In January, before the auctions for the second edition of the Indian Premier League (IPL), a researcher-professor duo from the Indian Institute of Management, Ahmedabad, decided to take a long, critical and analytical look at the prices teams paid for the various players in the first auction. On 20 February last year, the eight IPL teams bid a total of $40.08 million (around Rs161 crore then) for a total of 75 players. The eye-popping amount shocked even the most optimistic supporters of the Twenty20 format and experts predicted that teams would require many years to recoup their investments. At the end of the first season, profit and loss numbers seemed to support this view: Only two of the teams turned in an operating profit. The Kolkata Knight Riders and the winners, Rajasthan Royals, made profits of Rs13 crore and Rs6 crore, respectively.
Costliest duo: English cricketers Andrew Flintoff (left) and Kevin Pietersen were valued at $1.55 million each at the auction for the second edition of the IPL making them the most expensive players in the tournament. Philip Brown / Reuters
Prof. Satish Deodhar and doctoral student Siddhartha Rastogi then decided to look at both bid amounts and the cricketing achievements of the players to understand the basis for the evaluations and to “facilitate better understanding of player price formation”.
Their results, published in a working paper titled Player Pricing and Valuation of Cricketing Attributes: Exploring the IPL Twenty-Twenty Vision in January, threw up some interesting results. Not only did they confirm the concept that good batsmen received higher bids than good bowlers, they also found out that attributes such as the number of centuries in a batsmen’s career probably had no impact at all on his bid amount.
After the IPL 2009 auctions on 6 February we asked Rastogi to run his pricing model and then compare his estimates to actual bid amounts for seven of the top players. We then asked him to explain the disparities.
Why bids went up
Even by the lofty standards of the first auction, the second edition was very expensive. Rastogi believes that teams were more bullish after the success of IPL 2008: “That was a high-risk proposition and could have been a complete flop, leading to huge losses. However, after the success of the first season, IPL 2009 is a comparatively low-risk and high-return proposition. Hence, it is easy to draw investments from bidders.” Rastogi also points out that this time teams only had a few spots to fill and had to choose from 17 players, against 75 the first time. Therefore, they had more resources to spend per slot. It is also possible that teams placed dummy bids on certain players to merely force other teams to spend more.
Also See Players and prices (PDF)
Rastogi believes that his model to predict player prices will get more and more accurate with each edition of IPL.
So what really makes a cricketer worth a million bucks?
Country of origin: Players from stronger cricketing nations can draw in more crowds and therefore are more valuable.
Age: Deodhar and Rastogi’s research shows younger players are more valuable. For every additional year in age, a player lost out an average of $29,484 in bid price.
Twenty20 batting average: An obvious criterion, Deodhar and Rastogi found that every additional run in T20 batting average gained a player an extra $4,658 in bid price.
ODI strike rate: Predictably, faster movers of the scoreboard won higher prices. Every point increase in career strike rate upped fees by $3,111.
Half centuries: While centuries were found to have little impact on bids, half centuries upped prices considerably. Every additional 50, in any form of the game, gained a player an extra $2,683.
Stumpings: Wicketkeeper bids are largely determined by number of stumpings in any format. Additional stumpings were worth $2,595 each.
Wickets: Bowlers got the worst end of the deal. Only number of wickets in all forms of the game impacted their prices. And even then each additional career wicket only upped bids by $377.