Indian Premier League Cricket: The Most Successful Sports Entrepreneurial Story Ever

“Modi says I got you your team. I'm going to set the minimum reserve price at $50 million payable over 10 years. No matter what you bid, the first year payment is $5 million. Nokia is sponsoring your team for $5 million. You are already in the black. You have a profitable enterprise day one. Shah Rukh's like, okay, great. I'm in. That is an offer I can't refuse. At the auction Shah Rukh won the team at 12 o'clock. At 3 o'clock he had a signed agreement with Nokia to pay the $5 million.”

Business & Entrepreneurship · Economics & Markets · Strategy & Decision Making

DUR_ENDURING

Pre-wire revenue to match year one cost

“Lalit comes up with this incredibly brilliant idea. Instead of having a salary cap, all these auctions that I keep running for media rights and sponsorships work really well because they collapse everything down to a super clear, one time, in the moment transaction, and I can set the guardrails for minimum, maximum. What's wrong with auctioning players like a Sotheby's auction? Great transparency. I also knew it would be the talk of the town. Extremely controversial.”— Lalit Modi

Economics & Markets · Strategy & Decision Making · Business & Entrepreneurship

DUR_ENDURING

Auctions eliminate side deals, create spectacle

“There were a number of guiding principles behind how we put IPL together. One was that it should reflect the characteristics of modern India: energetic, colorful, noisy, exciting. Two, it should not compete with other forms of cricket, but rather compete with other forms of entertainment, evening primetime. Most households in India were single television homes, and women controlled the remote watching soap operas at night.”— Andrew Wildblood

Strategy & Decision Making · Psychology & Behavior

DUR_ENDURING

Compete with substitutes not complements

“Lalit and IMG say to Sony, okay we hear you, hang on. They go to World Sport Group and say here's what we need you to do. We need you to bid and buy the 10 year media rights at the billion dollar price, but we'll only charge you $60 million in year one. You're going to turn around and immediately sub-license the Indian domestic broadcast rights back to Sony who is good for that $60 million.”— Lalit Modi

Business & Entrepreneurship · Strategy & Decision Making · Economics & Markets

DUR_ENDURING

Three-party deal isolates year one risk

“The IPL was designed from day one as a major league in the post-television world, anticipating streaming and social media. One game every night, every match matters. It's Monday Night Football every single night for two whole months. Explicitly bringing in Bollywood creates 50-50 gender viewership. No other men's sports league achieves this. Previous to the IPL, the NFL was the most perfect sports entertainment product, but the NFL is an accident that Pete Rozelle massaged into working.”— David Rosenthal

Strategy & Decision Making · Creativity & Innovation · Business & Entrepreneurship

DUR_ENDURING

Architected perfection beats evolved accident

“Lalit goes to Sony, Sky from the UK, and an Indian entertainment company called Nimbus. He says these rights are now available, minimum bid is $500 million for four years. This is going to be very profitable for you. It's very easy to set up a sports network. I've already done it. I will help you do it. Nimbus ends up winning the auction with a $620 million bid for four years. They set up Nimbus Sports Channel. It quickly becomes the number one sports channel in India. There's nothing else.”

Strategy & Decision Making · Business & Entrepreneurship

DUR_ENDURING

Help non-competitors become competitors

“Lalit walks in, sits down and says, Mr. Murdoch, I'm informing you that your contract is terminated right now. We are going to rebid the contract and you are welcome to submit a bid. We are mandating that the minimum bid is $500 million for four years. Murdoch spits his tea out. He's like, you're crazy, who are you and why do you think this is going to work? Star and ESPN had merged. There are no other sports channels in India. Rupert's like, who's going to bid on this? You're all hot air.”— Lalit Modi

Strategy & Decision Making · Economics & Markets · Psychology & Behavior

DUR_ENDURING

Engineer competitive bidding from monopoly position

“Lalit Modi goes to the Walt Disney company and says, my family has this JV with Philip Morris, help them enter the Indian market. We can help you Disney do the same thing. In a genius fashion, Lalit uses the sales force that the Modi company has for their tobacco products. They have 80,000 to 100,000 sales reps going to convenience stores in every part of the country.”

Business & Entrepreneurship · Strategy & Decision Making · Operations & Execution

DUR_ENDURING

Repurpose existing distribution for new products

“Sports are the only property left where there is true uncertainty and true appointment live viewing has to happen. There's nothing else left. Sports are king in live content in the modern world. Bollywood studios now refuse to release movies during IPL season, even though it's when kids are out of school and historically their blockbuster window. They don't want to compete with IPL. The best Bollywood product is the IPL games right now.”— David Rosenthal

Business & Entrepreneurship · Economics & Markets · Culture & Society

DUR_ENDURING

Bollywood won't release during IPL season

“You couldn't have the IPL without Lalit Modi, period. But did you need every business practice? Could something so valuable be created without allegedly having stakes in three teams? The only examples of founders of this magnitude who did it without realizing equity are Dee Hock at Visa and Morris Chang at TSMC, though Morris got equity grants over time and Dee got paid. It's rare. The BCCI structure was really a blocker for incentives.”— Ben Gilbert and David Rosenthal

Leadership & Management · Psychology & Behavior · Philosophy & Reasoning

DUR_ENDURING

Rare: create massive value without equity

“It actually wasn't until right before all this went down that India even realized they had the broadcast rights to cricket at all. In 1991, the South African National Cricket team comes on a tour to India. The South African Cricket Board is like, hey, we want to broadcast this. How much do we owe you for the rights? The BCCI doesn't know how to respond. They're talking amongst each other: what should we say? $10,000? Let's start with $20,000.”

Economics & Markets · Psychology & Behavior

DUR_ENDURING

Buyer sets anchor 10x seller expectation

“There are two things you need to maximize to make a sports league appealing. First, you need the best players in the world playing there. Two, you need uncertainty about the outcome. You need competitive parity. This is the any given Sunday element of the NFL. The NFL would love nothing more than every team to go eight and eight and then have an incredibly competitive playoff situation. It took them 100 years but they became wizards of competitive balance.”

Business & Entrepreneurship · Strategy & Decision Making · Psychology & Behavior

DUR_ENDURING

Quality talent plus outcome uncertainty

“Assets can get more valuable with the right owners. Shah Rukh Khan deciding to own the Kolkata Knight Riders made it much more valuable than if passive money had bought it. He was in the black on brand value as soon as he bought it because his association is worth millions of dollars. His face on it, doing the anthem video. It's a smack-in-the-face reminder that assets need to find the right owner to maximize value, and sometimes it's a gigantic multiplier versus passive dollars.”— Ben Gilbert

Strategy & Decision Making · Business & Entrepreneurship · Economics & Markets

DUR_ENDURING

Right owner multiplies asset value

“Here we are in the early 90s. Disney isn't the only major global media conglomerate that sees the potential of this newly television hooked-up Indian consumer market. There's News Corp and Rupert Murdoch. Rupert really built the television side of News Corp on the back of two things. It was news at first, but then it was really sports that helped Fox totally take off. The NFL Sunday deal here in the US is what put them on the map. This is the blueprint for bringing Fox into a new country.”

Business & Entrepreneurship · Strategy & Decision Making

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Sports rights unlock new media markets

“Sports teams are an amazing asset to own. The big four US sports leagues (MLB, NFL, NBA, NHL) outperformed the stock market from 1961 to 2024: 13% annualized versus 10%. The stock market 550x'd during that period, while an index of sports teams went 2300x. Sports teams have historically been very uncorrelated with the stock market and don't have big drawdowns. These are very scarce assets.”— Ben Gilbert

Economics & Markets · Business & Entrepreneurship · Strategy & Decision Making

DUR_CONTEXTUAL

Sports teams 2300x vs market 550x

“The BCCI's overarching control of cricket within India and the cornered resource of the players, being able to ban them from playing in other leagues, obviously doesn't exist in the US. That makes it difficult to replicate the IPL disruption model directly in MLB or NBA. The IPL had unique n-of-one dynamics: the BCCI structure, T20 format timing, and the primordial soup when IPL was formed. MLB is farther along the decline curve.”— David Rosenthal

Strategy & Decision Making · Business & Entrepreneurship · Economics & Markets

DUR_ENDURING

BCCI monopoly unreplicable in US