Indian Premier League Cricket (Audio)

1. 0:00 – 1:11

   KKR anthem and why IPL feels like a spectacle-first sports product

   1. BGBen Gilbert0:00

      I am listening to the Kolkata Knight Riders anthem as my pump-up song.

   2. DRDavid Rosenthal0:05

      Oh, nice!

   3. BGBen Gilbert0:06

      It is so awesome. Have you seen the music video with Shah Rukh Khan, the owner of the Kolkata Knight Riders?

   4. DRDavid Rosenthal0:13

      No.

   5. BGBen Gilbert0:14

      He is the main character with the Bollywood dance around him.

   6. DRDavid Rosenthal0:17

      Okay, I'm gonna go watch it right now.

   7. BGBen Gilbert0:19

      And it's a little cheesy 'cause I think it's from 2008 era, but it is perfect pump-up music.

   8. DRDavid Rosenthal0:25

      Oh, yes. We've got the player silhouettes in fire. [chuckles]

   9. BGBen Gilbert0:29

      Yes, that's exactly the one.

   10. DRDavid Rosenthal0:31

       This is incredible. [laughing] How have I not seen this before?

   11. BGBen Gilbert0:36

       This is something that American sports definitely need to adopt.

   12. DRDavid Rosenthal0:39

       Oh, man, we've got, like, a construction crew.

   13. BGBen Gilbert0:42

       Yes. [laughing]

   14. DRDavid Rosenthal0:42

       Too hot, too cool.

   15. BGBen Gilbert0:44

       That is exactly the right reaction.

   16. DRDavid Rosenthal0:46

       Okay, I'm gonna pause it. We're not even gonna record an episode until I watch this film. [laughing]

   17. BGBen Gilbert0:50

       [laughing] All right, let's do it.

   18. DRDavid Rosenthal0:53

       Let's do it.

   19. SPSpeaker0:54

       Who got the truth? Is it you, is it you, is it you? Who got the truth now? Is it you, is it you, is it you? Sit me down, say it straight, another story on the way. Who got the truth?

2. 1:11 – 4:39

   What makes IPL the most interesting sports-business story (and why it could beat the NFL)

   1. BGBen Gilbert1:11

      Welcome to the Spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

   2. DRDavid Rosenthal1:18

      I'm David Rosenthal.

   3. BGBen Gilbert1:19

      And we are your hosts. Today, we cover the most interesting story in sports: cricket. Now, when David pitched me this idea a few months ago, I thought, "Eh, I'm not that interested in cricket." And to all of our US listeners out there, I am guessing you feel the same way, but I was very wrong.

   4. DRDavid Rosenthal1:38

      Hey, there are twenty million hardcore cricket fans in the US today-

   5. BGBen Gilbert1:43

      Great point

   6. DRDavid Rosenthal1:43

      ... as we will get into later in the episode.

   7. BGBen Gilbert1:45

      Great point. And listeners, this story really isn't about the game of cricket anyways. It's about how to create a massively successful sports league from scratch, something that I thought was impossible after doing our NFL and NBA episodes, which each took a hundred years to get to where they are today. Indian Premier League cricket started a mere seventeen years ago in 2008. And even more than a sports league, the IPL is a case study in how to create the perfect entertainment product. They took this sleepy, polite British sport with matches that lasted five days, and they completely transformed it. It is compressed down to three hours. It's a high-octane slugfest that is all about power hitting and hitting sixes, the sort of cricket equivalent of a home run. It's got Bollywood glamour and on-field dance performances, cheerleaders, fireworks, and the way they started the league itself was a high-stakes auction to a group of billionaires and movie stars. And of course, they carefully studied all the mechanics that made the NBA and the NFL as successful as they are today and then applied them on steroids.

   8. DRDavid Rosenthal2:52

      It's an amazing story.

   9. BGBen Gilbert2:53

      On top of all of this, the story itself has just about the most palace intrigue of any company we've ever studied. You've got Disney, Philip Morris, Rupert Murdoch, Reliance, Tata, and even Google. There's a very, very complicated founder figure. There's corruption, there's potential self-dealing, betting, rigging, and miraculously, the league has been successful despite all that. So successful, in fact, that it is the fastest-growing major sports league in the world, growing twenty x in value since 2008 to be worth more than sixteen billion dollars today. Insanely, the media rights to each match are so valuable that they're second only to the NFL. The TV broadcast rights, let me just say this again, for each match are worth more than an English Premier League soccer match.

   10. DRDavid Rosenthal3:46

       Or an NBA game or a Major League Baseball game.

   11. BGBen Gilbert3:49

       Yes. There's one angle where IPL cricket looks like pure, unadulterated capitalism applied to the world of sports, but there's another angle where it looks a lot more like a religion-

   12. DRDavid Rosenthal4:00

       [laughing]

   13. BGBen Gilbert4:00

       ... or a unifying cultural force, or even a mechanism of diplomacy, as we shall see. And David, I don't want to spoil too much, but last night, before we were recording, you were pitching me that twenty years from now, the IPL will be the largest sports league on the planet, period, bigger than the NFL.

   14. DRDavid Rosenthal4:18

       That is the case I'm going to make on this episode.

   15. BGBen Gilbert4:20

       Ooh!

   16. DRDavid Rosenthal4:21

       It's funny, on our NFL episode, we came to the conclusion that the NFL is this perfect blend of communism and capitalism, and I was thinking, "Oh, maybe the IPL will be an even more perfect blend." No, it's the perfect blend of capitalism and religion.

   17. BGBen Gilbert4:35

       Yes. Ooh, that's a great way to put it.

   18. DRDavid Rosenthal4:37

       Even more lucrative.

3. 4:39 – 6:38

   Show announcements and sponsor/admin housekeeping

   1. BGBen Gilbert4:39

      Yep. So listeners, is this a bubble waiting to pop or the future of entertainment? Today, we dive in. Well, we have one huge announcement to share with you today, a save the date. We can't say much yet, but after incredible listener demand over the years, we are finally coming to New York City.

   2. DRDavid Rosenthal5:00

      Yeah!

   3. BGBen Gilbert5:01

      July 15th, save the date, mark your calendars with our good friends at J.P. Morgan Payments. And if you want to be the first to know when we have any details to announce, acquired.fm/nyc. We can't wait to see you there.

   4. DRDavid Rosenthal5:15

      We can't wait to see you there, and we can't wait to be there.

   5. BGBen Gilbert5:18

      Yep. If you want to know every time an episode drops, check out our email list. It's the only place where we share a hint at what our next episode will be and share episode corrections, updates, and little tidbits that we learned from previous episodes. And we actually had quite a few little ones from all the Rolex enthusiasts, so thank you to the deluge of people who wrote in with little corrections to particular reference numbers about the Rolex episode. That's acquired.fm/email to join the list. Join the Slack and talk about this with us afterwards with the whole Acquired community: acquired.fm/slack. And if you want more Acquired between each episode, check out ACQ2, our interview show, where we talk with founders and CEOs building their businesses in real time. This most recent one was with Bill McDermott, the CEO of ServiceNow, talking about the art of enterprise sales that he used to grow ServiceNow to over ten billion dollars in revenue.... Before we dive in, we wanna thank our presenting partner, J.P. Morgan Payments.

   6. DRDavid Rosenthal6:18

      Yes, just like how we say every company has a story, every company's story is powered by payments, and J.P. Morgan Payments is a part of so many of their journeys from seed to IPO and beyond.

   7. BGBen Gilbert6:28

      So with that, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David, take us in.

4. 6:38 – 10:52

   Lalit Modi’s origin story: US education, Disney/ESPN, and India’s early cable boom

   1. DRDavid Rosenthal6:38

      Well, we start in the early 1990s with a colorful character, shall we say, named Lalit Modi. No relation to Narendra Modi, the prime minister of India, but he is from another famous Modi family. Lalit is the son of the renowned Indian industrialist K.K. Modi, who had built a fairly large conglomerate in India, you know, in the vein of Reliance or Tata or whatnot.

   2. BGBen Gilbert7:09

      It seems like all these big Indian companies are conglomerates. Like, it was actually kinda hard to find a scaled Indian company that did one thing.

   3. DRDavid Rosenthal7:18

      Yeah, the industrial structure in India, at least to date, seems to be more like South Korea or Japan with the big conglomerates.

   4. BGBen Gilbert7:25

      Yep.

   5. DRDavid Rosenthal7:26

      But in this case, Modi's conglomerate primarily is based around the tobacco industry, and they have a JV partnership with Philip Morris and are one of India's leading tobacco and cigarette companies. So Lalit, as the heir apparent son in this family to this business, he gets sent to college in the US for his education. First, he goes to Pace University, and then he transfers to Duke University. He ends up not finishing and coming back home and rejoining the family business, but when he comes back, inspired by his time at Duke and how basketball-crazy Duke is, he's like: "Man, the thing that really struck me about America is how sports-crazy everyone is there, and how big a business sports is in America, and how big the sports media business is around it."

   6. BGBen Gilbert8:16

      Yes.

   7. DRDavid Rosenthal8:16

      We should get into that.

   8. BGBen Gilbert8:17

      Specifically, I saw him reference Monday Night Football as this appointment viewing, my friends all would gather around it. We couldn't do anything Monday nights at that time 'cause they're all glued to the TV, watching Monday Night Football.

   9. DRDavid Rosenthal8:29

      Yep, and this is kind of the perfect time for it because here in the early '90s, Indian households are, for the first time, starting to get television. And so there hadn't been a sports culture, there certainly hadn't been a sports media culture in India up until this point, but it's fertile ground. So Lalit goes to the Walt Disney Company, and Disney, of course, owns 80% of ESPN at this point in time, and says, "Hey, my family has this JV with Philip Morris, you know, helped them enter the Indian market. We can help you, Disney, do the same thing." And at first, it's not sports. It's not ESPN yet. It's Disney Disney, kids' movies, merchandise, entering the market that way.

   10. BGBen Gilbert9:10

       Yes.

   11. DRDavid Rosenthal9:11

       So in kind of a genius fashion, Lalit uses the sales force that the Modi company has for their tobacco products. They have eighty thousand, a hundred thousand sales reps that are going to convenience stores, corner stores, you know, in every part of the country in India, this vast, vast country where the majority of people do not live in large cities. They've got a sales channel relationship into these stores [laughing] distributing cigarettes.

   12. BGBen Gilbert9:36

       Huh.

   13. DRDavid Rosenthal9:37

       So Lalit says, "Hey, we can leverage this sales force and use those people to go hook up with these early Wild West proto-cable operators out there in these towns and villages in India and bring them Disney content."

   14. BGBen Gilbert9:51

       It's amazing. And so this isn't, like, distributing home video, right? This is finding the local person who has set up all the wires to go out to the other homes in the neighborhood and going to that person and saying, "Hey, I know you have hundreds or thousands of homes that you're sending content to. Can you send this content there?"

   15. DRDavid Rosenthal10:10

       Yep. There is a national over-the-air broadcast network in India, a national network called Doordarshan, but just like happened decades earlier in the US, little mom-and-pop cable operators are starting to pop up and saying, "Oh yeah, we'll run a wire. You know, we've got a satellite dish. We're pulling down signal from CNN-

   16. BGBen Gilbert10:28

       Mm

   17. DRDavid Rosenthal10:28

       ... or what have you, and we'll rebroadcast those channels out to you via a wire into your home."

   18. BGBen Gilbert10:34

       Makes sense. So at this point, Modi is sort of acting as a middleman between the content creation business and the distribution business. He neither has to create the Disney movies and the Disney content, but he also doesn't have to lay wires.

   19. DRDavid Rosenthal10:47

       Yep, he is the JV partner that Disney is entering India with.

   20. BGBen Gilbert10:51

       Got it.

5. 10:52 – 18:34

   Murdoch’s Star, cricket rights, and the BCCI discovers it owns a gold mine

   1. DRDavid Rosenthal10:52

      So now, 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 out there and Rupert Murdoch, and Rupert, of course, really built the television side of News Corp, with Fox, on the back of two things. It was news at first, but then it was really sports that helped Fox totally take off. I mean, the NFL Sunday deal here in the US is what put them on the map. This is the blueprint for bringing Fox into, and News Corp into a new country.

   2. BGBen Gilbert11:30

      And Fox Sports, and eventually all the regional sports networks in the US.

   3. DRDavid Rosenthal11:34

      Exactly. So News Corp had just launched a new brand and channel in India called Star, and Rupert's going around looking for how he's gonna run this playbook in India, what sports is he gonna broadcast? And pretty quickly, he figures out that there's really only one sport that matters in India, and that's cricket. And it just so happens that he thinks he can actually get the rights to broadcast Indian national cricket pretty darn cheaply. We're gonna come back to that in a little bit.

   4. BGBen Gilbert12:04

      And the question is, what is cricket at this point? You know, this is the Indian national cricket team playing other countries in these international matches, and then there's a big World Cup, but it's not like each city has a team or something like that.

   5. DRDavid Rosenthal12:19

      Yeah.... There's no English Premier League of cricket. At this point in time, cricket is just this international game.

   6. BGBen Gilbert12:26

      And now that the Indians are getting televisions, the Indian national team playing cricket is becoming must-see television.

   7. DRDavid Rosenthal12:34

      Yeah. It's Monday Night Football, it's the playoffs, it's probably every Indian male who has access to a TV, and I say male, because at this point in time, cricket is a male game-- [chuckles]

   8. BGBen Gilbert12:44

      Yep

   9. DRDavid Rosenthal12:45

      ... is watching when the Indian national team is playing.

   10. BGBen Gilbert12:47

       Yep.

   11. DRDavid Rosenthal12:48

       So Rupert Hoovers up these rights pretty cheaply, and all of a sudden, Star is now the place to watch cricket in India. Lalit sees this. He's got the partnership with Disney. He's always been interested in sports, and he's like, "Well, hey, guys, you have ESPN. We gotta get in this game. We gotta be getting cricket, too."

   12. BGBen Gilbert13:06

       Yep.

   13. DRDavid Rosenthal13:07

       So Lalit, and ESPN, and Disney, they go to IMG, the big international sports agency, which we didn't plan this at all, amazing crossover with our Rolex episode, the same IMG. IMG, of course, helped Rolex design the Testimonee program that brought in Jack Nicklaus, and Arnold Palmer, and then ultimately Roger Federer, and all of the athletes who partnered with Rolex over the years.

   14. BGBen Gilbert13:31

       Yep.

   15. DRDavid Rosenthal13:32

       So Lalit, and ESPN, and IMG, they go to the national cricket board in India that controls these broadcast rights. The national cricket board is called the BCCI, the Board for the Control of Cricket in India, and they say, "Hey, you've sold these pretty cheaply to Rupert. We'll pay you more. We'll take 'em. [chuckles] We should run an auction process here."

   16. BGBen Gilbert13:56

       And it's worth knowing, the BCCI's responsibility is not really a profit-maximizing organization. It's kind of a regulatory body. It's not the government, but they're tasked with developing the sport of cricket, and in particular, cricket in India, ensuring that the sport has longevity, and it has all the infrastructure that it needs. They're like the stewards of making sure that Indian cricket has a long and successful future.

   17. DRDavid Rosenthal14:25

       And all of the other cricket-playing countries, from England, to Australia, to Sri Lanka, to the West Indies, they all have the same type of structure in their countries.

   18. BGBen Gilbert14:34

       And they all actually roll up to the ICC, which today is called the International Cricket Council. But interesting to know, when it started in 1909, it was the Imperial Cricket Conference, so that gives you a sense of the way that cricket was spread around the world by the British.

   19. DRDavid Rosenthal14:49

       Yes, it is the British Commonwealth countries that are historically the cricket-playing nations that are part of the ICC.

   20. BGBen Gilbert14:55

       Yep.

   21. DRDavid Rosenthal14:56

       So we've been talking about how these early cricket rights here in the '90s, Star and Murdoch, they're able to get them super cheap. It actually wasn't until right before all this goes down that India even realized they had the broadcast rights to cricket at all. [chuckles]

   22. BGBen Gilbert15:12

       Yes.

   23. DRDavid Rosenthal15:12

       They didn't even know, and this is crazy. You can't make this up. How do they find it out? In 1991, the South African national cricket team comes on a tour to India. It's international cricket. They're playing in India, and the South African Cricket Board is like, "Hey, we wanna broadcast this. Uh, how much do we owe you for the rights?"

   24. BGBen Gilbert15:35

       Cricket was newly extremely popular in India. It was 1983, eight years before, where India had won the Cricket World Cup for the first time. This is a really big deal. The nation comes together. They're all excited about it. Then '87 is the first time the World Cup is actually hosted outside of England. It's actually in India and Pakistan, so the power of the cricket globally is starting to shift to India, and so this is only four years after India hosted the World Cup for the first time, and cricket's kind of on the rise.

   25. DRDavid Rosenthal16:02

       Yep, and it's all tied up with the television penetration of India.

   26. BGBen Gilbert16:06

       Yes.

   27. DRDavid Rosenthal16:07

       The first time that it's even possible for these to become big national pride-type events. So here, South Africa is just coming for a tour, the national team, and the board is like, "Well, how much do we owe you for this?" [laughing] They don't know how to respond, so there's this great history of they're sorta, like, talking amongst each other. "Well, what do we think we should say? We should say $10,000? Is that crazy? Let's start with 20. See what they say, $20,000, and then, you know, they can bargain us down from there." So they go to the meeting or phone call with one representative of the BCCI, with the South African board, and before the BCCI representative can open his mouth at all, the South African board member says, "We're thinking $200,000. Does that sound good to you?" [laughing]

   28. BGBen Gilbert16:51

       [laughing]

   29. DRDavid Rosenthal16:51

       And the India guy's like, "Uh, yeah, yeah, that sounds great. Let's do that." So they'd only just discovered that this thing had value, they even had these rights, and that they could sell them.

   30. BGBen Gilbert17:03

       And then it got really concretized into law a couple years later. There's a legal battle between the BCCI and this legendary leader of the BCCI, Dalmiya, and he goes to war against the national state broadcaster, Doordarshan, and the outcome of this legal battle is, yes, even the Indian government, the state broadcaster, has to pay the BCCI for these rights. The BCCI is the owner of the rights, and they can sell them to anyone they want.
6. 18:34 – 19:30

   Player central contracts + BCCI power: the hidden foundation for IPL

   1. BGBen Gilbert18:34

      While we're on this topic of things the BCCI realizes they own, and in particular, Dalmiya, and I hope I'm pronouncing that correctly, is the one who gains these rights the same way that he solidifies the broadcast rights. In 2001, Dalmiya introduces central contracts for Indian players and pensions for retired cricketers as a part of the BCCI's remit. The BCCI is the one who pays the players. This is so critical, and at the time it's almost like, oh, of course, the BCCI pays the national team. But it sort of sets up this umbrella that no matter how an Indian cricketer is playing cricket, we are the one who pays them, or at least who sort of has a contract with them. And that, along with the BCCI's ownership of media rights, is this killer combo that would eventually lead later to the IPL as we have it today.

7. 19:30 – 23:44

   The Star/ESPN merger, Lalit’s ouster, and a vendetta that powers a new league

   1. DRDavid Rosenthal19:30

      Yep. So all this launches ESPN in India, and there's back and forth for a couple years between Star and ESPN. They're bidding over these cricket rights with the BCCI. Eventually, in 1996, they decide, "Hey, let's stop fighting each other. Let's just merge." Uh, antitrust, uh, regulation in India is not quite what it is in the US at this point in time.

   2. BGBen Gilbert19:52

      No.

   3. DRDavid Rosenthal19:53

      So Star and ESPN merge, and to hear Lalit tell the story, Rupert Murdoch is kind of a, you know, sore loser here, that Lalit came in and increased the money that he had to spend for these cricket rights, ultimately had to merge with ESPN. He decides that he's gonna kick Lalit out of his baby, out of this company, post-merger.

   4. BGBen Gilbert20:14

      Hmm.

   5. DRDavid Rosenthal20:14

      Now... [chuckles] Is that really what happened? That's Lalit's side of the story. Um, Star Disney, the merged entity, would allege that Lalit underreported revenues that they were collecting and was accepting kickbacks from the cable operators, all sorts of stuff. There's a big lawsuit about it, goes on for a couple years, and at the end of it, Lalit gets booted out of the business, and despite his family's fifty percent ownership in that original ESPN-Disney joint venture, he gets nothing. He's out in the cold.

   6. BGBen Gilbert20:46

      Brutal.

   7. DRDavid Rosenthal20:47

      So from his perspective, he's like: Hey, I started Disney India. I modernized cable in India. I brought sports to India! I did this, and now all of a sudden, I'm out in the cold, and I get nothing. And in his mind, Rupert Murdoch is the reason that this happened.

   8. BGBen Gilbert21:06

      He's the villain. Rupert stole it away from the Modi family.

   9. DRDavid Rosenthal21:09

      My sworn enemy from here onwards. [chuckles] And thus begins a ten to fifteen-year journey that is not just the ultimate revenge play by Lalit on Rupert, but accidentally, along the way, starts the biggest sports entrepreneurial story phenomenon that has ever existed. [chuckles]

   10. BGBen Gilbert21:32

       Yep. Crazy, out of this feud. And I will say, more than any other episode that we've done, it seems like every element of this has two completely different sides to the story, both of which the leaders of that side dig in and maintain their side. In most companies we study, there kind of becomes one canonical truth, and it's mostly written by the victors. But in the history of the IPL, and especially with Lalit Modi, there's always two completely different stories representing how it went, and nobody ever gives an inch on either side of them. They just say, "Oh, that's all lies. That never happened. No way did that ever happen. Zero truth to that." And so it is a little bit difficult to tease out what actually did happen, given there is no convergence of story.

   11. DRDavid Rosenthal22:23

       Yep, and this is probably the right moment to say a word about the nature of doing business in India, at least at this point in time.

   12. BGBen Gilbert22:29

       The '80s, early '90s.

   13. DRDavid Rosenthal22:31

       The euphemism, I believe, that the Indian business environment is referred to as a low-trust environment, i.e., this is par for the course.

   14. BGBen Gilbert22:40

       Yes. If you make an investment, you should be babysitting it very carefully, very actively, making sure that your interests are protected.

   15. DRDavid Rosenthal22:49

       A lot of corruption, a lot of kickbacks, and particularly doing business in India as a foreign company at this point in time is at your own risk, shall we say.

   16. BGBen Gilbert22:59

       And I will say, these phrases, corruption, kickbacks, that is a Westerner's way or an American way of describing it. I think another way to look at it is just, these are just the norms. This is the way you do business. I don't know what you expected.

   17. DRDavid Rosenthal23:14

       Totally. You, Disney, you, News Corp., you are foreign corporations coming into our country and trying to play by your own rules here. Like, no, this is India. You play by our rules. So the net of it is, Lalit's got this blood vendetta against not just News Corp. and Star, but, like, Rupert Murdoch personally, [chuckles] specifically. And what's the way to hit him where it hurts the most? Well, it's the biggest piece on his chessboard, pillar

8. 23:44 – 26:57

   Modi captures BCCI: state association coup to national power (2003–2005)

   1. DRDavid Rosenthal23:44

      of News Corp. It's sports, and it's what Lalit thinks is, like, his birthright, like, he brought to India, was professionalizing and televising sports. He needs to take that away from Rupert. So how are you gonna do that? Well, who controls cricket in India? It's the national cricket board, the BCCI. So Lalit figures, "Okay, I need to engineer getting myself installed- [chuckles] ... on the BCCI board." It turns out, the way that you get to be on the board of the BCCI is, first, you need to be either president of or just on the board of a state cricket association, so there's states within India. So in 1999, Lalit manages to join the board of one of the smaller Indian state cricket associations. That ends up not working out, and then in 2003, he manages to get appointed to the Rajasthan State board.... and then quickly engineers what basically amounts to a coup [chuckles] of the board, and gets himself elected in 2003, 2004, as president of the Rajasthan board. So now he's got a path to the BCCI. He starts waging a campaign that the BCCI is vastly under-monetizing the television rights to international cricket. Mind you, he was, like, directly involved in buying them for cheap when he was back at ESPN, but now he's like, "I know how valuable these are."

   2. BGBen Gilbert25:05

      Mm.

   3. DRDavid Rosenthal25:06

      "I know how many eyeballs these are getting, and, like, you guys, now you're selling them for 10, $15 million a year. These are worth hundreds of millions of dollars a year."

   4. BGBen Gilbert25:15

      Right. Other than the latest slate of Bollywood movies, this is what the Indian population cares about, so why are we making 10 to $15 million on it?

   5. DRDavid Rosenthal25:25

      Yeah. This is an outrageous claim in 2004. It also just happens to be right, but saying something like this is crazy. He is a dark horse candidate to come in and reform the BCCI and fully commercialize this quasi-governmental entity.

   6. BGBen Gilbert25:42

      Right, that is the important thing. Their remit was not make the most money. They were not acting as a capitalist enterprise with shareholders. It was to preserve and promote the game of cricket to make sure that our national team is good.

   7. DRDavid Rosenthal25:56

      Yep, but most of the members are industrialists from the industrialist families, just like Modi. You know, their interests are Disney, News Corp, these big multinational corporations. "Hmm, I would really like to have a relationship with you all."

   8. BGBen Gilbert26:10

      Mm.

   9. DRDavid Rosenthal26:10

      "Oh, maybe there's stuff we can do together. Maybe we, we should advertise our company's products on these cricket events," and, "Oh, maybe we can get to know you and advertise on other programming that you're doing." So it's rife with conflicts of interest, shall we say, and the only reason that Lalit doesn't have this conflict of interest-

   10. BGBen Gilbert26:26

       Is 'cause he got ousted. [chuckles]

   11. DRDavid Rosenthal26:27

       He's ousted, exactly, [chuckles] and his life mission is to extract revenge here. So this campaign succeeds, and in 2005, he finally gets appointed to the BCCI, and this is wild. Within a span of, like, two months, he completely upends everything. He's not the chairperson of the BCCI. He's just a newly elected board member, one of, you know, I don't know, five or seven board members. He comes in like a wrecking ball. So the first thing he

9. 26:57 – 46:54

   Commercialization shock therapy: Sahara jersey deal, kit auction, and the Nimbus broadcast coup

   1. DRDavid Rosenthal26:57

      does, he goes to the main sponsor of the team, like, the title presenting sponsor of the Indian national cricket team. I think at this point, probably already the logo is on the jersey. That's, like, one of the main things you're gonna get as the title sponsor, and maybe at this point in time, you're also getting the logo on the broadcast.

   2. BGBen Gilbert27:21

      But pathetically commercial versus cricket today.

   3. DRDavid Rosenthal27:25

      Well, let me give you a sense of how commercial it is at the time. So the presenting team sponsor is the Sahara Group, which is another one of these big Indian family conglomerates. How much do you think they are paying the BCCI-

   4. BGBen Gilbert27:40

      Mm

   5. DRDavid Rosenthal27:40

      ... for this sponsorship?

   6. BGBen Gilbert27:42

      I don't know, a million bucks.

   7. DRDavid Rosenthal27:44

      $100,000 per year. [laughs]

   8. BGBen Gilbert27:46

      I thought a million was low! Wow.

   9. DRDavid Rosenthal27:49

      [laughs] Well, just you wait. A million is low. Mind you, when we've said that cricket is the biggest sport in India, nothing else matters, it borders on religion... It has 93% mind share of sports in India.

   10. BGBen Gilbert28:05

       And I think that calculation is done by viewer hours.

   11. DRDavid Rosenthal28:08

       Yeah.

   12. BGBen Gilbert28:09

       If you look at all sports watched, cricket is 93% of the hours people paid attention.

   13. DRDavid Rosenthal28:14

       If you look at American football, at the NFL in America, it's like, I don't know, 37% or something like that. It is less than 50%. Cricket in India is 93%.

   14. BGBen Gilbert28:25

       Yeah, it's a one-sport country, and it happens to be a one-sport country with one of the two largest populations in the world that is growing the fastest in the world.

   15. DRDavid Rosenthal28:34

       And the middle class is rapidly expanding, so, like, this is exactly as... You know, if you're Pepsi or you're Tata or you're-

   16. BGBen Gilbert28:41

       $100,000 to sponsor. [chuckles]

   17. DRDavid Rosenthal28:43

       Yeah. Oh, my God. Oh, my God, unbelievable. Now, you might think, "Oh, okay, well, you just told me that this sport is sort of in the model of the Olympics right now. It's international competition. Maybe they're not playing that much. You know, is this team only playing for two weeks in the summer? Maybe there's just not that much inventory."

   18. BGBen Gilbert28:59

       Nope.

   19. DRDavid Rosenthal29:00

       No, they are playing 105 days of competition per year, all nationally televised.

   20. BGBen Gilbert29:07

       And not to mention, one of those days is when they play Pakistan, or more than one of those days, and the whole country stops to pay attention on that day. That game alone, you would think, would be millions of dollars.

   21. DRDavid Rosenthal29:17

       [chuckles] You say day. At this point in time, there are two forms of cricket. There are one-day internationals-

   22. BGBen Gilbert29:24

       Which is the new, fancy version of cricket that came about, what, in the '70s, '80s?

   23. DRDavid Rosenthal29:29

       '70s, '80s, and that really was to enable tournaments to happen to, like... You can play a match in one day. Takes all day. These are eight-hour games, so it's all day. The country's eyes are glued on this. The other form of cricket, the classical form of cricket, is test cricket. Test cricket, a match lasts five days. So one-day internationals were invented so that you could have kind of a round-robin tournament with different teams.

   24. BGBen Gilbert29:52

       Mm.

   25. DRDavid Rosenthal29:52

       Otherwise, there's no way you can have a 10-country tournament where every match takes five days.

   26. BGBen Gilbert29:57

       Right. The vibes are very different, shall we say? The, uh, test cricket is very... Do you know why it's called test, by the way?

   27. DRDavid Rosenthal30:04

       Uh, I believe it's 'cause it's a test of the strength, will, you know, the team.

   28. BGBen Gilbert30:09

       And in particular, to test the English team. When they first brought cricket out to the rest of the Commonwealth, it was that those teams could then come and test against the English team. When they came to Lord's-

   29. DRDavid Rosenthal30:22

       Lord's is the hallowed cricket ground in England.

   30. BGBen Gilbert30:25

       Yes, to play this five-day, thoughtful, quiet, strategic... The vibe is like golf, even though you're playing something that looks like baseball.
10. 46:54 – 56:49

    Why IPL becomes inevitable: more inventory, more money, and a new game format (T20)

    1. BGBen Gilbert46:54

       Shocking. If we've learned anything studying all these characters over the entire arc of Acquired's history, they're never satisfied.

    2. DRDavid Rosenthal47:01

       Totally. He's, I got to assume, thinking about this 105 days of competitive play that the team is playing. You know, that's 105 cricket matches. That's not a lot of inventory. On the one hand, it's a lot, but it's only one team that you're talking about here, playing 105 matches. The NFL plays what? I think-

    3. BGBen Gilbert47:26

       285 games, including the postseason.

    4. DRDavid Rosenthal47:29

       So more than double that, and that's the scarcest sports media in the world.

    5. BGBen Gilbert47:33

       Yes.

    6. DRDavid Rosenthal47:34

       And the only reason that the NFL plays that few games is because the bodies of the players just can't take any more. They would fall apart.

    7. BGBen Gilbert47:42

       Right. Major League Baseball, almost 2,500 games are played per season.

    8. DRDavid Rosenthal47:48

       Yes, thousands of games. [chuckles] Cricket is not like American football. This sport was designed to be played five days in a row.

    9. BGBen Gilbert47:58

       Yes.

    10. DRDavid Rosenthal47:59

        The cricketers' bodies are not falling apart. There is a lot more juice to squeeze here, so this sparks, unquestionably, truly unquestionably, this is in zero way a controversial statement, the most brilliant, most successful sports entrepreneurial business plan of all time, the Indian Premier League, a domestic, city-based cricket league in India that Lalit is gonna set up in the model of the very best elements of the NFL, of the English Premier League, of the NBA-

    11. BGBen Gilbert48:36

        Of international cricket.

    12. DRDavid Rosenthal48:37

        Yep, of international cricket.

    13. BGBen Gilbert48:39

        Leveraging the assets that they have with the BCCI's control over cricket. I mean, this is something that is not-... emergent in any of these other sports we're comparing to, there's no BCCI for football in the US. There's nobody telling the NFL what they can and can't do. The BCCI is the one who controls the players' contracts with how much they make, who decides what leagues they can play in or can't play in, who cuts media rights deals. This is all happening by this organization-

    14. DRDavid Rosenthal49:12

        Organization that Lalit now de facto controls.

    15. BGBen Gilbert49:15

        That is not the league. It's a parent to any league or organized play. And so you mentioned that with the Indian Premier League, they get to learn all this stuff from the other great leagues, but they have this asset, this structural advantage, that no other sports league in the world has, which is the BCCI control.

    16. DRDavid Rosenthal49:32

        Absolutely. They innovate beyond the other leagues, too.

    17. BGBen Gilbert49:34

        Yeah, totally.

    18. DRDavid Rosenthal49:35

        To me, this is not a controversial statement: the IPL is better set up structurally than the NFL. It is the most perfect sports league that exists.

    19. BGBen Gilbert49:46

        All right, so-

    20. DRDavid Rosenthal49:47

        So how does he do it?

    21. BGBen Gilbert49:47

        Yes, what is it? You're telling me it's the most amazing thing ever. Prove it.

    22. DRDavid Rosenthal49:51

        So besides Lalit seeing that there's a inventory opportunity to expand cricket in India here beyond the 105 or so days of competition that the international team is playing, there's also the perfect opportunity at this moment within the cricketing world, which is that the whole game itself is undergoing a major revolution. England had just introduced a brand-new version of the game. Up until this point, there were only two versions of cricket that were played professionally. There's the Test match cricket, the five-day gentlemanly event with the cable knit sweaters- [chuckles]

    23. BGBen Gilbert50:29

        ... that we talked about.

    24. DRDavid Rosenthal50:30

        And then there's the one-day, eight-hour matches that are for international tournaments and competitions, One Day Internationals.

    25. BGBen Gilbert50:36

        Yep.

    26. DRDavid Rosenthal50:37

        Back home in England, cricket was basically starting to become a dying sport. The nation that invented the game, that was the home of everything sacred in this sport, in this industry.

    27. BGBen Gilbert50:50

        Empty stadiums. I mean, truly empty. They had the most incredible stadiums built for cricket, and you look at these old videos, and just empty seats everywhere, empty sections.

    28. DRDavid Rosenthal50:59

        And the only people still left watching it are old men, basically.

    29. BGBen Gilbert51:04

        Yep.

    30. DRDavid Rosenthal51:05

        Women have never really cared, and kids are like, "I'm interested in football, you know, European football. Like, I d- I, I don't care about this."
11. 56:49 – 1:04:38

    Competitive threat: Zee’s Indian Cricket League (ICL) forces IPL to launch fast

    1. DRDavid Rosenthal56:49

       of this new league? We've got some time. We've just done these major rights deals and sponsorships deals for BCCI. Let's be really thoughtful about this. We'll plan to start it in 2009." So here we are, we're now in end of 2006, beginning of 2007, we got two to three years to set this up. And then, in the spring of 2007, a rebel league [laughing] starts up under their nose in India. Another domestic T20 league with city-based franchises announces that they're gonna launch, and they are gonna call it the Indian Cricket League, and it's backed by the broadcaster Zee TV.

    2. BGBen Gilbert57:38

       Not only was it called the Indian Cricket League, which is just a great name, that is actually an entity name that Lalit had registered in the '90s.

    3. DRDavid Rosenthal57:48

       Yes!

    4. BGBen Gilbert57:49

       I don't know if Lalit was thinking he would actually call IPL the Indian Cricket League, but then something else launches called the Indian Cricket League.

    5. DRDavid Rosenthal57:56

       Yeah, it's a good point. This opportunity for a domestic cricket league was not some, like, aha brainstorm that Lalit had once he took over BCCI. Everybody knew that this would be a huge opportunity.

    6. BGBen Gilbert58:08

       Right. This is like social networking in 2004.

    7. DRDavid Rosenthal58:11

       The time just wasn't right yet. So he had been thinking about it all the way back when he was first working with Disney to fight against Star and enter the market, but the timing just wasn't right.

    8. BGBen Gilbert58:19

       All right, so what is this Indian Cricket League? Where did it come from? What is Zee TV? So way back in 1996, Subhash Chandra, the founder of Zee TV, kind of recognized, "Hey," exactly what you're saying, David, "I'm a TV distributor." He owned a satellite TV company. He saw exactly what Lalit saw: sports are the most important thing, India increasingly cares more, and more, and more about cricket. This is gonna be the perfect thing to distribute over my airwaves. '96 to '04, he's trying to get the rights to cricket and not getting them. Finally, in 2004, he bid the highest for domestic cricket in India, but the BCCI still did not award the rights to him.

    9. DRDavid Rosenthal59:00

       Oh, interesting. So this must have been right before Lalit joined the board and then restructured the whole thing.

    10. BGBen Gilbert59:07

        Must have been, right around that time. Finally, two more years goes by. He wins. He gets a five-year deal between the BCCI and Zee TV for the exclusive rights to broadcast cricket.

    11. DRDavid Rosenthal59:20

        Oh, wow! I didn't even find this, that they had a deal with BCCI.

    12. BGBen Gilbert59:25

        They had a deal.

    13. DRDavid Rosenthal59:26

        Wow.

    14. BGBen Gilbert59:27

        One year into the deal, there's something that passes called the Sports Broadcasting Bill, and this requires broadcasters to share feeds in real time, like, live feeds, without ads, directly back to the state-owned broadcast channel.

    15. DRDavid Rosenthal59:45

        [chuckles] Interesting.

    16. BGBen Gilbert59:46

        Which, of course, destroyed the profitability of this enterprise that Zee TV is trying to create here of broadcasting cricket, if they have to give away the very thing they're collecting without an ability to generate revenue on it. So BCCI ignores Zee TV's attempt to renegotiate this.

    17. DRDavid Rosenthal1:00:05

        Because at this point in time, Lalit is starting to work on setting up IPL.

    18. BGBen Gilbert1:00:09

        Yeah, and I think the Zee TV side of the story is, where did the Sports Broadcasting Bill come from? Why won't they renegotiate? I think, David, you are correctly reading into the BCCI is starting to say, "Uh, just hold tight. We're gonna make some changes here." Not knowing what's going on yet with IPL, Zee TV is like, "This is so weird that, you know, I'm not making any money on this thing that I finally got rights to, that I really want the rights to. BCCI won't negotiate with me, so I'm just gonna start a new T20 league outside of the BCCI universe without their cooperation."

    19. DRDavid Rosenthal1:00:42

        Ah, so this is spring 2007, when they announce ICL.

    20. BGBen Gilbert1:00:46

        Yes. The BCCI immediately says, "Any players who sign up for the Indian Cricket League are banned for life from playing for India nationally or any other domestic tournaments. This includes if you are a young player who had never even played for the Indian national team yet."... Chandra's freaking out. He's like, "Wait, wait, what?" So he then tries to make this big appeal, the economic benefit that's gonna come from a domestic league like this. "Everyone's gonna watch this. It's gonna promote the local economies of all these places. We're gonna pull in talent from all these other countries," which, by the way, this is straight-up the Premier League playbook. This is what IPL ends up doing. "It's gonna be broadcast on Zee TV. I'm gonna fund a million-dollar prize pool." BCCI ignores this again, and in fact, what they did was they went and pulled pensions away from any retired cricketers, who then went and joined the ICL.

    21. DRDavid Rosenthal1:01:39

        [laughing] Amazing!

    22. BGBen Gilbert1:01:41

        They're raising the stakes. They're saying, "No one who has any affiliation with us at all can do this." So then other state organizations like BCCI, the Bengali equivalent, recognized that this was gonna be an issue if entrepreneurs started going around the state organizations, so they also banned their players from joining the ICL. So this really hamstrung the whole thing before it could even get going, and then finally, I'll flash forward one year, and then we'll come back. In '09, the BCCI announced an amnesty, and all players could return to official cricket without penalties if they cut all ties with the ICL. So that was the final nail in the coffin, and then in 2009, they would shut down.

    23. DRDavid Rosenthal1:02:20

        Yeah, so they do play actually two seasons, 2007, 2008, uh, into 2009, and then they fold. [chuckles]

    24. BGBen Gilbert1:02:26

        But this was someone making a, a true run at what if we go around the state institutions, these regulatory bodies of cricket, and try to start something on our own? It just didn't work, period. You can't go around them.

    25. DRDavid Rosenthal1:02:40

        Well, I mean, this brings up probably the most important power and playbook theme that I was gonna save to talk about later, but we should talk about now, the cornered resource of the players. If you are creating or running a sports league, it is of paramount importance that you have the best players in the world. If you do not have the best players in the world, you're toast. Nobody wants to watch the second-best players in the world play each other. [chuckles]

    26. BGBen Gilbert1:03:04

        Well, I think that's right, but it, it is a two-sided equation. Like BCCI worked themselves into the choke point or ended up in the choke point or the linchpin or the aggregator position, where they aggregated both all the best players, at least the Indian best players, and the broadcast rights. It's the two different things that Dalmiya did under his term at BCCI, both the centralized contracts for players and the centralized media rights that they had the Supreme Court-approved right to auction off to any capitalist companies that want to bid for these rights. So they owned the two things that mattered.

    27. DRDavid Rosenthal1:03:40

        Yes, that is absolutely true. The players are the primary thing, though. The broadcasters will follow the players. Star is desperate to rebroadcast cricket at this point in time. They would've loved for the ICL to take off and be able to broadcast that and go around the BCCI, but it just wasn't a compelling product. And the BCCI is basically using the mafia tactics of like, "Hey, if you even think about going and playing there, you are banned for life from..." At that point in time, what really mattered, which was the chance to play international cricket for India.

    28. BGBen Gilbert1:04:10

        Yep.

    29. DRDavid Rosenthal1:04:11

        So Lalit and Andrew Wildblood and IMG are like, "Okay, we gotta accelerate this. We were planning to launch what becomes the IPL in 2009. We need to launch now, [chuckles] next season, April 2008."

    30. BGBen Gilbert1:04:26

        I will say, given how rushed this was, it is shocking how well it is all set up. All these dynamics, all the rules and auctions and everything about this league are so well-balanced, given they pulled it forward a year.

12. 1:04:38 – 1:13:34

    T20 World Cup 2007: the Porsche, India-Pakistan final, and perfect marketing timing

    1. DRDavid Rosenthal1:04:38

       Absolutely. It's also lucky for them that they do pull this forward in response to the competitive threat from the ICL because there's another media marketing gift, which is that unexpectedly, India ends up winning the first T20 World Cup that summer.

    2. BGBen Gilbert1:04:58

       Yes, and they were initially really dragging their feet. They were resistant to T20. They already had ODI. They loved it, and I think you may have more details than I do, three of their best players didn't go to the World Cup?

    3. DRDavid Rosenthal1:05:11

       So what happened was T20 was introduced by England in 2003. It takes a couple years for other countries to catch on, start playing it. Like you said, Ben, you know, there was that Australia, New Zealand thing. 2007 is when the ICC finally starts to recognize, "Uh, maybe there's something to this," and this is the first T20 World Cup that they organized. So they've been doing the One Day International World Cup for years, all the way back to before 1983, when India won it, but 2007 is the first T20 version of this that they're putting on. Well, the sort of first team of the Indian national team, they'd already just played the One Day International version-

    4. BGBen Gilbert1:05:48

       Ah

    5. DRDavid Rosenthal1:05:48

       ... so they were tired, uh, the best players. You know, look, tired, I think "tired" is in quotes for cricketers. They can play any day of the week, but they weren't that interested, and the star players, they're like, "Eh, let's let the young guys have a go at this new tournament."

    6. BGBen Gilbert1:06:02

       Mm.

    7. DRDavid Rosenthal1:06:03

       So the young guys go, and the tournament is being held in South Africa. They go over there, not expected to win. The other countries are sending, you know, their first teams- [chuckles]

    8. BGBen Gilbert1:06:13

       [chuckles]

    9. DRDavid Rosenthal1:06:13

       ... to this. Amazingly, the young guys end up winning the tournament in incredibly dramatic fashion.

    10. BGBen Gilbert1:06:23

        And guess who they are playing in the final?

    11. DRDavid Rosenthal1:06:26

        Pakistan.

    12. BGBen Gilbert1:06:27

        Yes.

    13. DRDavid Rosenthal1:06:28

        So during the group play stage, the early stages of the tournament, the Indian team is playing the England team. England, home of cricket.

    14. BGBen Gilbert1:06:38

        Yes.

    15. DRDavid Rosenthal1:06:39

        Massive underdogs here. You've got the young Indian players. Lalit has come over, of course, to South Africa to watch the World Cup. He's working on the IPL accelerated launch in the meantime, and he's like, "Okay, great, we're playing in T20 World Cup. This is an opportunity. I wanna create some exciting moments here." So he tells all the guys on the team, "If any of you hit six sixes in an over" [chuckles]

    16. BGBen Gilbert1:07:04

        [chuckles]

    17. DRDavid Rosenthal1:07:05

        So, you know, uh, an over, like we talked about, is six balls, in T20 to 20 overs.

    18. BGBen Gilbert1:07:09

        This is six home runs in an at bat back-to-back.

    19. DRDavid Rosenthal1:07:12

        Essentially, yes. Very, very, very difficult to do.

    20. BGBen Gilbert1:07:16

        Oh, and they're bouncing the ball.... [chuckles] right. And that's, [chuckles] you're trying to hit a ball that is bouncing somewhat unpredictably.

    21. DRDavid Rosenthal1:07:24

        The bowlers can either bounce the ball or throw it like a baseball pitch. They can do whatever they want. You don't know what they're gonna do, and it might have spin. You know, like in baseball, you can throw a curve ball. A curve ball curves a little more than a fastball does, but it can't move that much. When you spin the ball and then it hits the ground, it can move a lot, so you really don't know what's coming.

    22. BGBen Gilbert1:07:43

        Not to mention a running start. The pitcher has a running start, the bowler.

    23. DRDavid Rosenthal1:07:47

        So Lalit tells these kids, remember, they're kids from India, not from wealthy families here, "If any of you can hit six sixes in an over, this is gonna be such a dramatic event. I know this is gonna capture the public's imagination here. I will personally give you a Porsche 911." [laughing]

    24. BGBen Gilbert1:08:08

        [laughing]

    25. DRDavid Rosenthal1:08:08

        I swear to God, this is true. [chuckles]

    26. BGBen Gilbert1:08:10

        Wow, the Acquired Universe crossover. That, uh-

    27. DRDavid Rosenthal1:08:12

        The crossovers are amazing. And I believe, in fact, that when they were talking about this in the locker room, he might have first offered a Rolex, and then-

    28. BGBen Gilbert1:08:23

        [chuckles]

    29. DRDavid Rosenthal1:08:23

        ... the players were like, "No, that's not enough for doing, like, I need a Porsche 911." [chuckles]

    30. BGBen Gilbert1:08:25

        Oh, that's amazing!
13. 1:13:34 – 1:39:19

    Designing the ‘perfect league’: parity + talent, Bollywood strategy, and soap-opera programming

    1. BGBen Gilbert1:13:34

       ... All right, so David, India's coming hot off winning the T20 World Cup cricket final, and it's time for the birth of the Indian Premier League.

    2. DRDavid Rosenthal1:13:44

       Yep, we have finally arrived at what we've been hinting at the whole episode, just the sheer brilliance of how IPL is architected. So if you are from a clean sheet of paper, trying to design the perfect sport league, there are two things that you need to really try and maximize to make it appealing to an audience. First is that it needs to be the best place in the world to showcase human skill and achievement in that sport, i.e., you need the best players in the world playing there. Two, though, and this is where a lot of sports leagues go wrong, you need uncertainty about the outcome. You need competitive parity amongst the teams in the league. This is the any given Sunday element of the NFL that has been the key critical ingredient to making the NFL the most valuable sports property in the world.

    3. BGBen Gilbert1:14:35

       Every little year, they're tweaking things here and there to try and make it a little bit more balanced. The NFL would love nothing more than every team to go eight and eight, and then have an incredibly competitive, who knows what's gonna happen, playoff situation. It was almost a disaster what happened when the Chiefs almost won three Super Bowls in a row. That was so un-NFL that that was a possibility. It took 'em a hundred years, but they became wizards of that competitive balance. And David, I'll say one quick thing: it's not to create the best sports league, it's to create the best business.

    4. DRDavid Rosenthal1:15:09

       Yes, I was taking it as tautological that that is what you are trying to achieve. [chuckles]

    5. BGBen Gilbert1:15:12

       If you want to create the best business out of sports, you need it to be the most entertaining version of that sport, which means you need uncertainty as much as possible.

    6. DRDavid Rosenthal1:15:23

       Now, importantly, this does not mean you are simply creating spectacle, and controversy, and entertainment-

    7. BGBen Gilbert1:15:31

       Correct

    8. DRDavid Rosenthal1:15:31

       ... without quality sport. You know, that would be the Harlem Globetrotters, that would be the Savannah Bananas. Amazing, incredible businesses and products, never gonna be the biggest thing in the world in their sports.

    9. BGBen Gilbert1:15:42

       Correct. And on top of that, it has to remain a game of skill, not chance. So it can't be pure BS entertainment show, and it can't be too subject to randomness. It has to be the best people competing in skill against each other to create the most thrilling product, but in the most balanced game design that you could possibly offer.

    10. DRDavid Rosenthal1:16:06

        Yep. So because of everything we've talked about to this point in the episode, the first part of getting the best players in the world, that was actually pretty easy for the IPL. That's what created the opportunity.

    11. BGBen Gilbert1:16:18

        Assuming it was birthed out of the BCCI, yes. If it had come from elsewhere, it would've been a non-starter and impossible.

    12. DRDavid Rosenthal1:16:23

        Correct. The BCCI has cornered resource access to the best talent in the world-

    13. BGBen Gilbert1:16:28

        Yep

    14. DRDavid Rosenthal1:16:28

        ... because they have all the money, and they have the Indian fans who care about watching the best Indian players, and they have essentially veto right over the best Indian players playing anywhere else. Now, the trickier one: competitive parity. This is where so many leagues go wrong. To get competitive parity among the teams on the field, you need every franchise to have access to the same opportunity to win, no matter how much money they have or how much money the ownership group has outside of the franchise.

    15. BGBen Gilbert1:17:02

        Or how big of a market they're playing in.

    16. DRDavid Rosenthal1:17:05

        Exactly.

    17. BGBen Gilbert1:17:06

        Or how good they were last year. You can't throw the board up in the air too much every single year, 'cause you need some continuity of fan base, but you also kinda can't really allow for dynasty creation. There's a million little ways that a misalignment could get in there and ruin competitive balance, and you have to think through all the different variables and balance them all.

    18. DRDavid Rosenthal1:17:28

        Yep, and we'll get into this later in the episode, but here in the US, I think this is where Major League Baseball has gone really, really, really wrong over the last set of decades. You know, it's the Yankees, it's the Dodgers.

    19. BGBen Gilbert1:17:38

        They've never successfully implemented a salary cap in baseball, and so guess who's in the World Series? The New York team and the LA team.

    20. DRDavid Rosenthal1:17:46

        Yep, and then the worst example of this is the European soccer leagues. [chuckles] It's the top two, five franchises at the top that are spending the most money, buying the best players, and winning every year.

    21. BGBen Gilbert1:17:56

        And you have owners that are willing to spend hundreds and hundreds of millions of dollars on players, and essentially run the teams in the red because they have to spend so much money on players to win.

    22. DRDavid Rosenthal1:18:08

        Yep. So now think about setting up this new league in India. For reasons I'll get into in a sec, you need to have a diverse ownership group, as in you can't just have super wealthy industrialists owning all of these teams. But if you look at Indian society at this point in time, it's so bifurcated between the billionaires of these conglomerates, the Ambanis of the world and et cetera, et cetera, you know, the Tata family, and then other people who you would want involved, but are gonna have nowhere near the same amount of godlike resources that these other people have.

    23. BGBen Gilbert1:18:43

        Coming out of the '90s, and it's starting to change already here in the mid-2000s, it's essentially an impoverished nation with a very thin slice of billionaires.

    24. DRDavid Rosenthal1:18:52

        Yep. So as you're setting up these franchises, you need to make them no-brainer investments for whoever makes them, and you can't have this have-and-have-not dynamic. So the first order of business, which is the easiest one, is stadiums. So Ben, you were mentioning the teams running in the red in the English Premier League. This is, I think, beyond just overpaying for players, the biggest problem in the English Premier League, which is a lot of teams own their stadiums, and then the debt payments that you gotta make on-

    25. BGBen Gilbert1:19:22

        Mm

    26. DRDavid Rosenthal1:19:22

        ... these stadiums are just crippling.

    27. BGBen Gilbert1:19:24

        This is soccer, for anyone who's not a Premier League fan.

    28. DRDavid Rosenthal1:19:27

        Yeah, exactly. You know, these are hundreds of millions, if not billion dollar edifices, that you have these teams funding and owning through debt, and then the debt payments are just astronomical, on top of astronomical player salaries that they're paying. So-... first thing that Lalit and Angie Wildblood and IMG decide as they're setting up the league, no debt. No team is allowed to have debt, and de facto, no team will own their stadiums.

    29. BGBen Gilbert1:19:56

        And the driving force of all this is the teams have to be profitable because we want to incentivize this diverse group of people to own them.

    30. DRDavid Rosenthal1:20:05

        Yeah.
14. 1:39:19 – 1:52:51

    No-risk dealmaking: franchise auction, TV-rights engineering, and cash-flow guarantees

    1. BGBen Gilbert1:39:19

       Okay, so so far you've got three pillars of competitive balance that they've managed to stabilize, here at least at the start.

    2. DRDavid Rosenthal1:39:27

       Yep. You've got, first, the stadiums and no debt, not owning stadiums, asset-light business model. Second, you've got a diverse ownership group, which is necessary both to ensure that no one group has financial resources outside the system that can outspend any other, but more importantly, you really need Bollywood to be involved here to unlock the media budgets.

    3. BGBen Gilbert1:39:49

       Yep.

    4. DRDavid Rosenthal1:39:50

       So then now, three falling into place here is the media budgets, and being able to get a huge central broadcasting rights deal.

    5. BGBen Gilbert1:39:58

       Yep, which gets evenly distributed.

    6. DRDavid Rosenthal1:40:01

       Yep, exactly. So here we are now by January 2008, all the pieces are in place to get that deal. Lalit and IMG are ready to take it out to the markets for bidding. Of course, per usual, there's just one problem, which is that Nimbus, remember, which had spent $620 million to buy the international cricket rights from BCCI, they're like, "Wait a minute, we already own this. We paid you $620 million over four or five years," or whatever it was, "for the rights to all of BCCI cricket. This is what we're paying you for. IPL is a BCCI product. We should have this already." [chuckles]

    7. BGBen Gilbert1:40:39

       Makes sense to me. I see the argument.

    8. DRDavid Rosenthal1:40:41

       Uh, and of course, you know, what do you think Lalit says? [chuckles] He's like, "Nope, IPL was not specifically laid out in the contract, and if you would like to sue me, you are welcome to go ahead and sue me. Good luck here winning."

    9. BGBen Gilbert1:40:52

       Of course, it wasn't specifically called out by either party, and so therefore, Lalit gets to say, "This is something different."

    10. DRDavid Rosenthal1:41:01

        And I mean, look, Nimbus is already making out great. They went from being, like, a middling broadcaster that had no sports rights to all of a sudden having all of the sports rights. And yes, they paid a lot of money for it, but they're making a lot of money for it here, too. Which this is always Lalit's argument, of "I make money for everybody," and this just is how business in India gets done, or at least was how business in India gets done in this timeframe, you know, call it 2008. Sure, from our US, American, and Western perspectives, we can look at this and be like, "Well, what was actually the letter of the contract? And shouldn't there be a process here, and does Nimbus have these rights?"

    11. BGBen Gilbert1:41:39

        And you just want to deal in good faith. You just want to assume that if someone knows that they're about to launch a huge new cricket league that's not included in your contract, and you're operating under the idea that it is included in your contract, what's in the contract doesn't matter as much as what you both feel like you're agreeing to. And it's a shame that if what you're relying on is, "Well, the letter of the contract says this," you know...

    12. DRDavid Rosenthal1:42:00

        Yep, exactly.

    13. BGBen Gilbert1:42:02

        Okay, so Nimbus does not have the broadcasting rights. How do they get sold?

    14. DRDavid Rosenthal1:42:06

        So Nimbus, they're out. Star is still out because [laughing] uh, another amazing Lalit quote-- He just doesn't let bygones be bygones. He's talking about how he sets up the broadcasting rights auction: "Rupert Murdoch I had blacklisted. I would never allow him in due to what had already happened, so I blacklisted Rupert Murdoch." [laughing] Amazing. I mean, this was 10 years ago that that happened. ESPN and Disney corporate says that they are interested in bidding on these rights separately from Star, which they're already a JV in, but they think this is so interesting, they're interested in bidding. Ultimately, though, they can't get comfortable enough to put an actual bid in. They say, "We will broadcast it over-the-top as Disney, soon to be Disney+ in the coming years, but we're only gonna do it on a rev share basis. We won't give you cash up front, we'll just share advertising revenue with you."

    15. BGBen Gilbert1:43:00

        Hmm.

    16. DRDavid Rosenthal1:43:00

        And obviously, that's not what Lalit wants, 'cause he needs the cash to have the central sponsorship guarantees, central media guarantees out to the franchises.

    17. BGBen Gilbert1:43:09

        Right, 'cause if no one's [chuckles] gonna bid on one of these teams for 80 million bucks unless somebody is guaranteeing you there is media revenue there.

    18. DRDavid Rosenthal1:43:18

        Exactly. So what does he do? He just runs the same playbook he's always been running, which he goes to another broadcaster who does not have a sports channel or sports presence. This time it's Sony, which is the number two broadcaster in India at this point, but like Nimbus before and Disney before that, did not have a sports channel. And he says, "I will make you a sports channel. And by the way, this isn't just sports. This is sports and Bollywood and the greatest entertainment product that India and the world has ever seen."

    19. BGBen Gilbert1:43:45

        Yep.

    20. DRDavid Rosenthal1:43:45

        "And the minimum bid for this is 600 million for 10 years, but I am expecting a billion over 10 years," which would put it roughly on parity with the India international cricket rights that Nimbus had bought-

    21. BGBen Gilbert1:44:00

        Hmm

    22. DRDavid Rosenthal1:44:00

        ... the year before. So Sony's like-... Okay, we're interested. We see the value here, but 10 years is a big commitment for what is essentially a startup.

    23. BGBen Gilbert1:44:10

        And we don't know that it's gonna work. I mean, again, not a ball has been bowled.

    24. DRDavid Rosenthal1:44:14

        Exactly, not a ball has been bowled, no teams have been established yet, there are no official ownership groups that have bid on franchises. Yes, this is a very compelling business plan, Lalit and IMG, but no domestic cricket league has ever proven valuable anywhere in the world.

    25. BGBen Gilbert1:44:29

        Hmm.

    26. DRDavid Rosenthal1:44:30

        You know, there are domestic leagues in Australia, in England, in New Zealand, et cetera, but they're peanuts. You know, they're the minor leagues. They're fine. They're not gonna justify a hundred million dollar a year, billion dollar over 10-year media rights deal. But they say, "We are interested, so what we would like to do is we would like to buy just the first year at the same pro rata price as the $600 million minimum bid for 10. We'll pay you $60 million for year one." So, you know, it's something. It's money on the table, but it's not really gonna send the signal of strength to franchise bidders that Lalit wants for the auction coming up. He really wants the 10-year deal to project stability and cash flow certainty, that also, by the way, is gonna match up the 10-year payable period-

    27. BGBen Gilbert1:45:20

        Ah, right

    28. DRDavid Rosenthal1:45:21

        ... of the franchisees. That's why he wants 10 years. So he and IMG say to Sony, like, "Okay, we hear you. Hang on." They turn around, and they go to a sports rights group based out of Singapore called World Sport Group, and it's basically just like the Nokia and Shah Rukh Khan deal. They say to WSG, World Sports Group, "Here's what we need you to do. We need you to bid and buy the 10-year media rights deal at the billion dollar price that we want, but we'll only charge you $60 million in year one."

    29. BGBen Gilbert1:45:58

        So then they would owe the remaining 940 over nine years?

    30. DRDavid Rosenthal1:46:02

        Exactly. "And so you're gonna put up $60 million in year one," and this is for the global rights, by the way, to IPL broadcasting, "and what you're gonna do is you are gonna turn around and immediately sublicense the Indian domestic broadcast rights back to Sony, who is good for that $60 million on the table."
15. 1:52:51 – 2:25:28

    The player auction innovation: hard constraints, transparency, and enforced parity

    1. DRDavid Rosenthal1:52:51

       And it's an asset-light business model. You don't have to invest any balance sheet dollars. There's no stadiums, no hard assets, et cetera. Well, if you are a smart sports investor, the first most important question you would ask next is...

    2. BGBen Gilbert1:53:05

       What's the salary cap?

    3. DRDavid Rosenthal1:53:06

       What's the salary cap? What about the players?

    4. BGBen Gilbert1:53:09

       Which, here's a funny thing. In most leagues, "What's the salary cap?" is the same as asking, "On my P&L, what is the expense line for players?" Interestingly, in the IPL, they don't pay the full salary cap. Plenty of teams are running around there with seventy-five, eighty, ninety percent of salary cap and having a competitive team. It's actually a different question in the IPL of asking, "What's the cap?" versus actually, "What's my team expense gonna be?"

    5. DRDavid Rosenthal1:53:36

       Yes, and what makes the IPL unique relative to every other sports league in the world, what they uniquely innovate on this, is the auction system. Players in the IPL are auctioned off just like a Sotheby's auction, like a piece of fine art, or, uh, as the media say when covering it, like cattle and sheep.

    6. BGBen Gilbert1:54:01

       It's like the draft, but with money.

    7. DRDavid Rosenthal1:54:04

       It is the draft with money, and it is absolutely freaking brilliant. But before we tell the story of the IPL auction-

    8. BGBen Gilbert1:54:13

       Yes

    9. DRDavid Rosenthal1:54:13

       ... now is a great time to thank a friend of the show, Fundrise.

    10. BGBen Gilbert1:54:18

        The Fundrise team is awesome, and they are big Acquired listeners, just like all of you. They've been evolving since we first started working together three years ago. At the time, Fundrise was mostly known as the US's largest real estate investment platform for retail investors. However, they were watching technology markets get larger than ever, thanks to Moore's Law and technology taking over every industry, and feeling like it really was a shame that all these tech companies are staying private longer, and that meant that retail investors couldn't get access. So in 2022, they launched their move to bring their democratized model into venture investing, which was a pretty contrarian idea.

    11. DRDavid Rosenthal1:54:54

        Totally. This had been tried in the past but never really worked. Fast-forward to today, Fundrise has invested in great companies like Databricks, Canva, Anduril, Ramp, fellow friends of the show Vanta and Anthropic, and also ServiceTitan, which just went public in December.

    12. BGBen Gilbert1:55:10

        It really is awesome what Fundrise has done. They've taken a retail platform that any American can invest in and gotten pre-IPO access to some of the best private companies in the world. They've enabled access to all the value creation that's been locked away in private companies.

    13. DRDavid Rosenthal1:55:23

        Yep. When the ServiceTitan IPO happened, thanks to Fundrise, tens of thousands of regular investors got to celebrate alongside VCs, LPs, and employees. And timing really is everything. Fundrise is doing this at a moment where, thanks to AI, there's more value being created than ever in the technology sector of the economy.

    14. BGBen Gilbert1:55:40

        You can go to check out the full portfolio that Fundrise is building at fundrise.com/venture, and if you're a growth stage founder looking for a great Series C or later investor, just get in touch and tell them that Ben and David sent you. This is a paid endorsement for Fundrise, and all investments can lead to a loss. Okay, so David, I said the player auction is like the draft with money, but that's not really giving it enough credit. The NFL draft did manage to turn itself into a huge, ridiculous viewer spectacle. Big thing at Radio City Music Hall in New York and TV coverage, but the player auction is both a live spectacle and a key piece to the way that they balance the whole league. And the rules for the annual player auction were nailed down even before the initial bidding for the teams happened, which is important to understand. You need to know-... before you bid on a team as an owner, how this whole auction process is gonna work?

    15. DRDavid Rosenthal1:56:36

        It is tied as top priority for the most important thing to know, along with how the central revenue is getting distributed, because by far the biggest expense for any premier sports team attracting the best players in the world is player salaries. Put aside capital expenditures and potential debt payments for stadiums, that's not part of this league. And that makes sense, by the way, that player salaries should be your biggest expense, because that is the most important raw ingredient to your business.

    16. BGBen Gilbert1:57:06

        Yep.

    17. DRDavid Rosenthal1:57:07

        So different leagues have different ways of dealing with this in different sports, and we talked about this a little already, but I would say until the IPL auction innovation, what was generally regarded as the most effective way to deal with this is a hard salary cap, and that's what the NFL has. Every year you have a dollar amount that is the same for every team. You cannot spend more than that dollar amount. It is simply not allowed, and how high that dollar amount is, is the result of collective bargaining between the players union and the ownership group.

    18. BGBen Gilbert1:57:41

        Yep, which is a very sane way to do it.

    19. DRDavid Rosenthal1:57:45

        Just taking the three big US sports leagues, NFL, clearly the gold standard, has the best way to manage competitive parity, which is the hard salary cap. Next is the NBA. They're somewhere in the middle. The NBA has a soft salary cap, which means, yes, there's a salary cap, but under some exceptions you can go beyond it, and then there's an associated luxury tax with going beyond it. This is a big problem. [chuckles] Not as big a problem as baseball, which I'll tell you about in a sec, but the reason this is a problem is it all of a sudden introduces the amount of wealth that your ownership group has outside of the business of running the team and outside of the league, now starts to play a factor in how much you can spend for players and starts to affect the competitive balance of the league.

    20. BGBen Gilbert1:58:33

        Or maybe to put it in a more generic way, the amount of access to capital the ownership group has. 'Cause whether or not they're wealthy, if they're in a market where you're in a team that can produce a lot of local revenue, well, then you can afford to pay for more expensive players out of your local revenue and pay the associated luxury tax fees.

    21. DRDavid Rosenthal1:58:52

        Now, in theory, the luxury tax should address this because you're then now redistributing some of that extra money that you're spending on salary at an equal amount to other teams, but in practice, it doesn't really work out this way. So if you look at competitive dynamics in the NBA versus the NFL, you get dynasties in the NBA, like the Warriors or the Lakers or the Celtics, or the Spurs a few years ago.

    22. BGBen Gilbert1:59:14

        Yep. Cavs, Heat.

    23. DRDavid Rosenthal1:59:15

        Yep, the Heat. The Spurs are the anomaly 'cause they're not in a major market, but all those other cities, all those other teams I was talking about, San Francisco, Bay Area, Los Angeles-

    24. BGBen Gilbert1:59:27

        Mm

    25. DRDavid Rosenthal1:59:27

        ... Miami, these are big markets.

    26. BGBen Gilbert1:59:29

        Right. The luxury tax sounds great in practice, but the, uh, existence proof that you are now naming shows the flaw.

    27. DRDavid Rosenthal1:59:36

        So that's the NBA. Somewhere in the middle. Then you've got Major League Baseball. Major League Baseball has no salary cap at all. They do have what is called a, quote, unquote, "competitive balance tax," which sort of operates like a soft salary cap like the NBA, but in practice it's a total sham. Because in the NBA, there are at least strict rules about when and how and how much you can exceed the salary cap by. In baseball, it's just like, hey, there's some tiers, and if you go into the higher tiers of excess over the competitive balance thresholds, you pay more, but there's no cap on how much you can pay. You can pay an infinite amount and then just pay penalties to an infinite amount. So last year, in 2024, nine teams in Major League Baseball exceeded the competitive balance tax threshold. By far, the worst offender were the Los Angeles Dodgers, who exceeded it by one hundred million dollars, [laughing] which is just ridiculous! And then, of course, they won the World Series, like, duh. [chuckles]

    28. BGBen Gilbert2:00:39

        Gee. [chuckles]

    29. DRDavid Rosenthal2:00:40

        Gee, how did that happen? And why did the Dodgers feel comfortable exceeding it by a hundred million dollars and paying such a huge luxury tax? Oh, guess what? They're in Los Angeles, the biggest media market in the US, and oh, guess what? Major League Baseball does not have central media rates. The Dodgers have their own TV deal in Los Angeles, which is by far the most valuable in the sport. So they've got the funding, the, as you said, the access to capital to do this, and of course, they're gonna win the World Series. It's a big problem.

    30. BGBen Gilbert2:01:10

        Yep. Why would anyone tune in to watch that?
16. 2:25:28 – 2:36:54

    2008 launch: instant hit, iconic first match, and early proof of the model

    1. BGBen Gilbert2:25:28

       Okay, so the promise of all this sounds totally amazing, and we know it worked eventually, but most of the things that we study on this show that worked eventually kind of don't work at first.

    2. DRDavid Rosenthal2:25:37

       That is not the case here.

    3. BGBen Gilbert2:25:38

       Yeah. What does the first season look like?

    4. DRDavid Rosenthal2:25:41

       I would say explosive right away is an understatement. [laughing]

    5. BGBen Gilbert2:25:47

       [laughing]

    6. DRDavid Rosenthal2:25:47

       As you might expect, given the incredible architecture of it and Lalit's force of will personality, this thing is a sensation. Is... All of the predictions that they made, the business plan, the soap opera, the every night, the, "This is gonna be the biggest thing ever to happen to media in India," it's true, and it's true right away.

    7. BGBen Gilbert2:26:12

       Hmm. This never happens. Never. The Rolex Daytona flopped at first. The Birkin bag, not heralded as anything special for, like, twenty years.

    8. DRDavid Rosenthal2:26:26

       I think it happened in part because it had to happen. Lalit was running such a high-wire act with all of these year-one deals, like, "Hey, I promise you, this is gonna work like we all think in year one, and if it doesn't, I'll shut it all down."

    9. BGBen Gilbert2:26:38

       Oh, right, and Acquired is subject to heavy survivorship bias, so we don't cover the ones that-

    10. DRDavid Rosenthal2:26:43

        No, this was, like, a one-shot opportunity.

    11. BGBen Gilbert2:26:45

        There have been many other high-wire act, one-shot opportunities that we're just not talking about. The one that immediately comes to mind is Activision Blizzard selling the Overwatch League bids. I mean, that just didn't work right away and then proceeded to continue not working.

    12. DRDavid Rosenthal2:26:59

        ... Yes. To use a cricket analogy here, this would be like you are a batter facing the last ball of the game, and your team is down by five runs, and you need to hit a six to win. [laughing] IPL hits a six.

    13. BGBen Gilbert2:27:13

        But you've bet your entire life savings and reputation on the fact that a six is getting hit.

    14. DRDavid Rosenthal2:27:18

        If it hasn't been obvious enough from what we've been implying throughout the episode, the underworld of India and the mafia is definitely involved in all of this, and that is gonna come up in a minute. So it might not be an exaggeration to say lives are being bet on this, to some extent.

    15. BGBen Gilbert2:27:33

        Hmm.

    16. DRDavid Rosenthal2:27:34

        So April 18th, 2008, first game, first match happens. The Royal Challengers Bangalore, as the visiting team, versus the home Kolkata Knight Riders, owned, of course, by the one and only Shah Rukh Khan. He's there. He's leading the parade into the stadium, doing the big opening event, broadcast around the country. Every TV is watching. And in the game, one of the star players for the Knight Riders, the home Knight Riders, Brendon McCullum, interestingly, your international player, obviously not an Indian-

    17. BGBen Gilbert2:28:09

        Yeah

    18. DRDavid Rosenthal2:28:09

        ... but bought at auction by the Knight Riders, hits one hundred and fifty-eight in that first game for the Kolkata Knight Riders to win. That number probably means nothing to many of you who are not cricket fans yet. I mean, I say yet, because you might become one-

    19. BGBen Gilbert2:28:23

        [chuckles]

    20. DRDavid Rosenthal2:28:23

        ... after listening to all this. And the people of you who do know cricket are like, "Oh, yeah, that was one of the greatest moments of all time." To hit a hundred and fifty-eight, which means be responsible for a hundred and fifty-eight runs in a T20 game, where your entire team is only facing 120 balls, you know, pitches, opportunities to score, and you personally score 158 runs on the balls that you face, that is an epic performance.

    21. BGBen Gilbert2:28:48

        Wow! What is your sense of how organic it was that this was an incredible spectacle right out of the gate? I mean, it's hard to fake hitting sixes. There's a lot of rigging that would need to happen.

    22. DRDavid Rosenthal2:29:01

        There's a lot that would need to go into that. From the IPL's perspective, this could not be a better storyline. So the whole season basically goes amazingly. The average TV share viewership for the entire season is four point nine percent of all active televisions in India are watching IPL, like, on average.

    23. BGBen Gilbert2:29:27

        In the first season?

    24. DRDavid Rosenthal2:29:28

        First season, yes. A lot of TVs. There is no single soap opera between eight and eleven PM that is getting that kind of viewer share in India. It works. The final match, the championship match, is won in the last ball by the underdog-

    25. BGBen Gilbert2:29:44

        [chuckles]

    26. DRDavid Rosenthal2:29:44

        ... Rajasthan Royals, the cheapos, in dramatic fashion. That final gets ten percent viewership share of all TVs in India are tuned in to that final match. So it goes really, really, really well.

    27. BGBen Gilbert2:29:58

        Oh, and we should say, one other element of this, there's a prize pool that we didn't talk about. So just to add one more great game design mechanic, the winner of the whole thing gets, I think, a three million dollar grand prize in that first year?

    28. DRDavid Rosenthal2:30:12

        Five percent of the central media rights deal, and then that prize pool is shared among the teams that make the playoffs, with the winner obviously getting the most. [chuckles]

    29. BGBen Gilbert2:30:19

        Which is great, 'cause that actually is one thing that is kind of a bummer about other sports leagues is, you're not monetarily compensated for winning at all. I mean, of all the playoff games, the Super Bowl, all that, you get to win by having a franchise that people love more, and it sort of helps the durability of your franchise, but you don't financially win that year from that the way that you would if there was a prize pool of millions of dollars, like how there is in the IPL.

    30. DRDavid Rosenthal2:30:45

        Yes, this is the great irony of the NFL that we learned after doing our episode, and we talked about when we reprised it on the Armchair Expert podcast, which was super fun, with Dax and Monica. Winning the Super Bowl is actually, like, a net negative economic event for an NFL team. Now, in the long term, of course, it's-
17. 2:36:54 – 2:49:14

    Near-collapse: rights renegotiation, 2009 South Africa relocation, expansion blowups, and Modi’s fall

    1. BGBen Gilbert2:36:54

       Okay, so how does the IPL almost all fall apart in years two and three?

    2. DRDavid Rosenthal2:36:59

       Well, before it all almost falls apart in year two, in the off-season after year one, Lalit, the BCCI, all the teams, all the owners, they're all riding high. This was an enormous success, beyond anyone's wildest dreams. So I foreshadowed a little bit ago in the TV rights deal with World Sports Group and Sony, that Lalit had given him his word as a gentleman, that, "If this whole thing doesn't work, I'll rip up the deal, and I'll won't carry IPL forward. You won't be on the hook for the 940 million for the next nine years."

    3. BGBen Gilbert2:37:37

       Yep.

    4. DRDavid Rosenthal2:37:38

       Well, this thing was such a success, that all of a sudden, 940 million for the next nine years is looking like a hell of a steal.

    5. BGBen Gilbert2:37:46

       Which they should benefit from for signing a long-term deal.

    6. DRDavid Rosenthal2:37:49

       That's what you would think. Lalit rips up the deal.

    7. BGBen Gilbert2:37:53

       Oof!

    8. DRDavid Rosenthal2:37:54

       Specifically, he engineers an excuse and says that Sony had been allowing Reliance's telecom division to advertise during their commercial breaks, and that that violated Vodafone's exclusivity over everything IPL, because Vodafone was a central corporate IPL telecom sponsor. He also alleges that he has evidence that Sony had been, at least in certain markets, cutting away from the game early to squeeze in extra commercials, and not showing all the balls that were bowled in an over. Who knows if that's true or not? I don't know.

    9. BGBen Gilbert2:38:34

       Could be. Is that the kind of thing that means you tear up the contract, or do you call them and say, "Hey, we know you're doing this. Please don't do that anymore?"

    10. DRDavid Rosenthal2:38:40

        I suspect [laughing] -- that had the IPL not been such a huge success, and Lalit were not looking to tear up the contract, he would not have caught these discrepancies, shall we say?

    11. BGBen Gilbert2:38:50

        Yes.

    12. DRDavid Rosenthal2:38:51

        And of course, it's not till the end of the season that he points all this out. On the back of this, he strong-arms Sony and World Sports Group into renegotiating-... a new deal that is gonna be direct with Sony. They throw World Sports Group a bit of a bone. I think maybe they let them keep the international rights, but Sony is now gonna directly do a 10-year deal with the IPL for $2.4 billion, so $240 million a year. Quite a bit more than the $60 million that they had paid for year one.

    13. BGBen Gilbert2:39:25

        So that's 4X the actual cash out per year, and it's 2.4X what the theoretical value of the contract was gonna be on an annual basis.

    14. DRDavid Rosenthal2:39:36

        Yep, and really just tells you everything you need to know about how much of a success [chuckles] this is here, because Sony is willing to say, "Okay, fine, I'll let you rip up the contract, and I'll pay you roughly 4X."

    15. BGBen Gilbert2:39:49

        Right. Ultimately, they kept the same broadcast partner but started charging them four times as much, and the broadcast partner was like, "Yeah, that's still fine." Clearly, it meant that there was a lot left on the table that Sony was benefiting from in year one because of how big of a success it was.

    16. DRDavid Rosenthal2:40:03

        As Lalit would point out, "I made a lot of money for everyone."

    17. BGBen Gilbert2:40:07

        Yep.

    18. DRDavid Rosenthal2:40:08

        So things start off well, I guess you would call that well, from, uh, IPL's perspective during the off-season. But then as we're getting closer to the season launching in 2009, general elections are happening in India, and elections are contentious. There are security issues, and the government and various state police organizations start coming to the BCCI and the IPL and saying, "Hey, I'm not sure that we can promise security at the matches this season." And so they go back and forth. They're like, "Oh, are we gonna move some of the matches in some of the states, and can some of the states provide security and not others?" Ultimately, they decide, "Shoot, we can't hold this thing in India at all." [chuckles]

    19. BGBen Gilbert2:40:50

        They go full NBA bubble, right? It's like the Disney bubble from COVID.

    20. DRDavid Rosenthal2:40:55

        Yes. So on very short notice, I think like a month notice, they airlift the entire tournament out of India [chuckles] and move it to South Africa, and then they re-set up all the teams in South Africa. I mean, they're the same teams, same ownership, same player, but they just assign like, "Oh, Mumbai, you're now in Cape Town," or, you know, wherever.

    21. BGBen Gilbert2:41:15

        Wow!

    22. DRDavid Rosenthal2:41:16

        Reassign teams to all the cities, and they restart the IPL, and they play it in South Africa. [chuckles] Amazingly, it goes pretty well, and this actually becomes a great thing for the IPL because it's still very popular in India. It's broadcast back in India.

    23. BGBen Gilbert2:41:33

        Yep.

    24. DRDavid Rosenthal2:41:34

        Local revenue for the teams and the stadium gate receipts and sponsorships for the local teams was never that much in India, still isn't that much to this day. So you're actually not sacrificing much revenue by doing this.

    25. BGBen Gilbert2:41:46

        I think by our calculations, we tried to estimate a P&L for any given team. We're looking at something today, like 66 million coming from a central pool and only like four-ish million coming from tickets. This is a TV product.

    26. DRDavid Rosenthal2:42:00

        Yes, and satellite signals work just fine from South Africa to India.

    27. BGBen Gilbert2:42:05

        Maybe even better 'cause it's closer to the poles.

    28. DRDavid Rosenthal2:42:07

        Yeah, maybe. [chuckles] This really accelerates IPL becoming a global phenomenon among the cricket-playing and cricket-watching countries of the world. The fact that you can airlift the tournament out of India, put it in another cricket-playing country, have it be just as successful, have everybody be happy, you're only growing the game by doing this.

    29. BGBen Gilbert2:42:28

        Yep.

    30. DRDavid Rosenthal2:42:29

        On the back of that, heading into season three, they decide, "All right, time to expand. We're gonna add two teams to the league. We're gonna do a two-team franchise auction in the same model as the first one, except now we expect the prices are gonna be much higher."

Episode duration: 4:28:06