 2012!"

    Errm, not really. Most ISPs in India claim to provide broadband, but the truth is that speeds average around 256 to 512 kbps for most entry level connections.

    I know, I've used most ISPs and the download speeds are laughable compared to the claims made by these ISPs. In there was huge hue and cry recently regarding complaints of false advertising. Of course if you are willing to shell out big bucks (anywhere between 4 and 5K a month) along with caps on your download, you can get the promised 2 Mbps speeds.

    This is unrelated to this blog, but I have to say it-

    I know we need to be proud about our country's achievements and there's plenty of real things to crow about, why do we need to invent things which are untrue? What is the need for chest thumping jingoism? Can't we be critical of our own country's shortcomings? Why do we bristle with so much insecurity that the first words of anything remotely critical not only elicits a vitriolic response, it also personally attacks the person making these comments?

    If you think an idea is foolish, then attack the idea not the person. Anonymity on the internet is not an excuse to forget your manners.

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  • 21. At 4:11pm on 31 Mar 2010, RaniV wrote:

    Dear NM
    You may not aware that there is only a finite amount of time and resources available, for people on earth. Time and resources are prioritised based on a value system.
    Of course entertainment is important.So is health and hygiene,but they probably do not get the same level of priority, or media exposure. Those making claims about India's economic power have not looked beyond NCR like regions.

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  • 22. At 4:48pm on 31 Mar 2010, ravisg28 wrote:

    "Lalit Modi says it is India's biggest global brand and valued at over $4bn. I have asked many friends in the valuations business and they say they have no clue about the basis of this figure"

    I showed this blog to a couple of my journalist friends and they say that this is a poor piece which does not make any sense whatsoever.

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  • 23. At 4:58pm on 31 Mar 2010, intruder2010 wrote:

    We got someone in the media who at least criticises on few things happening in India, whether its IPL or common wealth games, I usually read all these analysis, criticism and then make up my own mind. I personally don’t think BBC should report on all positive things or goods things happening in India, that’s what our Indian media does anyway. Most regional and some national Medias particularly in India always support the ruling party (both central and state), so that they always get government advertisement, also need to mention the regional new channels started by the political parties. Will I be able hear any kind of criticism from these news channels, criticising their own ruling party, not a chance.

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  • 24. At 5:26pm on 31 Mar 2010, champost wrote:

    Hey, I guess many of us tend to forget Soutik's initial premise, "...This blog is MY take on life and times in the world’s largest democracy."

    By the way, IPL is no Kalki avatar in disguise nor a doomed enterprise. Let's wait and watch with some room for healthy criticism and in the meanwhile I guess we can cut out the crap with the unnecessary sarcasm towards Soutik or the BBC...

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  • 25. At 00:00am on 01 Apr 2010, Sameer Khanwalker wrote:

    Soutik has forgotten what it is to be an Indian since he seems to have lived in the UK for a while. His comments are biased to the point of arrogance. The Brown Sahib still lives on in the guise of people like Soutik.

    Instead of appreciating what India is doing, the Brown Sahib is deriding the land of his origins.

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  • 26. At 08:48am on 01 Apr 2010, BakedBeans wrote:

    RaniV

    Could sponsor your collection tin ...why are you wasting your finite time in internet ? Do what you say :)

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  • 27. At 09:04am on 01 Apr 2010, BakedBeans wrote:

    >>raniv .

    Why do you work for NHS when you could have helped some tribal hills healthcare system etc ? More escapeism ?

    OK I assume you would only help in internet forums or advice is for others.

    I hope you atleast help srilankan refugees in UK....

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  • 28. At 00:03am on 02 Apr 2010, m4music wrote:

    You are just jealous because such a huge sports platform can never be realised for Cricket in the UK.... You are behaving much like an average teenage coconut in this country, jealous that India is finally making money and that Indians can afford to sign the likes of Peitersen, Collingwood, Bopara, etc as 12th men.... grow up

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  • 29. At 5:32pm on 02 Apr 2010, Naveen KB wrote:

    I dont want to judge biswas's view. I just have some facts regarding IPL(Channel) on youtube. Hope ppl can now have some balance view now.

    #1 - Most Subscribed (All Time) - India
    #1 - Most Subscribed (All Time) - Partners - India
    #1 - Most Viewed (Today) - India
    #1 - Most Subscribed (All Time) - India
    #1 - Most Subscribed (All Time) - Partners - India
    #1 - Most Viewed (Today) - India
    #1 - Most Viewed (Today) - Partners - India
    #13 - Most Viewed (Today)- worldwide
    #8 - Most Viewed (Today) - Partners
    #1 - Most Viewed (This Week) - India
    #1 - Most Viewed (This Week) - Partners - India
    #5 - Most Viewed (This Week) - worldwide
    #4 - Most Viewed (This Week) - Partners
    #1 - Most Viewed (This Month) - India
    #1 - Most Viewed (This Month) - Partners - India
    #15 - Most Viewed (This Month) - worldwide
    #12 - Most Viewed (This Month) - Partners
    #28 - Most Viewed (All Time) - India
    #15 - Most Viewed (All Time) - Partners - India
    (more) (less)

    I feel that these stats are very impressive.

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  • 30. At 08:47am on 03 Apr 2010, William E wrote:

    As the IPL has been on ITV I have watched some of the games and after a while they seem to get even less interesting as spectacles. There is interest in observing how English Qualified players fare but too many of the games are one-sided and decided half way through the second innings. There also seems to be a strange mixture of ex-Test stars considered too old by their countries to play International T20 but able to command huge salaries and unknowns, with cutrrent Internationals. Perhaps there is a need for a seperate Golden Oldies form of the IPL.

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  • 31. At 4:36pm on 03 Apr 2010, achy wrote:

    Soutik as a commentator, you have right to opine but no right to tread and trample on facts. That demeans this website as well as your own credibility.

    Overall this article of yours is a sure contender for worst piece of fabricated yarn. Just to burst your bluff, let me rip two examples of fabrication :

    You wrote, "But, amid this hype, there is absolutely no way to verify the spin about the IPL's fortunes. Lalit Modi says it is India's biggest global brand and valued at over $4bn. I have asked many friends in the valuations business and they say they have no clue about the basis of this figure. Mr Modi also insists that the tournament will generate up to $140m, translating into earnings of $18m for each team."

    There are many ways of valuing an enterprise e.g. Comparative valuation or Discounted Cash flow method as well as many others. But two mentioned are the best. In comparative valuation exercise you take the price commanded by a competing franchise and extrapolate to come at valuation of franchise in question. Kochi and Pune provide an excellent pointers of what is the valuation of other franchises and in turn the total valuation of IPL. Second method will be to use discounted cash flow method and here also you have very good pointers to forcast future cash flow of IPL. Take the TV deal with Sony, Youtube , sponsorship rights and add the gate receipts, local sponsorship deals as well as educated guess on other revenue sources and you can come to reasonably good estimate of valuation. In both cases, IPL's valuation will come reasonably close to $4 billion mark.

    Now tell me, what it says of your many good friends , who are in valuation exercise, whose opinion you sought. Or Did you seek any opinion ?

    Another place you wrote : "All this makes me uneasy about the commerce of the IPL. Is it an oversold event, a bubble that is going to burst one day? What if the phenomenal projections for its future - on the basis of which sponsorships are sold - fall short?".

    Is it an oversold event ? Oversold to who ? The stakeholders in IPL are Owners, players and viewers. Owners are shelling out $370 million for a new franchise and none of the existing franchises are making any noise of making losses. Players are playing with their best of abilities and getting paid handsomely for that. What about viewers? TV ratings , You tube figures are all telling that viewers are lapping it up everywhere from India to UK to USA. So exactly what your point is when you ask whether it is oversold ? What is your motive to ask this silly question.

    Yes, there is many thing to carp about IPL e.g. Excessive commercilization, fawning commentators on tv and some time uneven quality of cricket but valuation and sustainability is not.

    Next time, if you want to write, please do a little more research. That is minimum asked. Is'nt it.

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  • 32. At 8:21pm on 03 Apr 2010, GreatRobin wrote:

    God, the audacity of Indians thinking they can run a successful league like the NFL, NBA and the English Premiership. They must be joking!

    This will flop, in no time....................... And we can get back to our Test Cricket. The proper game.

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  • 33. At 11:41pm on 03 Apr 2010, Mahesh wrote:

    Pathetic article from Soutik. I am not a great fan of the IPL but his comments on the valuation of the business are moronic to say the least.

    If you are writing for the BBC, I would expect a certain level of integrity in the research rather than balderdash about asking some friends to put your point of view across. A rookie analyst will have valuated the IPL and given the figures. Also to suggest that all the sponsors are being hoodwinked by a single man to the tune of millions is akin to questioning the intelligence and due diligence of these organisations, something Soutik or his friends are clearly not in a position (I mean capability) to do.

    Did you think why in a recession where everybody is really drawing in the purse strings, the big guns are pouring in money on the IPL? Think, think before you put pen to paper as I really value articles I read on the BBC and please dampen it.

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  • 34. At 07:21am on 04 Apr 2010, Indian youth wrote:

    Mr Biswas
    A BBC reporter What else would i expect.A foolish anti Indian view.Most of the western journalists cant tolerate the Indian success story in economic growth nor the Cricket growth.If this was done in England or in Australia they will be putting them in a pedestal.India is the fourth largest economy in the world(PPP) and it is only natural that India has one of the richest sports league in the world.Cricket is the only sport which commands a nation wide interest.How does it have 4 billion $ valuation Simple idiot Pune cost 370 million dollars 10 Teams-Do the math around 4 billion dollars.By the way you are questioning the business acumen of the likes of Ambani,Sahara India and DLF Mr Biswas beg your pardon my vegetable vendor has better business acumen than you.IPL makes around 1.5 billion dollars in ad revenues alone per year.Check the TRPs it consistently has good ratings for all matches with a maximum difference of 14%.This is entertainment and sports combined at its best.All the IPL teams have already got a profit except for Kings XI Punjab in the third year itself.

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  • 35. At 3:02pm on 05 Apr 2010, samosafan wrote:

    Mr Biswas

    Rather than posting a fact based blog, you seem to have let personal or atleast perceived employers biases completely overrule any sense of judgement.
    Would you consider the MCC/ ECB 's courting of Stanford and the very classy chest bump on Lords and the very proper ECB hierarchy to be upholding the traditions of cricket. Why do you not give creidt where it is due. Yes the ads are overdone, yes some of the things you see are overdone. Criticize those but stop acting like a textbook case of sour grapes on behalf of the ECB. Just because the ECB could not make develop a good business idea, you do not have to write narrow minded comments.

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  • 36. At 2:40pm on 06 Apr 2010, Peninsulan wrote:

    Soutik, You're sick.

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  • 37. At 5:23pm on 06 Apr 2010, kumar wrote:

    I am a regular BBC news reader. While I mostly like the news coverage in other areas I feel the quality of cricket coverage is mostly poor. Especially, I was totally disappointed with the fact that there is no IPL coverage. After searching on the main news and hitting on cricket link, this article is the only piece of information I could find. An article with very few facts disappointed me.
    Due to lack of coverage I was forced to look at other news sites. I use to hit BBC website first in the morning, now I am doing so late in the afternoon. Over the period the time I might just look at other news web sites and probably would ignore BBC [Inadvertently]. Few of my friends from south Asian origin are going through the same. Dunno, how many million users would be facing the same issue and would take that route. This would be such a shame considering they are a great news channel.

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  • 38. At 06:28am on 07 Apr 2010, Nekonat wrote:

    A common thread with all the discussions seems to be people picking on Soutik for being "anti-Indian", whatever that means. Surely the purpose of the blog is to encourage healthy debate. I haven't seen anything so far that puts India or Indians down, or is negative about them. It's all a fairly realistic look at the way things work in India.

    So can we please put an end to the chest-thumping, jingoistic BS posts taking cheap shots at Soutik?

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  • 39. At 08:55am on 07 Apr 2010, U14366952 wrote:

    GreatRobin : "God, the audacity of Indians thinking they can run a successful league like the NFL, NBA and the English Premiership. They must be joking!


    If you think it is audacious when our love for cricket,our enterprise to start a venture like called IPL as Indians,and our resolve to chastise an article from a British news website that seems to belittle Indian achievements subliminally, then so be it. I would love to see the faces of people with views like your own,when this surpasses the popularity of NFL,NBA and the so called English premier league.

    and by the way when you say

    "This will flop, in no time....................... And we can get back to our Test Cricket. The proper game.""

    I can draw satire from the saying " the sun never sets in the British empire"

    I respect the present democratically elected British government,but to the colonial empire:-the sun has set and it has gone missing into oblivion for that evil empire that looted the wealth of the people of its colonies and because of which Africa is hungry,opium trade is flourishing,Asia is tackling poverty,including India"

    Rise of a Nation and fall of another is manifest.Its India's time for the brighter side of history hnow


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  • 40. At 6:11pm on 07 Apr 2010, arsenalinsomnia wrote:

    I am sorry but mr soutik.How can you make such a irresponsible and false statement.Do you really think that all these franchises which are investing 360 million dollars can be hoodwinked ? What are you even thinking? Why can you not be proud of the IPL just like the rest of us Indians? Wait, I am really sorry. Are you NRI ?

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  • 41. At 11:08am on 08 Apr 2010, jet225 wrote:

    Does any one really care if the IPL is all hype or substance. Just think of the IPL as this big economic stimulus, funded not by the Indian taxpayer, but by billionaire businessmen, bollywood stars and mega corporations. Just think about the number of airline tickets and the hotel rooms booked, just to ferry the different teams around as they crisscross India. This is just what the doctor ordered for the beleaguered travel and hospitality industry. And, what about the all the new jobs created as a result of the IPL. And please spare a thought for the cheerleaders. I'm sure they too have a mortgage to repay. As long as tax-payer money is not involved, i am happy to jump onto the IPL bandwagon.

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  • 42. At 3:21pm on 09 Apr 2010, kumar wrote:

    Mr. Netonak . I think you read only a few of the comments. While I agree that few readers have blamed Soutik for being anti-indian etc.
    The real issue of the article is lack of accuracy and not able to answers some of the better facts and numbers pointed out by other readers.

    I am sure if writer would have written some recent problems related to India, most people would have not only agreed to it but would also have added their own points of view to support it .

    Going back to my comment what frustates me is . How come the entire team of BBC who seems to ignore IPL ( and in turn discourage readers like me to visit this site) , suddenly writes such opinions to degrade the tournament.



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  • 43. At 11:53pm on 12 Apr 2010, Shubhendu Mohanty wrote:

    It is not a surprise that Soutik Biswas writes something ridiculing like this to woo English readers. It is not a hidden fact that IPL has been the envy of ECB and Cricket Australia probably from very inception it. With every successful game that IPL has produced, organizations and people envious with it are trying that much harder to find fault with it. It is so evident from Soutik's article that he has tried to scratch every inch(hearsay, quoting this-quoting that, predictions with no research, that point on broadband use,...)to find what could go wrong with IPL. He himself doesn't know if there is anything wrong with IPL or if they would ever go wrong, but it is as if he's praying that things should go wrong so that he could impress those who dislike IPL. I am sure he must have got a A+ from BBC on this article.
    I am not saying by any chance that IPL is perfect and nothing would ever go wrong, my only point is don't try so hard and dont wish for it to go wrong. I mean, it is hilarious that the whole purpose of this article on BBC online is to ridicule IPL based on heresy. And Southik, you can do better than just being a puppet writer.

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  • 44. At 2:04pm on 13 Apr 2010, Gunns wrote:

    I had been a avid reader of the News in BBC and one thing I can confirm...
    Soutik Biswas is not the right person to throw light on India. Throughout his conversations or various adventures, he tries to portray India as a colonial erstwhile British India who are incapable and unable to handle their economy, population and a lot of internal problems. But frankly speaking, India being a Europe styled continental country (What I mean here is the size and the vast differences between every state in India)has managed it lot better than any many other countries did... And coming to the IPL... Yes, it is a commercial entertainment spectacle unlike English Premier League and La Liga but it needs time to grow... Its just the 2nd time the tournament is taking place in India... Mark my words... 10 years from now IPL will be one the biggest brands in world sports and this will bring a sure rise in revenue in the tourism and a lot of other changes... And I still cant understand the real problem faced by Soutik... Cant a person hold an Indian flag if two IPL teams are playing? :)
    What a crazy guy!

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  • 45. At 8:41pm on 14 Apr 2010, kumar wrote:

    I think you guys have understood Soutik wrong. He has made a smart investment to Learn about IPL through his article. Look at so many better comments by others. I am sure by now he has aquired tons of "Correct understanding & understanding " and hopefully would write a better article on IPL next time. :)

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  • 46. At 10:40am on 15 Apr 2010, Ganesh wrote:

    Mr Biswas , Don’t you know any Positive things about India? What blind comparisons have you made in most of your article? I really appreciate your loyalty to BBC. Just for the sake of attracting English readers you have highlighted most negative things. Do you have any personal opinion about IPL? We all have read other articles which you have quoted above, So you don’t have to compile them and publish in your blog. Try to be positive, more than that be genuine of what you are saying.

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  • 47. At 8:13pm on 17 Apr 2010, Kumar wrote:

    Its hard to understand why theres such a long long line of people writing such comments about IPL. The writer of this particular piece is not only has very little understanding of the financial aspects of IPL but he is also proud enough to write about and quite diappointing from BBC to have posted this.
    IPL is a festival of cricket which not only Indians but people from all over enjoy watching. Its a tournment which is making players happy, people happy, businessman happy and nobodys losing anything. People like to watch cricket and players (current/present/past)enjoy playing cricket and of course make a lot of money which they deserve. Its also a giant step in terms of globalization of the game. I live the US and i see people over here are getting into cricket mostly because of the T20 and IPL.
    I would agree that theres a lot of room for improvement, but looks like its going to stay here for a long time to come. In these troubled times of global economy if somebodys spending $377 million US (compare this base value with the NBA teams the most valued franchise being NY Nicks at $500+ million US, and most other teams at around 300 million) to buy a team then there must be a some potential, because these businessman are not idiots to throw away money in the drain. What the writer hasnt understood is that the teams that have been bought are properties themselves and invesments. The owners are not looking to make a few dollars in profit every year in prizemoney or endorsements. You dont buy a piece of real estate and expect the piece of land to make some profit in 3 years!!! The idea is that over the years the teams will be valued at a lot more than what they were bought for and thats what the owners of the franchises are aiming for. In the near future you might see that each of these teams will value more than $500 million easily making IPL the biggest sporting league in the world. So far it has surpassed everybodys expectations hasnt it? The brand IPL is currently valued at more than $4 billion US which is twice the value from last year. Compare this with English Premier league value at $12 billion and EPL has been here for more than 120 years under different names.

    The writer talks about an Indian flag waved in a Delhi Vs Mumbhai game but fails to mention how the International players of most of the teams have become hugely popular among the fans in India. Ross Taylor has a 100 times the number of fans he has in NZL!!! A few years back Andrew Symonds had been jeered by the crowd in some of these grounds, but now you can see the crowd cheering for him. Players who were baying for eachothers blood are seen hifing and encouraging each other. All these players whether Australian, Southafrican, Srilankan or any other coutry enjoy playing in front of crowds like this and being celebrated. And why not? IPL is a celebration of cricket, players, spectators and also a thriving business. Its a great way of globalizing the game and other boards should take a leaf out of this event and improve the game.

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  • 48. At 11:57pm on 17 Apr 2010, sankalp wrote:

    This comment has been referred for further consideration. Explain

  • 49. At 07:26am on 18 Apr 2010, arya wrote:

    BBC allows such whiny comments as Biswas' because it suits their covert envy of the IPL. Example: It does not even report this world class event despite it being studded with all the international stars and local heroes. Meanwhile it reports on all European local club activities and innocuous county cricket...
    Shame on jealous BBC - please wake up out of your jaded colonialist mentality.

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  • 50. At 11:55pm on 21 Apr 2010, sankalp wrote:

    48. At 11:57pm on 17 Apr 2010, you wrote:
    This comment has been referred to the moderators. Explain.


    by removing post bbc proving its pale shadow of itself now and this may be beginning of end for bbc.

    The freedom of expression and criticism is not part of bbc culture anymore.

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  • 51. At 2:37pm on 23 Apr 2010, P J Walton wrote:

    Indians are utterly unable to separate sport and nationalism as is clearly evident from these posts. My hope was that the Indian public could be weaned off of this type of nationalism (which borders on ethno-centrism sometimes)and simply enjoy quality fun cricket for the sake of cricket. Cheering for the Indian cricket team has become a form of 'counterfeit nationalism', a kind of 'easy' nationalism that doesn't cost the individual personally. The odd Indian flag is OK, but if the whole IPL is only about India and nothing else it will only last a few more seasons I'm afraid.

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