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IPL-onomics: where Indian players call the shots

Indian cricketers are the chief beneficiaries of the IPL's salary boom

Amrit Mathur

April 22, 2013

Comments: 33 | Text size: A | A

Saurabh Tiwary goes over the top, Royal Challengers Bangalore v Rajasthan Royals, IPL 2013, Bangalore, April 20, 2013
The IPL has been a lottery ticket for Indian players like Saurabh Tiwary © BCCI
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Here's the most telling stat about star player salaries in the IPL: Sachin Tendulkar and MS Dhoni earn Rs 1 crore (about $180,000) every year as part of BCCI's Grade A list of centrally contracted players. That is said to be a fair estimate of the amount they also make from a single 20-over, 3.5 hour IPL game.

Recently I talked about this to Rahul Dravid, who said the commercially driven IPL has dramatically changed cricket's ecosystem and with it the mindset of players. He cautioned that we shouldn't be taken in by the politically correct noises players make about Test cricket being the ultimate challenge. The truth is, every young player wants to somehow land an IPL contract. That is what he is playing for. It is like every bright Indian student who wants to crack the Indian Institute of Technology and Indian Institute of Management exams to get into the country's most prestigious colleges.

Indian cricketers are the chief beneficiaries of the IPL's salary boom. As the tournament mandates that each team must play seven Indian players in its starting XI, the nine franchisees need to hire about 14 Indian players to build their squads. This means that approximately 125 Indian players benefit from what is effectively the BCCI/ IPL's employment guarantee scheme.

Player salaries for capped Indian (and overseas) players are decided by forces more complex than in the era when cricketers were paid by their boards in a structure dictated by them. In a departure from that norm, the value of the players' skills at the IPL are settled through an open and transparent auction. This hammer price becomes a combination of many different aspects: talent, important skill sets (in the 20-over format, multi-utility allrounders are priceless), specific team needs, and/or the whims of an indulgent owner.

This ends up leaving little room for reputations or sentiment. All that matters is the perceived ability of the player to deliver in exceedingly challenging pressure situations. No surprise then that VVS Laxman, stately and stylish, did not interest buyers, Sourav Ganguly was spurned and Brian Lara received no bids. Meanwhile Adam Gilchrist and the Hussey brothers continue to go for plenty. Even an unproven Glenn Maxwell gets a massive million-dollar contract, while Ricky Ponting and Michael Clarke, neither known for their T20 skills, attract much lower numbers.

When asked what the IPL means for seasoned pros like him, Dravid smiled and neatly deflected the question: it is a different world altogether, he said. "The other day I walked the ramp as part of a promotional event. When I started my career, I never imagined this would be part of a cricketer's life!"

Non-cricket factors also affect a player's price, as teams are mindful of the commercial value they bring to their table. Three seasons ago, when Gautam Gambhir, Dinesh Karthik, AB de Villiers and Tillakaratne Dilshan had moved to other teams, Delhi opted for "value" picks but the change provoked disapproval from sponsors, who bemoaned the lack of buzz around the squad. Not only does a team need stars who perform on the field but also marquee names that excite their commercial partners, who are looking for to find a way to leverage their association and reach their customers.

In this complex arrangement there are some unsaid, unwritten rules. One: Indian players count. Except for a handful of overseas names like Gilchrist, Brett Lee and Kevin Pietersen, Indian corporates and Indian fans want Indian cricket stars, which is why Munaf Patel and R Ashwin matter more than Morne Morkel and de Villiers. Two: controversy is bad for commerce, so there is no place for anyone, however good, if he spells trouble.

While commercial forces may be fundamental to every aspect of the IPL's functioning (including the franchise sale in the first place), the IPL's most bizarre move has been denying domestic Indian players market-driven rewards. Instead, it has arbitrarily capped payments to Ranji and Under-19 players, ostensibly to prevent them from getting "corrupted" by cash. Under these regulations, Ambati Rayudu, who is yet to play for India, can only earn Rs 30 lakhs (about $55,000) while Saurabh Tiwary, Venugopal Rao, Abhishek Nayar - all of whom represented India briefly - fetch far more.

Even at these artificially depressed rates, there still remains a crazy scramble for IPL contracts among uncapped domestic cricketers. The contracts are a passport to a dazzling world of unimaginable fame and riches. All manner of player agents - sleazy, slick and suave - have popped up and they lobby and aggressively pitch on behalf of their clients. Most Indian cricketers, including U-19s now operate through these agents. It is not unusual for IPL team managers to have their inbox flooded with smartly produced player portfolios.

 
 
Not only does a team need stars who perform on the field but also marquee names that excite their commercial partners, who in turn need to find a way to leverage their association and reach their customers
 

In the early days of the IPL, franchisees paid serious money to hire top players in order to attract attention towards their brands and engage with fans. Later, faced with financial losses, and alive to the danger of rising player cost that could damage the balance sheet and permanently cripple their business, teams got smarter in picking players. They are still a distance away from the Moneyball levels, but a clear understanding now exists that the player salary expense, unless capped, can wreak havoc. 

Players have become rich, but for some, the cash has become a curse. Yusuf Pathan, Saurabh Tiwary and a host of high-cost players have withered, crushed by the weight of expectation, the gnawing anxiety to justify their cost and the fearsome, although tacit, disapproval of annoyed owners.

There are two sides to earning large salaries in the IPL. Players who earn large sums may also have to surrender some of their commercial rights to team sponsors and partners. Player images are used for advertising but conditions apply: the association of sponsors must be with the team as a whole and advertising cannot be turned into a player's personal endorsement. Players are not individually required to promote a product and any commercial communication requires a minimum of three players to feature together, all wearing the official team jersey.

Players believe there are not enough safeguards in place to protect personal endorsements, because in the wake of the IPL, the market has slumped sharply and demand for individual player endorsements has dried up, except for the few Big Boys (like Tendulkar, Dhoni, and Virat Kohli) who have commercial currency of their own. The rest have been blown away in a marketplace where it makes better business sense for sponsors to associate with a team, and gain access to key players through this partnership.

Still, players stand to benefit cost-wise. For overseas players the money on offer for six weeks of work is game-changing. Sensing this ground reality, cricket boards (especially those with a history of payment defaults and delays) have made peace with their players about participation in the IPL. The ECB is yet to sort out its response, but after the KP controversy and Matt Prior's articulations and the PCA statements, there should be some shift in its position soon.

For Indian players, the IPL is a major leap towards making cricket a viable career. The money offers incentive, insurance, compensation and a certain amount of job security. Of all the IPL's stakeholders, the players are the most critical. The player contract reflects this and is completely pro-player - all players are assured performance-delinked guaranteed payment, and there is no penalty clause. The extent of pay protection in the IPL far exceeds that provided by the Indian government to its employees. (I say this as a former government employee myself). The suggestion some seasons ago that 20% of a contracted player wage would be payable only if the team qualifies for the Champions League was promptly shot down by Indian players.

Besides the comfort of assured payments, there are other benefits too. The IPL mandates that at least 50% of prize money is shared with players. Any trading or transfer can only take place with the consent of the player, and his wage can't be lowered during the contract period under any circumstance.

The peripherals are equally enticing: players are entitled to business-class travel, five-star hotel stay, and a $100 daily allowance. The franchise picks up the service-tax liability, and in the case of foreign players, contributes 10% of the salary to their national boards. Players lose out on minor amounts when they miss games due to injury (50% of the match fee, which is an individual calculation based on their auction fee divided by the number of matches they play) and for non-selection.

In any business, the customer is king but in cricket normal rules of economics don't apply. In the IPL ecosystem it is the players, and in this case the Indian players, who call the shots.

The next article in the series will look at how an IPL franchise prepares to host matches during the season

Amrit Mathur is a former manager of the Indian cricket team and currently a consultant with Delhi Daredevils

© ESPN Sports Media Ltd.

Posted by Nampally on (April 25, 2013, 13:42 GMT)

An excellent summary of the true state of Facts. Whilst Dhoni & Tendulkar earn $180,000 from a single IPL game, even Gary Sobers was delighted to get a full 5 month English county season contract of just 5500 Pounds- about $13,000- in 1968! Great Indian Cricketers like Mankad, Umrigar, S.Gupte, D.Phadkar & V.Hazare got <half what Sobers' contract in Lancashire League! So the present day Cricketer must count themselves lucky. Today Cricket is a profession just like Engineering or Medicine or Law. Promising young cricketers of yesteryear had to choose their career path when they reached University at age 17. Many chose Education & hard work at Universities- sponsored by their parents. They abandoned their ambitions of being Cricketers despite their talent. Even Villager Cricketers like Dhoni, Yadev and many others are better off today because they were born in right Era. Kudos to IPL for making Cricket available as a profession to all Indians & making them wealthier than professionals.

Posted by maddy20 on (April 25, 2013, 7:15 GMT)

@SevereCritic How many years did woods take to make it to that level? Dhoni has made it to 31 in about 6 years and he has 6 or 7 left to better it. By the time he retires, there is little doubt that he will be a billionaire, thanks to n number of endorsements he has been getting.

Posted by KFRITZ on (April 23, 2013, 1:53 GMT)

@severecritic...28 million in a year is not by any means less ..Dhoni and Sachin make much more than many American foot ball and baseball superstars and also many European soccer stars...

Posted by svenkat02 on (April 22, 2013, 23:08 GMT)

The contract amount is paid to the player irrespective of whether his team reaches the playoffs or not. A player loses money only when he is injured or he opts to not play some games. If he is available for selection all games, he is paid the full amount of his contract.

Posted by Y2SJ on (April 22, 2013, 22:31 GMT)

IPL in particular and the contract system in general has given the domestic players a chance to make a living out of playing cricket. It has given them a chance to concentrate on cricket and not worry about how to earn for a family. But youngsters should be using IPL as a launch pad rather as a pinnacle of their carer.

Posted by McGorium on (April 22, 2013, 21:30 GMT)

@SevereCritic: The reason why the likes of LeBron James, Woods, etc. are paid as highly as they are has everything to do with where they come from. The world's largest economy, which, even today, is larger than the combined GDP of the next 3 or 4 countries (the difference was far more a few years ago). Which are the big economies backing cricket? The UK (#6), India (#10) and Australia (#12) (UN numbers for 2012). Their combined GDP can't match Japan, never mind China or the USA. I'd imagine in PPP terms, though, Indian cricketers get paid as much, if not more, than most NFL and NBA players.

Posted by SevereCritic on (April 22, 2013, 20:44 GMT)

Cricket is not a high paying sports. Only 2 cricketers feature in Forbes 2012 list of 100 highest paid athletes -- Dhoni (31), Sachin (78). And they earn very little compared to someone like Tiger Woods(3) or Lebron James(4)

Posted by Zsam on (April 22, 2013, 19:23 GMT)

Interesting article by the writer and very well summed up by McGorium.

Posted by Anubhav-the-Experience on (April 22, 2013, 17:36 GMT)

This is the only reason why I like IPL even though I rarely watch it.

Posted by McGorium on (April 22, 2013, 16:26 GMT)

An interesting article, but I beg to differ with the final paragraph. The only part he got right was "customer is king". IMHO, the only reason corporates are interested in IPL is because of its potential as an advertising engine. Instead of having to sign multi-year ad contracts with individual players (who may later be dropped, or lose form, be injured, or be controversial), the IPL allows them to hire a pool of players, thereby mitigating the risk (much like stocks). The overall cost to a company for exclusive access to individual star players would likely be much higher than through the sponsorship of an IPL team (hence the annoyance with Delhi's lack of star power mentioned above). A sponsor of (say) CSK gets access to Dhoni, Raina, Ashwin, and Hussey for a price lower than individual contracts with each. Sure, they're shared amongst other sponsors, but they almost necessarily have orthogonal businesses. It's this pooling of resources(and risk)that makes IPL alluring to corporates

Posted by Mr_Anonymous on (April 22, 2013, 15:58 GMT)

@TheUltimateTruth and @Johnny_Rook.

I am just reading this sentence.

> Players lose out on minor amounts when they miss games due to injury (50% of the match fee, which is an individual calculation based on their auction fee divided by the number of matches they play) and for non-selection.

Maybe the minor amount is 50% for a match injury and a different number for non-selection. It would be nice to get some more information on these items. I don't understand why MI would bid $1M for a player and then bench that player for half the tournament (and potentially the rest of the tournament). Some more clarity on these financial qs in a IPLonomics article would have been nice.

@Johnny_Rook

> Maxwell will get $1 milllion only if his team Mumbai Indians make it to the top 4 etc

Certainly would be nice to confirm the validity of these statements. I don't doubt that there is something like what you have mentioned but I have not seen those numbers and %'s being confirmed anywhere.

Posted by TheUltimateTruth on (April 22, 2013, 14:18 GMT)

@Farce-Follower, I agree that S. Tiwary of RCB is not worth much, but you are focusing on the $100 per diem and missing his big salary! However, your insinuation about Dhoni is unfair. Tiwary's inclusion in the national team for ODIs has little to do with Dhoni. He was included based on "potential" and so were many others in ODIs and tests (Venugopal Rao, J. Unadkat, Vinay Kumar, etc.) who went on to fail at the national level, and none of the rest from Jharkhand. "Potential" was also the reason that RCB bid for him -- it couldn't have been based on Dhoni's recommendation to Vijay Mallya!

Posted by DTom on (April 22, 2013, 14:15 GMT)

Great article with real substance. Most of the IPL related articles are just fluff. This was a welcome change. The gap between capped India players and uncapped ones needs to be reduced, but BCCI will not do it as this is a nice stick to hold over Indian players for years to come. Without interfering with contracts, they can make or break an Indian player with such conditions. Also, this can work against capped players as well, if they are not very good. take Saurabh Tiwary for example. He is not that good. Being a capped player, he is guaranteed a higher contract. I would rather identify an uncapped player who can give me 3-4 decent games. What Tiwary did in the single match he has played in this IPL is being done by Vihari, Reddys, Mandeep Singh, Manan Vohra et all in almost every match. So, except for the long hair, what have RCB bought? As franchises mature, such rashness will go away, and capped players like Tiwary will find it tough to get a contract.

Posted by TheUltimateTruth on (April 22, 2013, 14:13 GMT)

@YS_USA, thank you for the helpful information. I find IPL contracts fascinating. From where did you get this information -- is there a reliable source to which you could point me?

Posted by TheUltimateTruth on (April 22, 2013, 14:06 GMT)

@Mr_Anonymous, I think a player gets the full auction salary if they are available to play. Not being in the final XI doesn't affect that salary (why should it?). Injury may affect salary as described in the article, but I am not sure how they treat matches missed because of an injury incurred during an IPL match or in the training facility. The article is quite unclear on all of these matters. I agree with the main point of the article, but it is not as informative as I was hoping it would be.

Posted by YS_USA on (April 22, 2013, 13:55 GMT)

Johnny_Rook, Maxwell will get $1 milllion only if his team Mumbai Indians make it to the top 4. Salaries of all players of 5 other teams who do not make to the top 4 will be reduced by 20%. The next 20% of the contract amount is paid on a pro rata basis depending upon the selection of the players, so if a player is not selected to play any game, his salary will be reduced by another 20% and there is a flat 30% tax on the remaining amount. so, most players' take home pay is generally 50% of the contract amount.

Posted by CricketpunditUSA on (April 22, 2013, 12:47 GMT)

Decent article. However, clubbing Munaf patel and Ashwin in the same sentence proves author's lack of cricketing knowledge. Ashwin is another Kumble in making, calm, collected and goes about his business. Munaf is a lazy cricker. In a nation that worships a Shewag, Kumbles of the world go unnoticed for so long. Even though, Kumbles and Ashwins win the test matches for India more often than the Kohils and Shewag. In other words, Right now, Ashwin and his success is more important to Team India (and CSK) that a Kohli... Because there is no Zaheer now and Bhajji belongs to the past.

Posted by Farce-Follower on (April 22, 2013, 11:54 GMT)

Superbly written, Amrit Mathur. One of the best articles that I have read in Cricinfo. If this is true, IPL is understandably the pot at the end of the rainbow. However the rule that a domestic player needs to represent India to get into the auction pool is truly bizarre. Being a RCB fan, I can safely state that Saurabh Tiwary is not worth even the $ 100 daily allowance. He is unfit and does not have the temperament for the long run. He however managed his India appearance due to a friendly nudge from a fellow statemate of great authority and stuck a huge payday at the auction. The IPL will still rule despite all the conflicts of interests.

Posted by TheUltimateTruth on (April 22, 2013, 11:48 GMT)

I don't think non-selection results in any reduction in pay. For example, I think Glenn Maxwell will get his full $1 million even if he doesn't play a single game (due to non-selection). I can understand the reduction in pay if someone misses a game due to injury. The article is not clear in explaining these differences. Does anyone know of a reliable source to read up on these issues?

Posted by Vivek6 on (April 22, 2013, 11:16 GMT)

What if the player comes on as a substitute fielder..will he then get the full match fee?

Posted by   on (April 22, 2013, 11:14 GMT)

The idea of I. P. L. is pretty pleasantly unassuming. The I. P. L. mixes the English Premier League of soccer football, with County Cricket. The player in the I. P. L., plays cricket, where the pressure of nation, or of a state Cricket association does not register. Also, the stars belonging to other national Cricket sides, and emerging stars make India feel very good about their participation. The only gripe is, the players don't have a problem, while others might have issues. Resources are expended when a O. D. I. match occurs. The B. C. C. I., with it's legendary organizational skills, plan years in advance for a tour, or so it appears, because of the constraints in the measurement of time, and how events are supposed to happen. It seems, people have an entertaining period, and many other sectors also benefit economically. The general issue might be, that the good times are relevant, when it is essential the I. P. L. occurs, even if it does not occur in India.

Posted by Sudhir65 on (April 22, 2013, 10:11 GMT)

Makes no sense to pay millions to non-capped foreign players but limit payment to non-capped Indian players.

Also we have many foreign stars just sitting on the bench. It is robbing IPL of quality. Why not increase the limit to 5?

Posted by ooper_cut on (April 22, 2013, 8:56 GMT)

Now we know why guys like Rayadu etc are yearning for a national call up. Even if they get a duck in the first match and never play for India again, they will stand to benefit in more money in IPL. No wonder playing for India is very important amidst the riches & clamour of IPL

Posted by Ayush_Chauhan on (April 22, 2013, 7:52 GMT)

Very nice read this. I love how you never took a side with IPL. It is definitely a leap in player salaries, and I think its great.

Posted by anshu.s on (April 22, 2013, 7:43 GMT)

@derpherp, please don't qoute figures out of thin air , those rumoured figures were never more than $A1.5 for either Clarke or Watson , don't make CA look like a mega rich body like BCCI who are sitting on heap of millions courtsey through sponsership and huge TV deals, Big TV deals ARE not possible in Australia because of limited population size and competition with other sports such as AFL,NRL ...

Posted by JohnnyRook on (April 22, 2013, 7:18 GMT)

@Mr_Anonymous. Glenn Maxwell will get whole $1M because he is available. MAshrafe Murtaza got $650k in prev edition for playing only 1 match. He would have got half if he wouldn't have been available at all for example because of injury or personal reason or a ban as in case of Harbhajan Singh after slapgate. Even in that case, he would have got all $1M if he would have got injured while playing a match. So KP should ideally get half and Kevon Cooper should get all. Ofcourse some part may be dependent on some fine print and Vijay Mallya may not pay anybody but largely this is it. Hope this helps.

Posted by   on (April 22, 2013, 7:04 GMT)

Perhaps the most valuable insight into the IPL's financial face.. Great work.. Wish they could do a little more than the normal stuff like nurturing U19 players, keeping audiences engaged with local matches between the squad members once in a while.. After all IPL is only for a month and a half!! People need something to cheer about all thru the year.

Posted by derpherp on (April 22, 2013, 6:14 GMT)

Clarke's CA contract was rumoured to be around $A5.5 million. Hell, Shane Watson (when he was vice captain) was earning approximately $A4 million. Basic Aus contracts pay around $A230 000. The players don't even need to play in the IPL. But you can never have to much money can you lol.

Posted by   on (April 22, 2013, 5:43 GMT)

IPL does give average players a reason to practice hard. One can earn a decent living even if they are not a Sachin Tendulkar or a MSD. I'm reminded of Tony Greig's letter to Mr Packer.

Posted by Mr_Anonymous on (April 22, 2013, 5:43 GMT)

So, this is a very good piece which answers some of the questions I have always had. To re-iterate, if a player is not selected for a game, they still get 50% of their match fee. So if Glenn Maxwell, does not play in any games in this IPL season, he would still get half a million dollars, correct? Also, does the injury clause apply only if it is sustained during the IPL or does it apply even if the injury happens prior to the IPL? So, for example does KP get paid in this IPL even if he is injured although he is part of the squad? How does that work? What about Kevon Cooper who got injured while playing an IPL game last year?

Posted by   on (April 22, 2013, 5:03 GMT)

Very nice article and goes to show how IPL has changed the life of cricketers in India. Some players went on to cash the opportunity and earn more while some degraded themselves. Performance matters a lot here than ur name.

Posted by cric_options on (April 22, 2013, 3:33 GMT)

Great article Amrit. Much needed insight for outsiders. While IPL has been a boon for the wannabe cricketer, the maturity of the league can only be adjudged when the auction allows the players or their representatives to take a call on the team they want to play and the amount for which they might prefer a team rather than the absolute top value they can earn. Right now, despite all the riches, the players appear to be like in a slave trade with the skill element (and probably fit) being the differentiator with no importance to player intent or choice.

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