IPL Business Model Deciphered (2)

Urbanomics takes a look at what the new franchises (in Poona and Cochin) mean for the new cities. He concludes that the biggest winners may be the other, existing franchises, who may now realize they have an IPL bubble on their hands, blown into existence by Lalit Modi hype:

Further, the IPL matches clearly places strains on the local administration in many other ways. The shifting of IPL to South Africa last year on grounds of security and the controversies and debates surrounding security of players in the lead-up to this year’s IPL underlines the critical role of security in the organization of such events. The district administration of the host city is therefore clearly stretched out to ensure the successful completion of a purely commercial event, often to the exclusion of other more important public issues. Since state governments regularly charge the organizers of private entertainment events for providing security for the event, the IPL too should be levied an appropriate user charge.

Tailpiece: I am convinced that the Pune and Kochi auctions will turn out to be classic examples of “winner’s curse”. The real winners from this auction are the existing eight franchises, who can now leverage the latest price discovery to exit when the IPL bubble is peaking. Let us re-visit the balance sheets three years down the line and I will be really surpised if it turned out any different!

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