By Alan Beattie
There is no better example of the winner-take-all economics of the super-rich than the recent history of cricket. Inside a couple of years, Indian commercialisation has turned a game originally designed for English gentlemen-amateurs into one of the most lucrative sports on earth.
The commercialisation of cricket came late. Football in England became a professional sport from the 1880s, while in the US baseball was a professional game as early as the 1870s. But as late as the 1960s, cricket, centred on a five-day international Test match format, contained both amateurs and professionals and was run neither to maximise overall income nor to distribute it to the better players.
Even after complete professionalisation, many cricketers would often have earned more as lawyers or accountants. Only with the rise of the one-day version of the game in the 1970s was there a determined attempt to bring more money into the game.
Now the Indian Premier League, invented in 2008 and based on a three-hour-long TV-friendly version of the sport, has led to a huge increase in rewards to a cricketing elite. Modelled on the US National Football League, the operation sells broadcasting rights and shares the revenue between franchise teams, to which players are auctioned off to create a competitive league. The IPL, which runs for only six weeks a year, takes revenue from India?s middle-class consumers and distributes it to a global elite of players.
Lalit Modi, the entrepreneur who was instrumental in setting up the IPL (since suspended as its chairman after allegations of impropriety that he denies), said: ?I knew that cricket in India was almost like a religion. It just had never been packaged or marketed effectively.?
Within two years, according to Sporting Intelligence, the IPL offered the second-highest salaries per week of any sport on earth after the US National Basketball Association.
A privately run product invented in and by a developing country profoundly changed a global industry.
International players even in the richest cricketing nations, England and Australia, are estimated to earn a retainer of about $650,000 from their national boards for a year?s contract. By contrast, in this year?s IPL auction 14 international cricketers won contracts of more than $1m for six weeks? work, with Gautam Gambhir, the Indian batsman, taking $2.4m.
Of the three possible reasons for the emergence of a super-rich elite – a rise in the disparity of skill, a triumph of manipulative rent-seeking by the high earners, or a rapid increase in returns to relative ability at the very top of the profession – the IPL illustrates the third.
There has been no apparent sudden increase in the disparity of quality between international cricketers, where huge differences have always existed. No player has ever stood as far above his contemporaries as the Australian batsman Sir Don Bradman, widely acknowledged as the greatest cricketer, who played during the 1920s and 1940s. Sir Gary Sobers, the West Indian all-rounder, was recognised as a class apart during an international career stretching from the 1950s to the 1970s.
And players? values in the IPL are realised in an open auction among employers based on ability, not decided by a secretive process controlled by the super-rich themselves.
Stefan Szymanski, an economics professor at Cass Business School at City University in the UK, was a consultant for the company that founded the IPL. He says: ?The IPL represents a fundamental change in the culture of cricket, both commercially and politically. For good or ill, one of the world?s oldest sports will never be the same again.?
? The Financial Times Limited 2011