The IPL Auction Structure Is Seriously Flawed; It Must Be Tweaked

The headlines were partly misleading, but they got the broader point right: the Indian Premier League’s (IPL’s) auction of players is flawed, and could do with some serious tweaks.

There is huge risk of mispricing, which, if allowed in the field of financial products, would attract adverse comments and penalties from regulators.

In last week’s mini auction, Sam Curran was picked up by Punjab Kings for a pricey Rs 18.5 crore, the highest paid so far in an IPL auction. The previous best was Rs 16.25 crore for Chris Morris in 2021.

What’s misleading about the headline on Curran is simple: the Rs 18.5 crore figure does not adjust for either inflation or currency depreciation since February 2021, when the auction for the 2021 IPL season was held.

Since then, not only has inflation hit the roof, but the rupee has also depreciated rapidly. So, no, Curran is not the costliest player to be won by an IPL franchise.

In fact, Yuvraj Singh, who got bought in 2015 for Rs 16 crore, and Ben Stokes, who got bid by Chennai Super Kings this month for a goodish Rs 16.25 crore, did much better in real terms in 2017.

Adjusted for just currency depreciation, Yuvraj Singh’s Rs 16 crore bid in 2015 would be worth more than Rs 20 crore today. Adjusted for inflation, it would be much, much higher.

Ben Stokes may be wondering what the brouhaha this year is all about, when he got Rs 14.5 crore in 2017, when the rupee was in the mid-60s against the dollar.

Five years later, adjusted for currency depreciation alone, his 2017 feat would top Rs 20 crore this year.

In short, the high bids for much-sought-out all-rounders are merely adjustment for inflation and/or currency depreciation.

But this is where we need to bring in the flawed nature of IPL auctions to scrutiny.

The flaws are obvious. In this month’s mini auction, some 991 players got registered, of whom some 400 were left for the final short-list. From this lot, only 70-80 were likely to be actually bid for.

But with the 10 IPL teams having a collective purse of barely Rs 206 crore, there was not much money to go around. And even this pot was skewed, with Sunrisers Hyderabad having over Rs 42 crore and Kolkata Knight Riders just Rs 7 crore.

Net result: the bidding was focused on obtaining prize scalps, especially all-rounders. This is what explains the high bids for all-rounders Curran, Stokes, and Cameron Green.

Two issues arise: one, the game is skewed towards all-rounders, and specialists may often get short-changed. And, two, limitations on the purse, how many foreign or domestic players one can buy, and how many specialists you must compulsorily invest in in terms of batsmen, bowlers or wicketkeepers, restricts what teams can really bid for.

Also, the fact that Indian players are not allowed to play in foreign T20 leagues dents their value in the IPL, and they may go for as low as Rs 50 lakh. They are almost an after-thought for bidders.

One wonders why, if the idea is to create hordes of fresh talent, they should be chained to IPL, and not allowed to improve their skills by competing abroad.

Wasn’t the Moroccan football team largely comprised of players who were born outside Morocco, and who play for European leagues. Why should promising young Indian players be forced to compete for bids in an also-ran category

A few changes are worth considering. The bidding limits and rules probably act as constraints on any team seeking to build a great team. Either the overall limits for teams should be raised substantially, or the cap removed altogether to enable those with better financials to bid for a superior team.

Second, there is no reason why a team should not experiment with more rookie players at lower cost, since that would test the assumption that only big names sell the IPL franchise.

Today’s rookies, when they perform, become tomorrow’s superstars. A new business model needs testing based on some teams focusing on new and regional players at much lower overall costs.

Third, maybe, there should be a performance-related component to the bid process.

Sam Curran may be worth every rupee of his Rs 18.5 crore, but would he not do his best if he can get more when he performs, and less when he doesn’t. He is young and promising, but it does not imply that he will deliver bang for the buck.

As a Times of India article today (26 December) tells us, buying the costliest player is no guarantee of success.

In this year's IPL, Ishan Kishan raised eye-brows when he got bought for Rs 15.25 crore, but his team Mumbai Indians ended up at the bottom of the league.

Also, why would a Kane Williamson give his best for Rs 2 crore when lower-rated players may be walking away with a much higher booty? Much lower rated or lower-paid players could end up doing much better if the incentive payments reflect performance as much as promise or potential.

And last, there is a case for experimenting with a second-tier IPL league, just like English football. This way franchises that want to stay in the top 10 must play better than the rest. Otherwise, they should get to play only in the second-tier league.

IPL is India’s best sporting idea yet, but it is not well structured to become the greater ever in the world.