IPL - or India's predictable larcenies
By Chan Akya
For over a month ago, India has been hosting the third instalment of the now
wildly popular Indian Premier League (IPL) cricket tournament. Despite
involving the mind-numbing sport of cricket, with its traditional image of
interminable five-day matches interrupted by breaks for tea and scones, the
tournament features a new format of the sport with big-hitting thrills and fast
action geared for television audiences.
Launched in 2008, the IPL has quickly become the center of the global cricket
calendar: trust me, there is one, and even more incredibly, it is followed by a
claimed audience of over 500 million people. As a symbol, the IPL could
represent something momentous for not just India but emerging markets (EM) in
general, for how often do you have a single country confidently
using its own audience power to change the rules of a global sport and in
essence, take it over?
Imagine if Japan had taken over (American) baseball in the 1980s and reset the
global baseball calendar so that Americans would see their best ball players
being unavailable in the domestic tournament for over half the year. Or if
Brazil launched a football ("soccer") tournament that attracted all the
globally famous players for six weeks every year, making them unavailable to
play in the various super leagues of Europe. This is precisely what India has
done in the world of cricket with the IPL.
How does this grand tournament of one of the world's most obscure sports
differentiate India from, say the grand spectacle that was the summer Olympics
hosted by China in 2008 (see
Anatomy of an Olympic winner, Asia Times Online, August 8, 2008)? It
became incredibly clear in that year that China had not only arrived on the
global stage as the main player of the next century; it had also done so with
rare aplomb and a grandeur befitting one of the world's oldest civilizations.
China played a grand host, but also followed the rules set by the Olympic
Committee to the last detail. It did not change, nor seek to change, the rules
of holding the Olympics; indeed even the timetable was set to suit television
audiences in the world's biggest markets. Like a dutiful supplier delivering
car parts to an automobile factory, the primary objective was to meet the
conditions of the contract rather than taking over the car company.
The IPL on the other hand is hosted within India and caters primarily to the
Indian television audiences. Its first and third tournaments were hosted in the
country, while last year's was moved to South Africa due to a clash of
schedules with India's general election.
Going back to a theme that I have explained in these articles frequently, the
IPL represents the triumph of the EM consumer over his global counterpart. As
an idea for other EM countries to emulate, this isn't half bad.
Having established that what India sought to do was daring, innovative and very
successful the question then becomes - what's with the scandals?
Unfortunately, and almost predictably in the case of India for every one of its
breakout moments in the past 50 years, all isn't what it seems in the IPL. A
waft of corruption has been gently blowing from the sewers below the country's
establishment and was unleashed just as the IPL approached the semi-final
stage.
Eight teams have competed in the IPL since its inception in 2008. Starting with
a revenue base of precisely nothing, the tournament had gone to be valued in
the billions of dollars; with television contracts alone helping to net the
organizers more than US$1 billion. Any such successful tournament would of
course be expanded, and sure enough two new team franchises were auctioned this
year.
Sex, sleaze and sport
And therein, as the bard would say, hangs the tale. Following from a decidedly
opaque process, bids for both franchises came in at more than $300 million.
Each. That kind of valuation immediately set the IPL in the same league as
major European soccer clubs; not a bad achievement for something in existence
for only a couple of years.
With this scale of money involved, corruption may have been unavoidable without
the right governance and ethics. As it turned out, the process had been skewed
to produce desirable outcomes for India's high and mighty. They could well have
pulled it off had there been a concept of honor amongst thieves - which was
distinctly not the case.
After the successful bids were announced, the commissioner of the IPL, Lalit
Modi, let it be known through Twitter (entirely another subject about the role
of new media in democracies like India) that the country's junior minister for
foreign affairs, Shashi Tharoor, had pressured him into accepting the winning
bid for one of the two franchises.
Further questions revealed that one of the members of the successful consortium
that ponied up over $300 million was a woman that the media quickly speculated
to be a "lady friend" of the minister. Tharoor immediately responded, also on
Twitter, that Modi had followed an opaque process in selecting the winning
bidders that was possibly slanted to favor his friends and family.
So there it was - sleaze, sex and sport all combined into one gripping package.
In a cricket-mad country, this kind of scandal was always going to become
intensely scrutinized and thereby generate a number of follow-up stories.
Tharoor was asked to resign by the prime minister, who has also requested a
full briefing from the organization in charge of the IPL. There will be a
number of other replacements in the near future, according to the media.
I have written before about corruption in emerging markets (see
Wages of corruption, Asia Times Online, August 19, 2006) and pointed to
the need for transparency and good governance as a means to resolving the
problem over the longer term. China has adopted ad-hoc measures to curb
corruption but these have been targeted essentially at politicians who exceeded
their "quotas" for bribes or perhaps more insidiously were caught in the act of
taking bribes.
In the case of India, despite a freewheeling democracy and ostensibly free
media, there has been an escalation of corruption in the past few years by all
accounts. A growth rate of over 8% in the official economy (perhaps 10% if the
unofficial economy is included) over each of the past five years has meant a
range of new opportunities for investors and businessmen even as it keeps the
vast number of the country's dispossessed away from outright revolt (with the
notable exception of the Maoist movement that infests central India and may
well morph into the country's greatest threat in the next few years).
Despite the heady growth, the country's fiscal deficit has remained virtually
untouched over the period due mainly to rising government spending on social
welfare programs that also bear the hallmarks of endemic corruption. Meanwhile,
government revenues have increased, but not quite to the extent that 8%
economic growth should have provided. The difference is of course due to
revenue-side corruption, that is, the government not pursuing tax collections
in order to keep certain businessmen happy.
That some of these very businessmen own the existing IPL franchises is one
point. Secondly, and almost incredibly, the government itself hasn't made money
from the sale of the IPL franchises or indeed from their significant revenues
for the past three years, due mainly to the non-profit status of the the
controlling body of the IPL, the Board for Cricket Control of India (BCCI).
With gargantuan revenues and little accountability, the BCCI effectively
operates as its own agency, which benefits mainly the interests of its
office-bearers. If one looks at the status of the BCCI officers, it is clear
that India's politicians have had a disproportionate representation in the body
over the past few years; it also amusing when you then look at their
photographs that not one looks anything like a sportsman. Other office bearers
of the BCCI also own the various franchises operating in the IPL, adding to the
problems of governance.
Operating without accountability has shown the BCCI to be nothing more than yet
another sham country club operating for the high and mighty. The IPL scandal
also points to the dangers of overestimating the potential for emerging markets
to supplant their developed country brethren, tripped as they may well be in
every turn by their own inability to adopt adequate governance standards.
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