Salary caps, player auctions and transfer fees – what the IPL needs to learn from the top leagues in the world
The IPL has the advantage of having multiple role models
The first year of the IPL saw player auctions, player quotas, icon players and a draft equivalent for the U-19 players. The organizers of the IPL – the BCCI got most of these spot on, well, except the concept of the ‘Icon Players’ maybe.
Now in its second year, the IPL has new modality-related issues to deal with. Mr Lalit Modi borrowed heavily from international Leagues like the NBA and the EPL in the first year of the IPL and it turned out to be a good move on his part. So why not do the same this time as well. So let’s look at the various issues that need to be dealt with and what is the best possible solution for each – based on how similar issues have been best handled the world over.
The first matter is the salary cap. This was a completely new creature for everyone involved and most of the teams wouldn’t have envisaged the complexities it would involve. And that is precisely why the cap needs to increase – because most of the contracts are for three years and teams will have no financial flexibility to engineer any changes in their composition if they have already utilized the existing cap.
It would also be a good idea to announce approximate cap numbers for the next 4-5 years. This is how it works in the NBA and allows teams to plan out their cap structure. It also gives them a lot of options in devising player contracts. For e.g. If you have less money free in your cap this year but have a lot more next year, you could still sign up a big time player for big bucks by offering more money in the second year of the contract. But all this becomes possible only when the contract structure is not rigid. Teams should be allowed to offer contracts ranging from one to any number of years. Such flexibility is beneficial to both players and teams and ensures that both their interests are protected. The combination of cap planning and flexible contracts adds another exciting element to the league and rewards teams who plan their team composition judiciously and just throw money around – which is how a league should be.
Another question is about the sanctity of the Cap amount – should teams be allowed to spend more? Yes, they should be for the simple reason that there is no league in the world where the cap amount is sacrosanct – it allows teams to go for the jugular and assemble super star squads. You can however protect against teams going over board by having a luxury tax – for every rupee that they spend over the cap they need to pay the league a percentage of it as tax.
The next issue is that of transfers. The league proposes a transfer fee similar to that in European football, with the decision to move depending on both the player and the owning club. As we have seen in football, the balance of power soon shifts to the player and the club targeting the player. The club dangles the carrot of a massive contract and the player soon starts putting pressure on his parent club leading to ugly episodes.
The American model is based on barter and far more cordial. Their exchanges generally involve players moving in both directions with some money and draft picks also thrown in. The club has full right to decide whether it wants to transfer a player or not. Therefore, teams can hold onto their best players and don’t have to re-build every now then. It also encourages a club to develop new talent as there is no risk of richer teams snatching their precocious young players away from them. And development of young talent is high on the BCCI’s agenda for the IPL.
In these transfers, the team also tries to match the annual component of the contracts of the players moving out to that that of those moving in. In this way they can still improve without adding more salary. So for example, Hyderabad could trade one of its big hitters in return for a bowler to fix the balance of their side and not take on any additional salary. This kind of cap management is also a key feature of running professional teams. It’s a far healthier system where disparity between teams is far less than that in Europe where there is a huge gulf between rich and poor teams.
The next point concerns the entry of new players in the league. The League had four different systems last year. There was an auction system for international players; a draft for Indian U-19’s, a catchment area system for domestic players and the rest where signed up in an open market system. The auction was a unique method but a necessary one to form the teams the first time round and can be done away with for the second year. The draft works best in an American scenario where there is a very organized collegiate system and each and every player enters the league via it. Therefore, the draft system for U-19’s who are taking their first steps in big time cricket via the IPL. The catchment area concept was based on the popularity of domestic players in their own states. However, as we saw in the first episode, fans don’t care for that. They just love performers. Therefore, this system can be done away with – will also ensure that there is one uniform recruitment system.
The ‘Icon’ player system also needs a re-think. It was unfair that some teams had certain players thrust upon them and that too for big money, whereas some used the same moolah to grab players of their own liking. However, the three year contracts are already in place and the ‘Icons’ will continue to be so for another two seasons. Some concessions could balance the situation though. The full salary of the ‘Icons’ should not count towards the cap. This way the existing contracts stand but teams with ‘Icons’ have a little more money to play with.
The IPL did well to copy the best practices of the top international leagues during its inception. A similar approach would do it a world of good this year as well
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