IPL’s Casino Culture: A bubble waiting to burst

Tears were shed across the country last week, as a nation in mourning decried the actions of a military junta ruthlessly attempting to exterminate a renowned symbol of hope and joy. Tributes of support have come from far and wide, with many decrying the incident as a “national tragedy.”

Of course, the Deccan Chargers Holdings Ltd were the architects of their own undoing, and ultimately only have themselves to blame for carelessly veering towards the edge of the steepest of cliffs, before gleefully being given the final push by the BCCI. It seems inevitable that Deccan Chargers are the tip of the iceberg in terms of financial mismanagement, and internal discussions at the IPL now revolve around how to give other franchises a crutch to lean on until their ten-year leases expire.

Deccan Chargers epitomize the ‘casino culture’ that has been a symptom of the IPL ever since its inception. In the weeks to come, the question will be asked: “How were an ailing print company allowed to purchase the rights to a $107m team that only existed on paper?”

There will be manifold answers, including a Walter Mitty-esque desire to acquire a status symbol; Lalit Modi’s powers as a snake oil salesman, and seemingly infinite layers of improper due diligence. However, all answers will ultimately revolve around one thing only: greed.

Greed has characterized the IPL ever since its birth in a glitzy auction-house, where Bollywood’s finest actors took piles of cash and threw them at players of varying quality. “Oh, you hit four sixes in a row? Was it televised in India? Well son, it looks like you’re in luck, to the tune of $300,000.”

Some businesses purchased shrewdly and built their teams around the most promising young Indians, and a few of the smarter teams have managed to stay afloat in the intervening period, with no immediate anticipated financial haemorrhaging. However, year after year, the same auction room has been filled with a combination of sage businessmen overcome by greed, and actors indulging in some of the finest ego-stroking since Allen Stanford hung nude paintings of himself in the lobby of his megayacht.

Whilst I appreciate that the likes of Shah Rukh Khan and Preity Zinta must possess some degree of business nous, neither would have been first on my list if I needed help in determining whether it would be cost-effective to buy Simon Katich, or eschew him in favour of a promising youngster. Granted, I’d still give Preity a call before I asked for Sunil Gavaskar’s opinion.

A West Indian player recently described the IPL auction aptly. “It’s Christmas come early, every year,” he bellowed, presumably before checking his bank account and pinching himself in disbelief. It is an open secret that salary caps are flaunted, and that many players are given jobs by holding companies ‘on the side’ in roles such as ‘brand ambassadors’ and ‘executive assistants’.

But where is the money coming from? All franchises have been struggling financially to some extent – even with those teams that have planned carefully, the income is far lower than projected five years ago, and the financial climate has taken a turn for the worse. In the murky back rooms of the IPL, one would have expected that franchises would be shouting from the rooftops about the sheer extent of their vast profits, yet all we have is radio silence.

A watershed moment for the IPL was the purchase – and immediate failure – of Kochi Tuskers Kerala in 2010, which was bought by a variety of shady consortiums for the not-too-shabby sum of $333m. As well as being bought for three times the amount of most franchises just three years before, the Kochi franchise was valued higher than established football clubs such as Manchester City, Atletico Madrid and Borussia Dortmund.

Each of these clubs are over a century old, and Kochi had yet to even play a match – let alone turn a profit – before it was purchased for this eye-watering amount. Who in their right mind would even contemplate putting money into what would seem to be a commercial black hole?

To add to the IPL’s woes, its latest valuation lies at around $2.92bn, a huge decline from $4.13bn just two years ago. Ongoing frosty relationships with Kings XI Punjab and Pune Warriors in particular are likely to come to a head at some point, with the latter having nearly pulled out altogether just before IPL 5. Perhaps most worryingly, DLF – you may know them for their cement empire, as well as coining the made-for-Shastri, nauseating ‘DLF Maximum’ – have pulled out as the IPL’s title sponsor. There are no other companies lining up to pay upwards of $50m for another five-year term – will the IPL even exist then?

The IPL masquerades behind its glitz and glamour, but with its never-ending controversy and financial skullduggery, one can only recall uncomfortable similarities to the Ponzi empire run by the aforementioned Stanford. The IPL are courting bidders for a new franchise, but buying one would be akin to setting your money on fire, throwing it down a bottomless pit, or paying upwards of $5m a year to Ravindra Jadeja.

The IPL’s house of sand is certain to collapse eventually. Just like the dotcom crash and current financial crisis, it is just a matter of time before years of mismanagement, unrealistic valuations and sheer greed are exposed.