Tuesday, September 7, 2010

PLAYER RETENTION STRATEGIES

The player retention rules for the fourth edition of the Indian Premier League are out. So after weeks of speculation, here they are:

A. The maximum number of players that can be retained are 4.
B. The maximum number of Indian players amongst those retained can be 3, and the maximum number of Foreign Players amongst those retained can be 2.
C. Irrespective of what fee is paid to the retained players, the deduction from the total salary budget of US$ 9 million will be in the following format:
                1 Player(s) Retained - US$ 1.8 million
                2 Player(s) Retained - US$ 1.3 million
                3 Player(s) Retained - US$ 0.9 million
                4 Player(s) Retained - US$ 0.5 million

So lets say that a franchisee retains just 1 player, then irrespective of what they pay him, they can spend upto US$ 7.2 million at the auction. If they retain 2 players, their spending power will be US$ 5.9 million. It will be US$ 5.0 million if they retain 3 and US$ 4.5 million if they retain 4 players.

So what will be retaining strategy be like? In this post, I will try and look at it purely from the finance point of view (with a little bit of a reference to cricket).

The first major question that will need to be answered is that whether the player who is to be retained is really worth the amount that will be deducted from the team's budget... or whether all the players to be retained collectively are worth the total amount that will be reduced from their spending budget at the auction.

For example, Mumbai Indians should not hesitate in retaining Sachin Tendulkar and Kieron Pollard, for together they are easily worth US$ 3.1 million (if not a lot more). Chennai Super Kings have a similar state as far as the duo of MS Dhoni and Suresh Raina is concerned. Well, frankly, I am not a big fan of Dhoni and don't think he is worth much... but there is not doubt that he will be retained for his Brand Value. The entire brand marketing of Chennai's franchisee has been done around Dhoni. He is the poster boy of their team. Therefore, he will definitely be retained.

The problem will occur for the likes of Rajasthan Royals and Kings XI Punjab... I don't think anyone on their present team is worth US$ 1.8 million. Maybe Yuvraj Singh is, but then he does not want to stay at Mohali (from what has been reported).

The second consideration is that even if the teams do not retain players, they will have to spend upwards of US$ 1 million each in buying at least 2 big names that can benefit their team... maybe, even upwards of US$ 1.5 million. So it might be ideal to retain the old ones as one does not really know how high the valuation for the new ones will be, whether they will be worth it.

For example, Praveen Kumar may not justify a price tag of US$ 1.8 or 1.3 million, but it may be wiser to retain him as his price may well exceed US$ 1 million when 10 owners sit together for the bid - and - buy auction process.

The third major question, as I have already talked of in one of the examples above, is the brand-building. Chennai Super Kings have their entire brand name built around the image of Mahendra Singh Dhoni. There is no way they can let him go. No other cricketer in the league is has his brand so closely associated with that of the franchise as the Indian skipper.

And yes, finally there is the question of whether the entire team can be bought in US$ 4.5 million if a team decides to retain 4 men. We must remember that in the first ever auction, the limit for spending was up to US$ 5 million only. So there is no reason why an entire team cannot be bought for US$ 4.5 million, especially considering that in doing so the teams will be retaining their 4 main old men in their squad.

It would be interesting to see the auction process when it does take place. For the sake of the existing fans, I hope that there is not much of a reshuffle so that fan loyalties towards a particular player can be maintained. And for the sake of the fans of the two new teams, I hope they do get a chance to net in some big names who will perform for them well in the tournament.

6 comments:

jimmymycrushie said...

Very informative post. Good job fellow blogger! I thin' most captains will be retained. Sadly, most franchisee/selectors have personal preference so retaining will not be based only on performance. One mistake that most franchisee make is that they don't have a plan before they go for the auction. They buy the first few players who are auctioned. Thus, some good ones are just not sold. Swann, Wright and some others want to play in IPL but were not bought this year.

Shridhar Jaju said...

Hi there! I think Swann can expect a nice contract for the next season.

But I don't think all captains will be retained. Anil Kumble is too old to command that price. And Sangakkara has not performed that well. Shane Warne was good, but does he really command that price??

jimmymycrushie said...

I don't thin' it will be always about whether a captain is worth his price or not. This is similar to what I said about personal preferences. Some captains will be given respect and might be retained. I never thought that Anil Kumble would be the best man for the job, Dravid didn't do a bad job, not his fault that RCB fared poorly in Season 1. Pietersen wasn't bad either. I'm not a big fan of his captaincy in ODIs and Tests but he is good in Twenty20. Morgan is one awesome player they have. He hasn't excelled much or even played much for RCB but has been exceptional for England. Shane Warne was the coach, isn't he? If he is still the coach, he might be retained. I really like most of your headlines now btw!

Shridhar Jaju said...

The problem for every team now is that they have to buy an entire new team with a good (and large enough) bench strength that will be capable of winning as well as capable of selling their franchise to the fans as a 'brand'.

It is here that both Kumble and Dravid fail, as they are that great as brand ambassadors as they are as players. Pietersen has a good chance of being retained... a number of reasons - A. His IPL 3 performance, B. He does attract a strong fanbase, C. The owner of RCB Dr. Vijay Mallaya had gone all guns blazing for Pietersen at the auction when he was sold and so, I have a feeling that as you say, this one might be influenced by personal choice / preferences of the owner.

Despite Shane Warne's heroics as a captain in IPL 1 and his role as a coach, I will be surprised if he is retained.

And thank you about the headlines.

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