It's not just spectators but academia, too, that is enamoured with the Indian Premier League Twenty20 cricket tournament. After an Indian Institute of Management, Ahmedabad student assisted the management of the Delhi IPL team, a faculty member along with a student at the institute have now prepared a working paper on the valuation of cricketers.
Titled 'Player Pricing and Valuation of Cricketing Attributes: Exploring the IPL Twenty-Twenty Vision', the working paper by Satish Deodhar and Siddhartha Rastogi attempts to discern an IPL player's valuation based on the relationship between the IPL-2008 final bid prices and the player's attributes.
Even as the auctioning of incumbent and new players for IPL 2009 is underway till February 2009, the study can help ascertain a new player's worth to the team owners. For instance, the study tries to find out when Andrew Symonds was offered $1.3 million (Rs 6.36 crore), it was because of his ability to draw crowds due to the controversies surrounding him during the auction period.
"The study gives some perception about how the pricing of the players might have been done during the IPL auction. We have employed the bid and offer curve concept of hedonic price analysis and econometrically established a relation between the IPL-2008 final bid prices and the player attributes.
"The idea that hedonic analysis has interesting applications in various fields triggered off our study, thus applying the analysis to cricket players as the IPL prices they were offered must have been based on individual attributes of the players.
"We have also used dummies in the form of cricket players in the study to understand the business of IPL. The numbers generated are not precise to the last dollar but are ballpark estimates, which seem to give a benchmark for cricketing and non-cricketing attributes," says Deodhar.
Claiming that this paper is a first attempt to provide an objective valuation of cricketers based on their cricketing and non-cricketing attributes as perceived by the business of cricket, Deodhar says that a cricket player is valued for his on-the-field as well as off-the-field performances.
He adds, "We propose that a cricket player sells his cricketing services for the IPL tournament. The franchisee team owners bid for the player services, for team owners would like to maximise their chances of winning and maximising profit. In equilibrium, the final bid price of a player must be a function of the valuation of winning attributes of a player."
Citing examples, the study talks about how players like Sachin Tendulkar, Sourav Ganguly, Rahul Dravid, and Yuvraj Singh, on an average, earn a hefty premium of $499,037 (Rs 2.4 crore approx.) for their regional iconic popularity. However, another icon player, Virender Sehwag, enjoys a premium of only $382,274 (Rs 1.8 crore approx.).
The study also states that an Indian player commands a better premium over a non-Indian player. For example, among the foreign players, none receives any premium for their nationality, as against an Indian player who on an average is likely to receive a premium of $203,156 (Rs 1 crore approx.) over non- Indian players.
Also, the study examines the coefficient for age as negative and statistically significant. On an average, a player loses out $29,484 (Rs 14.4 lakh approx.) for getting older by one more year, it states.
In April 2008, the Board of Control for Cricket in India (BCCI) initiated IPL, a cricket tournament of Twenty20 overs to be played among eight domestic teams. Team owners bid for the services of cricketers for a total of $42 million (Rs 205 crore approx.).