The Art of Making a Bubble…

…is not much of a task in India anymore.

Or a gold rush. Or a mania. Or a scam. The art of making one in this country has to be one of the easiest ever. The basic principle is what is the basis of religion—if a million people are doing it, it must be right.

This past week, we saw the news channels going gaga over the Indian Premier League selling two more franchises to consortiums. The cities chosen by these franchise owners were Pune and Kochi.

The price paid—in excess of Rs.1,500 crore each. Are you bloody kidding me? I fail to understand what made the smart people behind these two consortiums pay such an amount. What were they smoking?

I am not smoking something to argue on this point, though. I have reasons, real proven reasons. Mr. Modi’s business pitch is that the India Premier League has in it to be bigger even the English premier League (EPL). That it will take the sport global. That we will have Chinese and Americans playing in whites soon. That it will make handsome returns for the franchise owners. That it may even benefit Indian cricket and bring world peace along the way. Yeah? Really? Not. Modi (and all those taken in by this smokescreen) needs a lesson or two in business, and reality.

To strike first at the EPL comparison first, Id like to remind all that unlike cricket, football was always first a club sport, played and followed locally, and then an inter-national sport. As such, there has always been a local fan base for the clubs (so very important for a league) as long as football has been. The IPL attempts raggedly and artificially to create a local fan base for a sport always followed inter-nationally first. That can’t happen. Fan loyalty cannot be bought or made. No wonder that merchandize sales (reportedly) are negligible for these franchises.

Also, there are 150-odd countries playing football today against the nine who play cricket internationally. In any case, cricket is the number one followed sport in maybe the three South Asian countries in all. So what international fan base is Modi talking about?

Then there is the handsome returns bit. Okay, except out of the seven original franchise owners, only two made a profit in the first year. One had an acting superstar and marketing machine behind it, and the other paid peanuts and invested the least in the team. All the others are bleeding badly and after the last auction don’t look like they will stop bleeding for some time. That is the reality.

The reality is also there for those who associated with this League in other ways. Google and YouTube have realized that nobody is really watching cricket on the net. Reebok and Adidas are not selling T-Shirts like they thought they would. Movie halls which bet on IPL matches instead of good cinema are running empty. That is the truth.

My point here for talking about all this is to make an important point to those getting into business. If you see a million people running in a direction, don’t join them. Instead, wait, evaluate and make your own decision. Wise men and sense says so.

History has told us that the madness of crowds has only destroyed. The Dutch Tulip Mania of the 1600s, the dot-com rush of the late 1990s, and closer to home, the infamous Reliance Power IPO have all taught us one thing—fools rush in.

What I say is perhaps best encapsulated by what a certain Mukesh Patel, co-owner of the Kochi Franchise, said recently. “I’m just a businessman and have absolutely no idea about the game of cricket. It is just business for me.” Fool.

AUGUST SHARK is a once-failed, second-time successful bootstrapper who resides in Mumbai. He can be contacted at august@stumpspeak.com.

Tags:
global, Indian Premier League, IPL, sport