A Corporate Twist to the Dhoni Tale !!

Mahendra Singh Dhoni is a name that evokes awe, admiration and sometimes pure reverence across the teeming millions of cricket lovers in India. It is not without a reason. From 2007 till 2016 for a decade he strode the cricket firmament like a colossus. He captained India across all formats – 199 ODIs , 72 T20 Is , 60 Tests – a total of 331 matches, the most by any player across all formats. (no one in the world has captained over 50 matches across all formats). He is the only captain to win all 3 ICC Limited Overs Tournament – World T 20 in 2007, ODI World Cup in 2011, Champions Trophy in 2013. He was unbeaten 26 times in successful chases in ODIs- the highest for any captain. He is the only player to captain a country in 6 Editions of world T20. As captain of the Chennai Super Kings he won the IPL in 2010 & 2011 and the Champions Trophy T20 in 2010 & 2014. Little wonder that he enjoys an iconic status both in cricket crazy Chennai & across the length and breadth of India.

Sanjiv Goenka (SG) with a Net Worth of 1.1 B$ is No: 91 on the list of the richest Indians. He heads the 2.6 B$ Revenue RP Sanjiv Goenka Group with interests across Power distribution, Information Technology, Retail Supermarkets, Carbon Black & Entertainment. SG is a no-nonsense Manager who has always broken away from tradition, focused on Revenue Growth, Profitability and on improving operational efficiency. He ruffled feathers in the Group when he brought in Boston Consulting Group & Mckinsey to engineer a transformation. A man of courage, self- assurance , focus & dedication, he is a businessman par excellence. 

IPL or Club Cricket is not sport – it is business & serious business. Investors purchase teams knowing fully well that it will take a minimum of 5 years to reach break-even. Mumbai Indians, Royal Challengers & Sunrisers Hyderabad were all bought for over 100 M$. The company owning the team has a CEO, CFO , marketing and operations team apart from the sporting staff & players. In the business the captain is only one of the elements of the puzzle. Creativity & marketing strategy notwithstanding, there are only 3 primary sources of Revenue for IPL Teams:

1.     Broadcasting Revenue. (could constitute 60-70 % of revenue & is regulated by BCCI) . Winners could get 3-4 times that of the Team at the bottom of the table.

2.     Commercial Revenue. (sponsorships & advertising revenue for logos on helmets, jerseys etc. Generally 20-30% of overall revenue)

3.     Match Day Revenue (Ticket sales, stall rental, prize money. Generally 10-20 % of overall revenue)

Expenses include Franchise Fee, Player acquisition costs, stadium hire charges, team costs and marketing costs.

In 2016 SG acquired RPS for approximately 5.5 M$ for a mere 2 years. Also, BCCI ruled that RPS & Gujarat Lions will have no share in the Broadcasting Revenue and thus made it only 2 sources of Revenue. SG must have been clear upfront that there could never be an RoI. However, it was a great platform for his company to learn the business of cricket. Remember he is the owner of Atletico de Kolkata in the ISL Football, started a sports company called New Rising & knows he can diversify into Fitness Centres; Hotels; Transport Infrastructure & technology innovation in sport. Cricket is a masterpiece of technology innovation- Third Umpire with access to TV Replays wirelessly communicating with on-field umpires; Hawkeye which shows the path of the cricket ball to adjudicate LBW decisions ;snick-o-meter – a sensitive microphone located on the stumps which can pick the sound when the ball nicks the bat; helmet cams; sensors on the boundary ropes , stump cameras- it is a mind boggling assortment of technologies & future opportunities are only limited by one’s imagination. SG knows it. Also, for Spencers Retail (Supermarkets) & Saregama ( Music business) 2 of the flagship group companies RPS Giants is a great platform for brand building. However, SG has only 2 years and no visibility on whether RPS will have a team in the 2018 Edition of IPL.

IPL 2016 was a disaster for both Dhoni & RPS. The record was abysmal to say the least. Lost 9 out of 15 matches and ended second last at the bottom of the table. Dhoni had a lacklustre season as a batsman struggling with his timing & rhythm & clearly showing signs that he was fast approaching the twilight of his career. IPL can have no tolerance for aging superstars who are past their prime. No one gets on to the pitch based on reputation. Only performance counts like in business. Fans do not cheer for famous players deep into their declining years; they applaud winners. In management parlance, the axe had to fall.

Last week when SG announced – “Dhoni has not stepped down. We have appointed Steven Smith as skipper for the upcoming season” he showed no emotion. For him IPL is commercially driven, a ruthless competitive business. There is no space for emotion. He clearly showed he is made of sterner stuff. He has made significant investments & he is fully entitled to his return expectations. Dhoni continues to be a legend thanks to his heroics while playing for the country. Leadership of an IPL Team means little to him; although it might bring down his brand value & marketability which in any case should go down in the twilight of one’s career. With a Net worth of over 100 M$ & 1.9 M$ purse money from RPS whether he captains or not, Dhoni continues to be on a great wicket. The decision will have no impact on him. In fact Captain Cool has not even reacted although twitterati last week went berserk. If his emotional equity with Chennai & CSK is as high as it is believed to be , he will be back at the helm of CSK come 2018. The astute business mind of SG knows that this is an imminent possibility. He played the trump card- Steven Smith. Only time will tell if this was a master stroke or a colossal blunder. It is a courageous business decision. Hats off to SG.

Like the famous one-liner goes: Sometimes it is football, sometimes it is soccer but always it is business. So it is with Cricket. Enjoy the game………