This past week has seen a development that could result in the most serious test that the IPL has faced with respect to its long term success and viability. By terminating IMG?s contract after two seasons, BCCI has stirred a hornet?s nest, and the implications could be profound. There are numerous legal implications that could result from this unilateral move by BCCI/IPL, but beyond that, there are serious logistics and future financial viability concerns that must be addressed, even if one looks at this development in isolation.
Simply put, IMG has been at the helm of things with regard to the IPL, and the seamless manner in which it has managed to make the league an unprecedented success is in large part the reason why the stakeholders and even former BCCI president Sharad Pawar have been so vociferous in their support of the sports management firm. This is in stark contrast to the reaction by the franchisees and other stakeholders to SET Max?s premature contract termination by the League earlier this year. In that situation, there appeared to be a clear-cut leveraging by the League in an effort to renegotiate the existing contract on more favourable terms, a move that eventually yielded rich dividends to the League and its stakeholders, to the tune of $200 million annually. While some could have questioned the manner in which the entire situation was handled, the fact that SET itself was willing to renegotiate and agree to new terms without gaining any additional benefits made the entire process a non-starter from the perspective of controversy. And the fact that if SET had decided to part ways with IPL, there were other competitors who could have stepped in, ensuring a seamless transition.
The biggest problem that the League faces with respect to the current issue, besides the fact that there has been public opposition by stakeholders, as well as the fact that IMG has done a good job with the entire event, is that there is simply no one else who can replace IMG at the present moment. The entire basket of services, goodwill, and reputation that IMG gives to the League will be hard to replicate. Globally perhaps there are other sports management firms who could provide these kinds of legal, sports marketing, broadcasting-related, compliances, regulations, and other management-related services, but to expect either an indigenous firm, or even an Indian division of any other SM firm to provide these services in a manner where the event doesn?t skip a beat, is preposterous.
Also, it doesn?t behove IPL to consistently renege on contracts or agreements that were made in good faith, simply because it is in a dominant position, although at this point one cannot really say with certainty that the League is actually doing that. However, with the Competition/Anti-trust laws coming into effect, BCCI must be careful that it is not seen to be violating any of the basic tenets of monopolistic activities, including in particular, the abuse of its dominant position. As it is, there is enough ambiguity with respect to the treatment meted out to ICL and the blanket refusal to accommodate any of its erstwhile competitors? contracted players.
Other potential legal issues, and perhaps more immediate in nature, are those surrounding the grounds for termination. While BCCI is claiming disproportionate remuneration for services rendered, the fact remains that there is a strong possibility that the contract was actually signed in London, or is subject to British laws and jurisdiction. If that is the case, and the dispute resolution method is arbitration, BCCI might have a fight on its hands.
Now is the time to fly under the radar, but more importantly, not to jeopardise any of the League?s success. By terminating the services provided by the entity that has single-handedly conceptualised this League, and brought it to where it is, in conjunction with the IPL?s Governing Council, would be the one facet of this entire enterprise that would suddenly be rocked, and this could be extremely risky.
Regardless of what happens, one thing remains a fact. The perception of the League will depend in large part on how this situation is handled, and the treatment meted out to IMG will be telling in the future, as other sports and viable professional sports entities become competitors, and sponsors/investors have other options where a contract is valid only at the behest of a single, dominant party. The League should reconsider the termination, and use its leverage wisely: sport is getting corporatised, and with that comes accountability, both from an ethics and a financial standpoint. The only thing that can stop IPL from becoming a powerhouse global league is if it severs its own jugular. It probably won?t, but the focus needs to shift back to the sport and the brass-tacks. Before T20 get downgraded from being categorised as a sport, and grouped with Formula One as entertainment for the masses.
The author is a sports attorney at J Sagar Associates. Views are personal