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Sliding rupee hurting Indians at the IPL

Amol Karhadkar

August 22, 2013

Comments: 41 | Text size: A | A

Virat Kohli and Chris Gayle celebrate in signature fashion, Royal Challengers Bangalore v Pune Warriors, IPL, Bangalore, April 23, 2013
As the Indian rupee depreciates, local players who were auctioned lose out while the overseas signings are insulated © BCCI
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The rapid depreciation of the Indian rupee over the past couple of months has led to disruptions in the accounts of IPL franchises, and exposed the flaw in the tournament's dual-payment structure. The rupee's fall, from 54 against the US dollar on May 3 to 65 on August 23, will most severely affect Indian players, whose wages are linked to a three-year locked-in rate of 46 to the dollar; overseas players are paid according to the floating rate and will not be affected.

The net effect on the highest-paid Indians in the IPL - like Gautam Gambhir and MS Dhoni - could, given the 40% difference between the actual dollar rate and the "IPL rate", run into tens of millions of rupees worth of losses.

As for the franchises, what they save on payments to Indian players they lose on the wages to their overseas staff.

The problem stems from the amendment to the regulations before the 2011 IPL auction, by which Indian players who were auctioned were required to sign a three-way agreement with the franchise and the BCCI-IPL. The exchange rate for all these contracts was fixed at Rs 46 per USD from IPL 2011 to IPL 2013, and is due to be revised before next year's auction. However, it was decided that overseas cricketers would be paid according to the prevailing exchange rate of the day.

The IPL's payment schedule requires that players are paid their salary in four installments: 15% before the beginning of the season, 50% before May 1, 15% before the beginning of the Champions League Twenty20 and 20% before November 1. By that calculation, Indian players could receive up to 35% of their salary at the lower rupee rate.

For instance, Gambhir was bought for $2.4 million by Kolkata Knight Riders in 2011 - a salary of Rs 11.04 crore based on the fixed exchange rate. Had his player agreement been based on a floating exchange rate, he would have taken home at least Rs 13 crore (on the 54-rupees-per-dollar rate), and possibly closer to Rs 17 crore (on the 65-rupees-per-dollar rate).

One IPL cricketer, when asked about this on Thursday, admitted that the Indian players were indeed losing out on a lot of money. "But I am happy with what I am getting," he added. A player agent who manages some of the most sought-after rising stars in Indian cricket said he will make his "best effort to address the issue before the next year's auction".

The franchises too are taking a hit. One franchise official estimated that each rupee fall against the dollar would result in an additional expenditure of at least Rs 15 lakh (approx USD 23,200) for every franchise.

"The falling rupee is going to impact our payout to the international players since 35% of the salary is still to be paid. I am sure franchisees are seeking to take forward covers in this volatile market," Raghu Iyer, Rajasthan Royals' chief exectuvie, told ESPNcricinfo. He did not comment on the impact on Indian players.

In the wake of rising costs, it didn't come as a surprise that IPL chief operating officer Sundar Raman emphasised the need to conduct the next IPL auction with the rupee as the base, rather than the USD, in a tweet on Thursday, something that Kolkata Knight Riders managing director Venky Mysore had strongly recommended in ESPNcricinfo's video show, The Huddle, during IPL 2013.

Explaining the rationale behind adopting a different policy for paying Indian and overseas cricketers, an IPL insider said it was done to suit practical purposes. "At the end of the day, even though all the players were being sold in USDs, the Indians were going to be paid in rupees, so it was easier to calculate their values with a fixed tag," he said. "It is similar to the IPL team valuation, which was rounded off at Rs 40 per USD when the first eight teams were sold in 2008. Hopefully, next year onwards, all the transactions will be made with the rupee as the base so that neither franchisees nor Indian cricketers will suffer."

Amol Karhadkar is a correspondent at ESPNcricinfo

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Posted by AyeSayer on (August 24, 2013, 22:14 GMT)

Actually all players should be pain in INR and let them convert the payout to their preferred currency. Since this is IPL, I don't see the justification in paying in $$.

Posted by spinkingKK on (August 23, 2013, 23:53 GMT)

I agree with everyone who said that exchange rates shouldn't be a concern for the Indian players who are living in India. This is a ridiculous article. How about all the people who work and live in India? Their salaries are not compensated because the exchange rate is low. PLEASE. Think before writing an article. These players are not losing ANYTHING. They are getting what they were contracted to.

Posted by   on (August 23, 2013, 11:13 GMT)

Anyone signing a three year contract must be knowing the pros and cons of such signing up. Plus this is about personal contracts between parties involved. No undue influence or pressure were mounted to sign up. What if the rupee has rocketed up 50% up to say 23 per dollar? And mind you the exchange rates will be revised next year anyways. So what is this article cribbing about? and on whose behalf? Many importers and exporters of good and services in India are subject to the same risks of exchange fluctuations. Some cover their risks thru forward contracts and mitigate their risks. This article is in poor taste and insensitive to what the economy is going thru.

Posted by   on (August 23, 2013, 10:36 GMT)

The earnings of Indian players in IPL is very large compared to the overseas players. For example. Bravo was recruited by CSK for a paltry 50,000/- USD , which is equivalent to Rs.32,50,000/- at the present exchange rate .Badri was contracted for 800,000 USD , which is equivalent to Rs.3,68,00,000/- at the exchange rate of Rs. 46 to a USD . The amount Badri gets is more than 11 times that of Bravo , which is unequal compared to their respective workloads . There can be no cause for complaint from the Indian players because the money they make in a season is so huge . which even players of the calibre of Gavaskar or Kapil did not make.

Posted by ranjitchakravarthy07 on (August 23, 2013, 10:14 GMT)

This is one thing which has always irritated me right from the first season-selling the players in dollars.Why not sell the players and staffs in INR,when it is Indian Premier League?It would be easy for fans and media to deal with this auction if it was based in INR.One more thing is foreigners should not be insulated from all this depreciation stuff.At the end of the day all play the same cricket and also get a very good pay.It would also not tarnish the reputation of IPL,if there is some left.

Posted by   on (August 23, 2013, 9:36 GMT)

The title is misleading! It is actually hurting the franchisees, as their payout is more. Regarding Indian players, they're getting what they're contracted for - which is in Indian denomination. And regarding foreign players, for them it is neutral, as they're getting what actually they were supposed to get.

Posted by ansram on (August 23, 2013, 9:25 GMT)

Indians spend in rupees and they should not be bothered about exchange rates. Foreign players spend in dollars and they would loose a lot of money if they were to be paid in rupees equivalent.

Posted by   on (August 23, 2013, 8:55 GMT)

last year also.. the rate was more than 50rs/dollar.. why was it not hurting then?? why now suddenly?? pointless article.. cricketers are getting the amount that they had agreed upon.. where is the loss?? Loss is for IPL teams who have to pay more to foreign players..!

Posted by Surajrises on (August 23, 2013, 7:24 GMT)

@Blade-Runner Mate I understand what you are trying to say but someone like Gautam Gambhir who is earning 1.5 million would say that he is putting more efforts as a captain of KKR and he too deserves the same amount of money like an overseas player. Yes someone like Glen Maxwell who literally did nothing and was warming the bench is going to enjoy the benefits of earning 1 million and further the delay of payments from Mumbai Indians, more the losses incurred by Mukesh Ambani. More than that, 2.4 million for Gambhir (1$ = 46Rs which comes to 11.04 Crores) & 1 million to Maxell (1$ = 65Rs which comes to 6.5 Crores) makes a hell a lot of difference. The difference comes to 19Rs per $ mate. Because if Gautam Gambhir too was paid according to the fluctuating rates then he would earn 15.6 Crores. So not only do the Indian Franchisees have to face losses but also the players.

Posted by sweetspot on (August 23, 2013, 6:58 GMT)

The minuscule losses faced by Indian players are nothing compared to how much good this is doing for exporters, who can compete even more now. What do you want us to do? Weep for players who made crores now making the same? How is this a problem? It is only if they planned to stash their money abroad that any effect can be felt by them. Please. If any of our star players want to get paid international salaries, then let them change their citizenship, give up their ambitions of playing for India, and yell themselves hoarse to be picked up in the next auction in dollars!!

Posted by   on (August 23, 2013, 6:00 GMT)

IPL is a game in India, So paying all the players in rupees is best for both the players and franchises.

Posted by WAKE_UP_CALL on (August 23, 2013, 5:55 GMT)

@bumble23 Made my day.seriously

Posted by Blade-Runner on (August 23, 2013, 5:47 GMT)

This currency devaluation is hurting Indian players who are still getting paid millions of Indian Rupees ???? That's just a ridiculous statement. I understand that Indian currency has taken a big hit. From 54 to 65 within 4 months is quite a drop. If anyone is getting affected by it, it will be the 68 % of total population who earns less than $2 per day. Its not like these players live the States or something. They live in India. If they were paid according to the floating exchange rate, they would benefit from it today. But you can't call it a loss when they don't. How come they lose something they've never had ??

Posted by Cricket_Man on (August 23, 2013, 5:41 GMT)

What an article!! Economics in cricket. Next time write a piece on effects of global warming on Indian cricket, eh?

Posted by ramkaps on (August 23, 2013, 5:14 GMT)

My first ever comment on espncricinfo despite following it for years. Needless to say, this has been prompted by this 'preposterous article'. When the common man is reeling under spiralling food prices & fuel cost and having to suffer an inept corrupt government, how can the mega-crorepatis generated by the IPL be hurt. For these overhyped and overpaid players who will be in the top 1% wealthy in the country, a loss of some 10 lakhs here and there is not going to hurt. Maybe they will have to contend with one lesser DIESEL jeans worth 2 lakhs per piece ala Sreeshant. What an article: " sliding rupee hurts Indians at IPL"!! totally out of touch with ground issues for the common man.

Posted by   on (August 23, 2013, 5:09 GMT)

If the Indians are being paid in rupees and spending in rupees, then where are they loosing money? We all knew Gambhir is getting 11 CRs. He is still getting that. Why should he be getting 17 CRs now just because the dollar rate is higher now. The foreign player spend in dollars. They count their dollar salaries. The loss would have been if they suddenly start getting less dollar salary as is happening in IBL.

Posted by PhilCkt on (August 23, 2013, 5:06 GMT)

Gambhir was promised 11.04 crore per year, and now they are going to give him only 11.04 crore every year ? This is terribly unfair.

Posted by bumble23 on (August 23, 2013, 4:29 GMT)

Yesterday ishant sharma boasted of being the spearhead of the indian pace attack and today an article that claims indian cricketers are suffering due to the currency devaluation. Please dont post such articles anymore Cricinfo. It cant get worse than this.

Posted by TheGecko on (August 23, 2013, 4:21 GMT)

Sorry to say this, but this is such a seriously flawed interpretation of the prevailing economic situation. Indian players are "seriously affected"? Really? Do they live in the US? If no, then how? Wonder what's wrong with cricinfo nowadays. The other day, in the text commentary of South Africa A vs India A test, I read that the batsman has driven the ball to fine leg! I mean, how can you "drive" the ball to fine leg? Hope you guys take this in the right spirit!

Posted by   on (August 23, 2013, 4:07 GMT)

The thing is equality. if overseas players are getting fees in dollars then local players should also be. I dont feel that anybody want to loose money either it is franchise or players but in my opinion everybody should be equal and that's the sportsman spirit.

Posted by sandy_bangalore on (August 23, 2013, 4:03 GMT)

@Aditya0640: Laughing at your assumption that our overhyped crore kings are suffering because they missed out on a few crores more. Keep supporting our flat pitch 'heroes'!

Posted by sandy_bangalore on (August 23, 2013, 4:00 GMT)

This is really laughable. These guys are already millionaires many times over, and now devaluation in the currency is apparently 'hurting' them.They were highly overvalued in the first place, and over that fly business class and stay inthe best hotels. All this for tonking mediocre bowlers on flat pitches for about 5-6 overs. Can we stop being so precious about our overhyped cricketers please? There are millions in India far far worse off than many of these cricketers, so some perspective is needed! Millions in our country work 10 times harder than our flat pitch kings, and it'll take generations for them to make the kind of money these cricketers make in 2 months.

Posted by kris_mg on (August 23, 2013, 3:47 GMT)

I guess, everybody just beat me to it.. I was also thinking the same after reading the article that, where was the loss to the Indian Players in IPL. They agreed to a precise sum in Indian Rupees, hence the fixed conversion rate so that they and the franchisees are protected against the vagaries of uncertain economy. It was a safety net, so that if Rupee weakened or strengthened considerably against the dollar, nobody is unduly affected since the major players and franchisees involved are Indian. Also, the foreign players are not benefiting unduly, they are also getting the amount that was agreed to in the currency that had more relevance to them. That is the reason IPL is a global success and attract the best of the crop from outside India. Yes, the franchisees suffer here, but that kind of uncertainty is there in any business, and they knew what they were getting into when the agreements were penned. Although no one expected Rupee to go into such a free-fall.

Posted by   on (August 23, 2013, 3:04 GMT)

Its 'Indian' Premier League, all the transactions should have been in 'rupee' from the start of the 1st season.

Posted by   on (August 23, 2013, 2:58 GMT)

Why you are so cynical about Cricketers? Entire Nation is suffering Because of Money devaluation.

Stop being Business minded and please have a little bit of heart for Fans like Us.

Posted by akajaria on (August 23, 2013, 2:40 GMT)

Don't quite understand the point of this article! The Indian players are still getting the same salary that they were promised in the currency that they use... It's the franchises who are paying through their nose for the foreign players

Posted by satishchandar on (August 23, 2013, 2:27 GMT)

It all depends.. Had rupee been stronger, overseas players would have been impacted and Indian players might have enjoyed benefits.. BTW, on a level playing field, would prefer everyone get the same treatment.. The value for bigger players increases in auction and they don't need next set of division based on the exchange rates..

Posted by   on (August 23, 2013, 2:09 GMT)

I am not too sure the Indian players are really "suffering" here. At the end of the day, their contract is in Rupees. Since they are Indians, most of their expenses are also in rupees. Its just a case where the foreign players are gaining seriously due to rupee depreciation and Indian players are losing in comparison. But in absolute terms, its only the foreign players who are gaining with no effect on the Indian players.

Posted by PranayC on (August 23, 2013, 2:08 GMT)

May be I didn't understand the article but can someone explain as to why IPL players are 'hurt'. They are getting what they signed up for. What they are losing on is 'additional' money they could have made. But then, if INR was, say 40, then would the author say that they are enjoying? No player is gaining or losing anything. Only one to suffer from this would be franchises as they will have to convert INR to USD at a higher rate than anticipated to pay foreign players. But again, I may be wrong.

Posted by Aditya0460 on (August 23, 2013, 2:08 GMT)

According to me, I really support that the payments should be done in rupees. The local players and the franchise will not have to suffer because of this volatile market.

Posted by Seanparker on (August 23, 2013, 2:05 GMT)

The whole premise of this article is wrong. How does it hurt Gambhir, when he was guaranteed 11.04 Cr at the beginning of his contract and he is still getting the same. On the other hand, the Franchises are hurting because their income is in rupees, but they make payments to the foreign players in dollars. All this is not taking into consideration, the revenue these franchises are making from the Champions League ( which would be dollars).

So, the article should have been that the franchises are hurting, not the Indian players. Although, I agree that they would have earned more if they were being paid in dollars, but one should look at the Indian player salaries as fixed in rupees rather than dollars. In case, the rupee value appreciated to the dollar are the Indian players ready to take a hit, I don't think so. Hence, they should stick with ermine ration in rupees.

Posted by   on (August 23, 2013, 0:56 GMT)

Wrong Title: Indian players are not unduly benefiting from the misery of the nation's rupee --that is it. That is, Rupee's falling value against international currencies in general and dollar in particular, is not giving them an undue and unfair windfall income. That is the reality.

Are we Indian men and women working in and for our country are getting more take home , whenever rupee gets devalued?

This is just fair, for India, Indians, and Indian players. Remember Indian players are Indians and NOT foreign mercenaries working in India on Dollar salaries.

So, don't shed an undue tear for the Indian IPL players!

Posted by AjaySridharan on (August 23, 2013, 0:52 GMT)

This is an Indian tournament, held in India! The prudent thing to do would have been to baseline everything in Rupees, and pay the overseas players equivalent dollars per the prevailing exchange rate. The franchises would have stood to benefit since they would have to shell out lesser $$, Indian players' interests would have been protected...of course, the overseas players would have taken the hit.

Posted by vswami on (August 23, 2013, 0:15 GMT)

The contract is clear and players are being according to the contract. I fail to understand how the players are hurt.

Posted by McGorium on (August 22, 2013, 23:54 GMT)

To the editor: Lakh and Crore and Indian and Pakistani numbers that are not universally understood. It is best to express this in terms of the universally understood numbers: 1 lakh = 100,000, or 0.1 million. The other option is to clearly state the conversion from Lakh and crore to millions (much less preferable).

Posted by snbirdi on (August 22, 2013, 23:18 GMT)

This isn't really as big of a deal as this article and the headline makes it sound. Indian players live in India and everything in India adjusts according to inflation. The western players aren't even effected by it.

Posted by TheUltimateTruth on (August 22, 2013, 22:46 GMT)

Why is this a problem? Indian players' expenses are in rupees and their income is in rupee. Besides, they effectively agreed to a fixed rupee payment. Is a bank clerk at, say, SBI-Mumbai paid more in monthly salary just because the dollar has appreciated against the rupee? No. This is a non-issue.

Posted by   on (August 22, 2013, 22:04 GMT)

I think this has been badly structured. Indian players should be getting paid in rupees based on the ex. rate at the time of the auction. They are domestic guys. International cricketers should be paid in US$s so the Ex. Rate does not come into the picture.

Posted by xylo on (August 22, 2013, 22:00 GMT)

Why is this even news? The contract laid out the terms in black and white and the players signed it. What if the rupee had appreciated over the dollar and was at 35 rupees-per-dollar?

Posted by the_blue_android on (August 22, 2013, 21:13 GMT)

Nice. Let's forget about the 400 million living in poverty who would also be hit due to higher inflation which is a result of sliding rupee, but let's worry about all the millionaires. While we're at it, what about the billionaires? What about Ambanis? Should we feel for them too?

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