Thursday, February 21, 2008

Indian Premier League: Money Talks

The bidding for players at the Indian Premier League yesterday, along the lines of European football, has every newspaper this morning in a tizzy.

And of course, MS Dhoni being 'bought' for Rs 6 crores by the Chennai franchise is something to marvel at. But the Economic Times takes it over the top with this page 5 headline: 'Mahi stumps Mukesh at Cheque point'.

The chief executive officer of the Men-in-Blue Mahendra Singh Dhoni, who has been bagged for Rs 6 crores for the cricket league, has overtaken Mukesh Ambani, chief of India's largest private sector company in terms of compensation.

The next para goes on to say "The comparison is not apt but on a per hour basis Dhoni will be paid more than Mr Ambani.." Blah blah blah. If the comparison is not apt, why make it? Just because you have a calculator?

And by this calculation over the 44 days of the tourament in 20:20 format Dhoni will make Rs 56, 818 per hour while Mukeshji, who drew Rs 30.46 crores through salary, perks and commissions last year would have earned Rs 34, 771 per hour.

In case of Dhoni, by the way, the calculation 'discounts the actual time that Dhoni spends on the field for Chennai...". And of course the time he spends in training, sleeping, eating and merely being alive so he can play.

Not sure how Mukeshji's time has been accounted for. What part of his life is treated as being 'on the field'?

The point being that a person is the sum of his or her parts. The one hour that a cricketer or a consultant can charge is a reflection of who he is and what he can do. And that is a result of so many things... including how many hours of sleep he can get in a night!

And three paras into this oh-so-breathless story the writer drops a googly: We are, of course, not accounting for the dividend payout to Mr Ambani as the promoter of Reliance Industries... or the fact that he regularly features in standard lists of world's wealthiest tycoons.

And so it goes. There is no reason a story so bereft of purpose deserves half a page in the country's largest pink paper. At best, it could have been a small box item, a tongue in cheek kind of observation made as an aside.

The Salary Circus
Actually, the media is currently completely obsessed with salaries. The result is every employee is convinced the guy in the next cubicle or the neighouring industrial estate is earning twice as much as me.

Yes, salaries are rising and there are some folks getting paid what seem like princely amounts. And I say seem because hello, one crore buys you a flat in Ghatkopar these days.

A couple of months ago Business Standard released its anual 'Richest Indians' listing based on data from publicly listed companies. The survey noted that the number of senior executives earning more than Rs 1 crore annually increased to 576 from 442 in 2005-6.

HR consultants quoted by the paper admit this number would be twice as much if you include senior execs from unlisted companies, consultancies, foreign banks and such like. They estimate that the top salary in sectors like retail and management consulting could be anywhere between Rs 5 to Rs 7 crores.

But as R Suresh, MD of executive search firm Stanton Chase observed in BS: "The share of 'salary' as an element of the overall compensation plan is dwindling". Read the fine print. It's all about perquisites, stock options, share of profits, deferred payments and of course perfomance bonuses (esp. relevant in investment banking).

Compensation is stuctured in complex ways to beat the taxman. At the end
of the day it's the lifestyle enjoyed by the individual which matters.

To that extent there are thousansds of crorepatis who just do not get reflected in official salary statistics. From our grubby politicians and public servants with mountains of cash to the exporter in Ludhiana whose firm earned an 8 crore profit last year but whose 'salary' is something like 3 lakhs p.a.

Even the smallest businessman debits almost all his living expenses to the company and draws a relatively modest salary. And remember dividend which is non-taxableand taken full advantage of!

The other asset a smart businessman builds is valuation for the company as a whole. If you really want to be 'rich' the only way is to take the risk of building a successful, publicly listed or privately tradable company.

Coming back to IPL, sports is big business and sportsmen draw high compensations because they have a limited period of peak performance. Some may go on to become actors or commentators but most will build a nest egg which they can live off post 40.

Let's hope once IPL actually kicks off we see great cricket. Instead of calculations of how many rupees each ball bowled by Bhajji costs!


  1. don't have much to say abt the article, too much coverage has made me sick of the whole subject

    nice finish though " how many rupees each ball bowled by Bhajji costs!" lol... sweet

  2. The ET article is much like an out of work copy-writer assigned to fill some column centimetres, written purely for the purpose of intellectual(!) news or analysis value anywhere.

  3. "Blah blah blah. If the comparison is not apt, why make it?

    Just because you have a calculator?"

    Just because you have a blog, you can write whatever you like.. can't you..??

  4. seriously thats some cheesecake for the news channels and newspapers to go on and on about.. wonder all the more if the players are going to be interested anymore in playing cricket for the country since that would give them a lot less money then this sale that they are all a aprt off..

    commercialisation not always for the best i guess.. :(

  5. well.. dat was again interesting. Sometimes I really wonder, how do the newspaper guys select which news should make the headline n which not.

    Hope the series will b gud !!!

  6. Haha..reminds me of the comparisons we used to make when we were young and in college.
    Car mechanics, on an hourly basis (at $80 an hour) earn much more than I-bankers, who puts in 100 hours a week.
    Is the comparison apt? If we are comparing, yes it is :)

  7. yeah money talks.. but hoe much would it be effective in making cricket interesting.. thats a big question mark .. nice post by the way..
    check out my blog..i have written a similar post on this...
    i am posting the link because ur blog doesn''t allow open user id in the url column ..

  8. well I tried to do a small comparison of IPL and EPL on my blog.

    check that out. I basically tried to portray how EPL and IPL work and how promising is the financial future of IPL given the recent comparison between IPL and more than two decade old EPL.

  9. We work , Blog, Comment and do most of the stuff just for money, SO there is nothing wrong is there is money involved in this. It is good that the players can be encouraged.



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  10. cool content on Indian Premier League . For more information, news, contravesries, contracts about the Indian Premier League
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  11. Anonymous5:36 PM

    Should there be a Salary Cap in Football?
    Personally I think there should be! It’s just getting to be stupid money in football at the top of the premiership!
    It’s always the same teams at the top proving that football success is based purely on money which ruins the idea of it being a sport! They’ve done it in rugby, basketball, hockey and American football and it makes the sports more competitive and better to watch!
    I do a little Spread Betting from time to time and most matches don’t hold much surprise who is going to win, its boring! I want to see a team at the bottom pulling off an amazing season beating last seasons winners in a close fought battle!
    Make things fair! It shouldn’t be about money!
    All there is all that money in the premiership and barely any of it stays in the UK so it’s not even helping the economy!
    From my Spread Betting (or more precisely Football Spread Betting) if I ever win big (which is never, I’m unlucky) it’s still nothing compared to the average premiership players weekly wage!

  12. - The home of indian premier league - T20 cricket. Latest news of IPL. - Send gifts to your love one's in India


  14. Indian Premier League(IPL) is the future of world

    cricet...I think people will even stop watching Test & One day cricket as IPL Twenty-20 cricket format is getting popular...

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