In the May 14, 2008, issue of India’s Business Today, Nathan’s Ram Tamara and one of the firm’s principal consultants, Michael Maloney of Clemson University, share their opinion about what will drive the success of the Indian Premier League, or IPL. Worldwide, the business of sports offers fertile ground for economists, thanks in part to the wealth of statistics collected on the sports themselves and on their competitive processes.
Tamara and Maloney say that the interest of India’s cricket fans, sustained by the quality of IPL competition, will determine the league’s long-term success. And claiming and keeping the interest of those fans will require understanding what they want and what each type of fan is willing and able to pay to get it. Ticket prices are determined by seating, and franchisees need to allocate and price seats on the basis of the fan base. IPL franchisees, say Tamara and Maloney, should also take into account more than ticket price in order to find fans’ price points and maximize revenue. Fans, after all, spend time and money getting to stadiums and queueing, and they also consume goods within a stadium.
Tamara and Maloney note that satisfied fans are the basis for revenues from merchandising and televised matches. They advise franchisees to value young fans, 10–12 years old, especially, as they are most likely to take to new forms of cricket and influence their parents.
What fans want—local or foreign players, hard hitters, celebrities—will drive the composition of successful teams, and decisions about cost-effectiveness. How much is the team willing and able to pay for a particular player, and how will that affect the fans? Will fans be willing to pay higher prices for a star? And how high a price? Here, say Tamara and Maloney, quantitative analysis of player statistics has been helping U.S. teams make these difficult decisions.
Dr. Tamara is Managing Director of Nathan India, a wholly owned subsidiary of Nathan Associates based in Chennai. He can be reached at firstname.lastname@example.org