India news August 22, 2013

Sliding rupee hurting Indians at the IPL


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

Comments have now been closed for this article

  • Viswanathan 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 $$.

  • KISH 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.

  • Dummy4 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.

  • Dummy4 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.

  • Ranjit 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.

  • Dummy4 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.

  • Ram 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.

  • Dummy4 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..!

  • Suraj 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.