Cricket and The Indian Economy

Introduction

India is one of the most diverse lands in this world with over 10 religions coexisting together and one might not be completely wrong if one says that cricket is one of the religions in India. Where on a vase average religions tend to divide, cricket is the religion that unites India. India's cricket history is a rich tapestry of triumphs, challenges, and iconic moments that have shaped the nation's love affair with the sport. There is no second thought that cricket is more than just a sport in India and on many occasions, cricket is beyond religion as well. It's a way of life and a multi-billion-dollar industry. Over the years, the game has evolved from a simple pastime to a major economic force in the country. This article explores the cricket economy in India, examining its growth, impact, and the various dimensions that contribute to its remarkable success along with identifying possible investment opportunities for countries involved in the game and also for the countries that are not yet involved in the game. 

Evolution of Cricket in India 

The history of cricket is a long and fascinating journey that dates back several centuries. While it is challenging to pinpoint the exact origins of the sport, The earliest references to a game resembling cricket can be found in the 16th century in England. It is believed to have evolved from games like stoolball and clubball. The first recorded match took place in 1646 in Kent, England. Naturally, cricket was introduced to India during the British colonial period. The first recorded cricket match in India took place in 1721 in Gujarat. Initially, the game was played among British officers and civilians, but it gradually gained popularity among the locals. India played its first official Test match against England in June 1932 at Lord's Cricket Ground in London. This marked the beginning of India's journey in international cricket. The Ranji Trophy (1934), India's premier domestic cricket competition, was established in 1934-35. Named after the legendary cricketer Ranjitsinhji, it provided a platform for Indian players to showcase their skills and to date, is regarded as the most promising platform for youngsters aspiring to pursue their career in the sport.  

Post-independence, Indian cricket faced several challenges, including a lack of infrastructure and resources. However, players like Vinoo Mankad and Vijay Hazare helped establish India's reputation in international cricket. India achieved its first-ever Test series victory on foreign soil by defeating England in the 1952 series. Vinoo Mankad played a pivotal role in this historic win. An unforgettable win for every Indian for years to come will surely be the World Cup 1983 which is a story of triumph and one of the greatest episodes of Indian sports history, under the captaincy of Kapil Dev, India pulled off a stunning upset by winning the 1983 Cricket World Cup and the man himself went off creating a world record in one of the matches. This momentous victory marked a turning point in Indian cricket history. Later players like Sachin Tendulkar, Sourav Ganguly, Anil Kumble, Ms Dhoni and Virat Kohli changed the course of cricket for India and its people by setting numerous records across different formats. India won its second Cricket World Cup in 2011, under the captaincy of MS Dhoni. The tournament was a moment of national pride, and finishing in style, Dhoni's six to seal the victory in the final is etched in cricketing history. India has continued to be a dominant force in international cricket. Under the leadership of Virat Kohli, the team achieved several notable victories and in the current 2023 World Cup India entered the finals remaining unbeatable in qualifiers and only losing the final match of the tournament under the captaincy of Rohit Sharma. 

Today, Indian cricket has come a long way since its early days, evolving into a powerhouse with a massive fan following, top-notch infrastructure, and a rich talent pool. This growth is reflected in finances as well, where in the 1983 World Cup the players were paid a sum of Rs. 200/day as allowance and Rs. 1500 as match fees per game and 40 years later the cricketers are paid from around 1-7 crore depending on the category. The Board of Control for Cricket in India (BCCI) is the governing body of Indian cricket and plays a pivotal role in the sport's administration, including organizing domestic and international tournaments. Cricket today is played in mainly three different formats- Test cricket, One Day Internationals (ODIs), and Twenty20 (T20) cricket, each with its own set of rules and characteristics. Test cricket is the oldest and most traditional format of the game. Matches can last up to five days, with each team batting and bowling twice. Each team has two innings, and there is no limit on the number of overs bowled per day. Test cricket emphasises the skills of endurance, strategy, and technique. One Day Internationals (ODIs) are a limited-overs format, with each team playing a single innings, restricted to a specific number of overs (usually 50 overs per team). ODIs are generally completed in a single day, making them more time-efficient than Test matches. Limited-overs cricket introduced coloured clothing, white cricket balls, and a set of new rules making the game more exciting. Twenty20 (T20) Cricket is the shortest and most explosive format of the game. Each team gets to bat for 20 overs, which usually takes around 3-4 hours to complete. T20 cricket was introduced in 2003 by England and is designed for fast-paced, high-scoring matches that are entertaining for fans. It has given rise to several T20 leagues such as the Indian Premier League (IPL), Big Bash League (BBL), Caribbean Premier League (CPL), Global T20 Canada 2023, Women's  Premier League, and SA20 etc to name a few. The T20 format has been a  game-changer in the world of cricket economics. 

The Indian Premier League, commonly known as the IPL, a franchise-based T20 cricket league, was launched in 2008 and since its inception, the IPL has become one of the richest and one of the most-watched and lucrative cricket leagues globally, attracting top international talent, boosting the careers of young Indian players, and it has been a financial windfall for players, team owners, sponsors, BCCI and the nation’s economy at large. To make a comparison each NBA game is worth 2 million dollars and each IPL game is worth more than 15 million dollars. The IPL's economic impact extends beyond cricket. This global phenomenon runs for two months and has 10 competing franchises with 74 matches and more than 600 million views. The first IPL auction garnered around 724 million dollars in 2008 and the 2022 media auction garnered around 5.64 billion dollars. IPL also created jobs, boosted tourism, and provided substantial advertising opportunities. Stadiums are often packed to capacity during IPL matches, leading to a surge in ticket sales, merchandise, and food and beverage sales. One of the major sources of revenue in IPL or for that matter any sports league comes from broadcasting rights. Television rights and OTTs (online platform) rights form a substantial part of the cricket economy in India. Broadcasting companies pay staggering amounts to secure the rights to telecast cricket matches. The Board of Control for Cricket in India (BCCI), the governing body of Indian cricket, auctions these rights, resulting in massive revenues. This not only benefits the BCCI but also the entire ecosystem of cricket, including players and associated businesses.

Opportunity for Foreign Investors

Foreign investment in cricket can take various forms, and it often involves individuals, companies, or entities from one country investing in cricket-related ventures or opportunities in India especially for non-cricket countries like Thailand. Traditionally cricket is played mostly in commonwealth countries whereas today the money involved, the viewership and the craze of cricket are such that non-cricket countries such as Japan, Denmark and the Netherlands are also stepping into the game with their bats and balls. Individuals and companies may invest in the Indian cricket economy through various means. Such as

• Broadcasting and Media Rights: Foreign investors may acquire broadcasting rights for cricket events in India. This can involve partnerships with television networks or online streaming platforms to broadcast matches to a global audience. The 2022 IPL Media Rights Auction made IPL the second-richest sports league in the world. Disney Star and Viacom18 emerged as the highest bidders in their respective packages, taking the Indian Subcontinent’s TV and Digital rights respectively. Disney Star won the rights to broadcast IPL in the Indian subcontinent for INR 23,575 Cr ($3.02 Bn). At the same time, Reliance-owned Viacom18 grabbed the digital rights for the competition with a bid of INR 20,500 Cr ($2.57 Bn) totalling $5.64 Bn collectively. 

• Franchise Ownership in T20 Leagues: Many cricket leagues, such as the Indian Premier League (IPL), have franchises that are owned by individuals or companies from different parts of the world. Foreign investors may buy stakes in these franchises, contributing to the growth and global appeal of these leagues. Gujarat Titans in IPL is an example of one such investment where CVC Capital Partners, a British private equity and investment advisory firm, purchased the franchise for a whopping bid of INR 5625 crore in October 2021.

• Sponsorship and Endorsements: Companies or investors from abroad may sponsor cricket teams, tournaments, or individual players. These sponsorship deals contribute to the financial health of cricket entities and help them attract a broader international fanbase. Sponsorships and Brand Endorsements also play a significant role in the ecosystem of the cricket economy. Cricket players in India are among the most marketable athletes globally. Their success on the field translates into lucrative brand endorsement deals off the field. Top cricketers like Virat Kohli, Rohit Sharma, and MS Dhoni have multimillion-dollar endorsement contracts with leading brands, making them some of the highest-paid athletes in the country. This sort of brand endorsement works vice versa as well, as these players are well-regarded and followed by millions of fans which has an immense effect on the sales of these brands. 

• Merchandising and Licensing: Foreign investors may engage in the production and sale of cricket-related merchandise, leveraging licensing agreements with cricket boards or teams. This can include apparel, accessories, and other products.  Investing in the production and sale of cricket-related merchandise can be profitable, especially if one can secure licensing agreements.

• Infrastructure Development: Investment in cricket stadiums, Cricket Academies, and infrastructure, either by contributing to the construction of new facilities or upgrading existing ones, can be an avenue for foreign investors to invest in the growing cricket economy. The growth of cricket in India has led to massive investments in infrastructure. Cricket stadiums, academies, and training facilities have sprouted across the nation. This has not only improved the standard of the game but also created jobs and promoted tourism. Iconic stadiums like the Eden Gardens in Kolkata, the Wankhede Stadium in Mumbai and the Narendra Modi Stadium in Ahmedabad which is the largest stadium in the world, with a seating capacity of 132,000 spectators are not just cricket venues; they are symbols of national pride and economic growth. 

• Fantasy Cricket Platforms: Online fantasy cricket platforms have gained popularity, and foreign investors may participate in or establish such platforms, catering to the global audience of cricket enthusiasts.  Investing in or creating online fantasy cricket platforms can tap into the growing market of fantasy sports enthusiasts.

• Media Production and Content Creation: Foreign investors may participate in the production of cricket-related content for international audiences, including documentaries, broadcasts, and digital content. Investing in the production of cricket-related content for television, streaming platforms, or social media.

• Tourism Packages: Foreign companies might create and sell cricket tourism packages, allowing fans to travel to different countries to watch major cricket tournaments or series. Cricket tournaments such as the IPL and the World Cup attract millions of visitors from both India and abroad, which will boost the travel and hospitality industries. According to a report by Kotak Securities, the Cricket World Cup 2023 could add up to 1.619 USD to the Indian economy, with a significant portion of this coming from the travel and hospitality sectors.

Conclusion 

Today, Cricket in India has become an economic powerhouse. From the glamour of the IPL to the grassroots development programs, it has created a ripple effect across various industries, generating jobs and becoming a strong element in the country’s growth story by contributing to India’s overall GDP. The huge infrastructure development and well as investment in grassroots cricket development are crucial to the game's continued success in India. The rise of digital media has further fueled the cricket economy in India. Social media platforms, cricket-specific websites, and mobile applications provide fans with real-time updates, highlights, and interactive content. These platforms also generate significant revenue through advertising and sponsorship deals. Cricket in India also provides employment opportunities for thousands of people in various roles, including administrators, coaches, ground staff, commentators, and production crews. The IPL alone has created numerous jobs directly and indirectly, boosting local economies. Like any other business, it is crucial to conduct thorough research and consider the risks associated with the investment. Additionally, staying informed about the cricket landscape, regulations, and market trends is essential for making informed investment decisions. Foreign investors who are not well-versed in the game may consider consulting with experts in the field to seek valuable insights as they need to navigate the regulatory landscape, understand cultural nuances, and assess the potential risks and rewards associated with investing in cricket, as well as comply with the rules and regulations of the cricket boards and governing bodies involved. The cricket economy in India is a testament to the passion and devotion of over a billion fans and the remarkable potential of sports as a driver of economic growth. As long as cricket continues to flourish, so will its economic impact on India and likewise opportunities will be available for all kinds of investors. 

References

 https://www.crictracker.com/salary-of-the-indian-team-that-won-the-1983-world-cup/

 https://www.timesofsports.com/cricket/indian-players-salary/

https://inc42.com/features/ipl-media-rights-auction-2022-auction-made-ipl-second-richest-sports-league-world/

 https://www.sportskeeda.com/cricket/ipl-team-owner

https://www.livemint.com/market/stock-market-news/as-india-hosts-cricket-world-cup-2023-these-sectors-to-get-a-leg-up-11698640012662.html#:~:text=According%20to%20a%20report%20by%20Kotak%20Securities%2C%20the%20Cricket%20World,the%20travel%20and%20hospitality%20sectors.

" Written By Ms. Ngawang Gamtso Hardy"

Economic Analyst, Deputy Editor-in-Chief

Royal Thai Embassy