The IPL and the limits of the free market

Just as season three of the Indian Premier League began, Ravindra Jadeja of the Rajasthan Royals was banned for attempting to renege on his contractual obligations and sign with another franchise. Midway through the tournament, his team appealed that it had lost a player for no fault of its own. Unable to recruit an alternative at a late stage, it wanted the prohibition removed.

At the end of March, the IPL Governing Council appointed a one-man committee comprising Arun Jaitley to hear the Jadeja appeal. President of the Delhi and Districts Cricket Association (DDCA) and a member of the IPL governing council, Jaitley is also a former Indian law minister and one of the country's best-regarded lawyers.

Appearing before him were Jadeja and Rajasthan Royals on one side and Mumbai Indians on the other. Jaitley was to decide if Jadeja had solicited Mumbai Indians, as the IPL had believed when it banned him, or if the Mumbai team had, instead, sought out the cricketer. All three parties agreed to abide by his ruling. On March 26, he delivered a nine-page "judgement" upholding Jadeja's ban. However, the document he drafted has wider implications.

There are two reasons for this. First, in the three years it has been around, the IPL has acquired a reputation for writing and rewriting rules as it goes along. The Jaitley verdict offers an attempt at consistency and legislation. More pertinently, it suggests the limits of player power in the IPL. As the initial three-year contracts end, the league authorities fear giving cricketers untrammelled right to choose the highest bidder, and negotiate or tear up contracts at will, could essentially end up subverting a very young league.

As Jaitley says in his ruling, "Leagues such as the IPL will survive only if utmost purity and honesty is maintained. There must be a strict compliance with the rules. Money has value, but in a league like the IPL, loyalty has a greater value." The affirmation of this principle could play a crucial role in the coming months, as 10 franchises compete to buy the best players and put together teams for the 2011 season.

Yet that is getting ahead of the story. First, the Jadeja episode - with all its drama, with two international players accusing each other of lying, with India's biggest business corporation questioned on ethical conduct, with email passwords being disclosed to investigators - requires recounting.

Opening overs
Weeks before the first IPL match in 2008, an Indian team led by Virat Kohli won the Under-19 World Cup. Members of this team had not been part of the big IPL player auction in February 2008. Yet they had to be accommodated in a tournament one of the professed goals of which was giving young Indian talent top-level exposure.

As such, the Player Trading Rules of the IPL allowed franchises to sign Under-19 World Cup Indian team members directly for, initially, one-year contracts, to be automatically renewed in 2009 with the signing of two-year contracts, valid till the end of the 2010 season. Fees were fixed:

A player's fee eligibility would be decided at the time of final squad registration, 30 days before the start of a season. As such, a rookie who got, say, Rs 12 lakh in year one could, theoretically, treble his fee in year two if he won his India cap between the first and second IPL seasons. Such fee enhancements benefited, for instance, Kohli and, indeed, Jadeja.

The Under-19 World Cup players could not be traded between teams. If a franchise released such a player, another team was free to sign him up but only for the fee he was entitled to as per the IPL formula. In essence, there was a salary cap imposed on him.

Jadeja duly played for Rajasthan Royals in year one. Just before IPL II, in February 2009, he made his one-day international debut for India. He had been rethinking his options even before that. In December 2008, Rajasthan Royals sent him his two-year contract. He delayed signing it and eventually agreed to only a one-year contract, on January 9, 2009.

The contract ran till December 31, 2009. In terms of cricket obligations it ended, really, with the conclusion of IPL II in May 2009. At this point, there occurred a strange discrepancy in perceptions. Rajasthan Royals thought Jadeja was still on their rolls for 2010 and it was only a technicality that he had not signed a piece of paper. Jadeja, on the other hand, thought he was a free agent. He thought he had walked out of a job and was at liberty to find another. As Jaitley records, "He informed me during the hearing that he was unaware of the legal obligations, and having become an ODI and T20 player for India, he thought he could command a higher price."

He was, of course, wrong.

At the death
Now began Jadeja's search for a new employer. He first met Venkatesh Prasad, the former India fast bowler and bowling coach, now with the IPL's Chennai franchise. Negotiations began when Jadeja and Prasad (as bowling coach) were in England with the Indian contingent to the ICC World Twenty20.

"[Jadeja] admitted," writes Jaitley, "that he had discussed the prospect of joining Chennai Super Kings in June 2009, when Venkatesh Prasad met him in London. Prasad clearly told him that he must first get the 'no objection' from Rajasthan Royals."

That deal went nowhere, but in December 2009, Jadeja agreed to play for Reliance Industries - the corporation behind Mumbai Indians - in a corporate cricket event. "[He] met Nikhil Meswani [a director of Reliance Industries] in Jamnagar, where he had gone to play a festival match," Jaitley records. This meeting took place on December 29, 2009, and "Meswani wanted to know if he was free to join Mumbai Indians". Jadeja "claimed that his contract was expiring" on December 31, 2009, and sent a copy of it to Mumbai Indians for verification.

It is here that the story gets mysterious. Jadeja alleges two documents were now drafted:

1. On January 2, 2010, he "claims that he was induced to sign a contract… by Rahul Sanghvi… agreeing to play for Mumbai Indians". Sanghvi, who once bowled spin for India, is part of the Mumbai Indians management.

2. In February 2010, Jadeja says, Mumbai Indians sent him the draft of a letter "in legal language" that he was meant to forward to the IPL governing council. It pointed out he had not signed his third-year contract with Rajasthan Royals and should be permitted to move to another team.

Sanghvi denied all of this. Jadeja could not present a copy of the player contract. Jaitley says: "It is one person's oral testimony against another and in the absence of any corroboration I am unable to opine on the existence of such a contract."

The "legal language" letter drafted for Jadeja was another matter. Jadeja, who disclosed his email password to the committee and allowed it to access and ascertain his mail exchanges with Rajasthan Royals and Mumbai Indians, produced a fax. Jaitley says it all: "Ravindra Jadeja/Rajasthan Royals sent to me a copy of a letter dated 2/2/2010 from the fax number which is used by Rahul Sanghvi in the Reliance/Mumbai Indians office… Obviously something was brewing between Mumbai Indians and Ravindra Jadeja."

Eventually Mumbai Indians acknowledged the "legal language" draft. It even gave Jaitley its own copy of the fax/letter.

Under the IPL rules, a franchise cannot "approach any player who is registered and has a current, unexpired player contract with another franchisee". Mumbai Indians' argument is, it never approached Jadeja; it only answered Jadeja's call and helped him build his case before the IPL governing council. It would have offered him a contract only if the league authorities had granted him permission. The difference between those two positions may seem minor but the legal consequences are vastly different.

Since Jadeja failed to produce this contract, the Mumbai Indians managers' contention that they did not approach him, he approached them was given the benefit of the doubt. The one-year ban on Jadeja was confirmed. As for Rajasthan Royals, it was "regrettable that acts of others" caused the team to lose "an important player".

Jadeja was dogged or uninformed enough to breach the rules, while Mumbai Indians did not explicitly break the rules. The verdict recognised this: "Mumbai Indians had also 'approached' Ravindra Jadeja inasmuch as they were in active communication with him regarding his obtaining 'no objection' from IPL, permitting him to play for Mumbai Indians, particularly when Rajasthan Royals was desperately trying to get Ravindra Jadeja to play for them… I am recommending a sanction of warning to Mumbai Indians." Any future "approach" or "response to approach" would, however, invite "more deterrent action".

Beyond the boundary
The Jadeja case is the first of its kind in the history of Indian sport. The reason Jaitley came down so hard on the cricketer was because sections of the IPL governing council are worried about what a complete free-market situation will mean for the league.

As the three-year contracts end and another massive auction beckons, the franchises want some sort of loyalty clause built in. They want the security of retaining core players, rather than having to rebuild from zero. On their part, star cricketers want the most liberal regime possible. A senior Indian batsman, in great form for the past year and captain of his IPL team, has semi-jokingly asked his franchise owners to put him on the transfer/auction list. They have no intention of losing him, if they can help it.

Jaitley's emphasis on "loyalty" and the integrity of the league is indicative here. It suggests the franchises will be given some protection. That aside, are player fee caps - as in the case of Jadeja - or even overall recruitment budgets (enhanced to US$7 million a year per team from 2011) sacrosanct? There is an intriguing line in Jaitley's verdict: "[Jadeja] wanted to… increase his amount in the third year from Rs 40 lakh to about Rs 2 crore. He admitted this in the course of the hearing. He sought a better bargain from other franchises."

If his IPL-designated fee was Rs 40 lakh, how did Jadeja expect to get Rs 2 crore - and why were IPL franchises, run by hard-nosed business executives who read every semicolon in a thick contract, even discussing it?

Finally, some of the IPL franchises - Mumbai and Bangalore, to name a couple - are part of big business corporations and obviously fit into huge promotional budgets. Others - Jaipur, Kolkata - may not have such advantages. What happens if, in addition to the IPL fee, a business house offers a "job" and a regular "paycheque" to a player?

An IPL governing council member doesn't refute the stories that have already been heard. He admits that, unchecked, this phenomenon could create a lopsided, uncompetitive league, with two or three resource-rich, ultra-strong teams. "At some point," he says, "there will have to be a crackdown on the corporate owners." That is the underlying message of the Ravindra Jadeja-Mumbai Indians chapter.