MONEY FOR (ALMOST) NOTHING
A windfall in county players' salaries as a result of the Hundred auctions is all thanks to the enlightened thinking of the two men who founded the IPL 18 years ago.
£390,000 for a month’s work for a 21-year-old cricketer who hasn’t yet played an international match. James Coles won the golden ticket at yesterday’s Hundred auction, as Dani Gibson did the day before with her £190,000 purchase by Sunrisers Leeds (though she is a full blown international.) Close on a £25m windfall has come into domestic cricketers’ (and agents’) pockets (augmented by some overseas players) as a result of the first player auction in English sport. And this in the month when Monty Panesar made his Test debut 20 years ago on a county salary of £12,000. As he says on the latest Analyst podcast. See also here.
The Hundred auction was a copy of the IPL auction in 2008 - one of the most revolutionary events in the history of sport - and featured the same auctioneer, Richard Madley. The modern players have two sports executives to thank for the new found wealth. The concept of the player auction was the brainchild of IPL creator Lalit Modi and his friend, the seasoned sports media consultant Andrew Wildblood. And the auction was set in motion after a phone conversation between Wildblood and the TV auctioneer Madley, who were old school cricketing pals. It went like this.
“Madders? It’s Wildblood. Ever been to India before?”
“Not yet Wildy, why?!”
“Well we’d like you in Mumbai next week to conduct an auction of cricket
players.”
“Auctioning the players?!!’
“The way we’re distributing the players in the new Indian Premier League is via an auction so the players are fairly shared out. You’re the only auctioneer I know! I’d like you to do it.’
“My dear chap I’d love to. Doesn’t matter what I’m doing next Thursday I’ll be there. Funnily enough, I’m currently in Bristol where I believe the last auction of human beings took place in 1757!’
There have been many alternative ways to select sports teams from the traditional two captains taking-it-in-turns method of the school playground to the draft system in American sports where the lowest-finishing team gets the first pick of the new college intake. In the NFL draft, each of the 32 teams receives one pick per round in reverse order to their most recent finishing position (so last place gets first pick and so on). It’s a method for keeping a league that doesn’t have promotion and relegation competitive. But never before had professional sportsmen been literally auctioned off to team owners.
The idea was conceived by Lalit Modi and Wildblood to circumvent the multiple challenges with salary caps. They had to find a way round the prospect of a wealthy team owner buying a player publicly for say $100,000 – keeping well within salary-cap limits – while securing him with a large private sponsorship offer.
“Traditional salary caps are always broken,” Modi says. “I knew if you tried to impose a salary cap on a variety of rich businessmen there was a strong chance they’d find a way round it. Because there was going to be no promotion and relegation, it was critical that we had a way of ensuring a level playing field across the teams, and a well-executed salary cap is the key to achieving this.
“I got the idea of the auction because we had a partnership with Sotheby’s auction house in India. Where you offer the item to the highest bidder. What’s wrong with that? Great transparency. I also knew it would be the talk of the town – extremely controversial. This was the central part of my strategy. “With the IPL consisting of only eight teams, if two of the eight – owned by the richest men – always win, it would soon become boring. You have to keep it interesting.
“The auction was a way of controlling how players were allocated to the teams. There’s an auction ‘purse’ for each team and if you can’t spend more than the purse then it’s no advantage being the richest – it’s like a transparent salary cap – it completely shines a light on how players are allocated. We also wanted to reassure owners that their asset wouldn’t fall off a cliff if they got relegated, which is why we guaranteed the number of teams, and no relegation.” So, for the first time in history, top sportsmen were going to go under the hammer like works of art or rare antiques.
February 20th 2008 was the day that cricket was changed forever. Those 24 hours transformed players’ lives, completely altered their priorities and perspectives. It gave a billion Indians hope and fascination and aspiration. It marginalised the world governing body – the ICC – and effectively elevated the domestic game above the international one. It changed the way people thought of, talked about and interpreted cricket. It made every national governing body recalibrate their goals and itineraries. It caused a huge stir in news agencies all over the world.
In A New Innings, the book about the IPL and its massive influence on sport, that I wrote with Manoj Badale, the lead owner of the Rajasthan Royals (above), Badale recalls the experience. “First up in the auction was Shoaib Akhtar. Fifth was Shane Warne. No bids emerged as Richard Madley scanned the room. Just as he was about to declare the player unsold, we raised our paddle. Shane Warne. Sold to Team Jaipur. For his base price of $450,000. We had bought our first player in the IPL. Secretly I was nervous that no one else had bid. Next out was the biggest name of all the players in the auction – Mahendra Singh Dhoni. We knew he was going to be above our budget, so we sat back and watched the auction explode into life. $500k, $600k, $700k and then a million-dollar cricketer – Mumbai versus Bangalore versus Chennai – the biggest Indian families in open warfare – $1.1m, $1.3m and then finally $1.5m! We were shocked. We couldn’t believe that Chennai had spent close to a third of their salary cap on one single player. How wrong we all were. Ultimately he was worth every dollar.”
Modi had offered the players he’d pre-signed the option of a base price or a fixed price – which he would guarantee – but the board would also pocket the upside should the bid go higher. “Australia’s Andrew Symonds chose the fixed price option,” Modi recalls. “It was $100k. He was sold for $1.35m. He was crying. He only got $100k. All the rest of the money went to the BCCI.”
The first auction created huge excitement in the build-up to the tournament.Not only had it produced the first-ever million-dollar player (Dhoni) but it had also aroused some intriguing financial dynamics, with some star players attracting negligible bids and virtual unknowns going for astronomical sums. The young Indian all-rounder Irfan Pathan, for instance, was sold for $925,000, and his brother Yusuf for $425,000. Meanwhile the Royal Challengers Bangalore picked up India’s relatively unknown U/19 captain Virat Kohli for just $50,000. Little did they know what a steal that was.
So who will be the biggest ‘steal’ in the Hundred auction. And who will be the most overpriced? Ok here goes: Bargain - Caleb Falconer (£55k) Gamble - Tom Curran (£260k).