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BCCI and its monopolistic attitude

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This has been spoken of in the past by the media so I will try to keep my post short.

What is a monopoly? http://en.wikipedia.org/wiki/Monopoly

Anyone who would have done a primer on Business economics knows that a monopoly is able to earn super normal profits and sustain its competitive advantage sometimes squashing competition. Classic example in this case has been Microsoft (Nasdaq: MSFT) where the European Union (EU) recently slapped a huge fine on for its monopolostic practices under its antitrust commission / EU watchdog.

The BCCI (Board of cricket control in India) is something similar. Its no secret that there is a lot of money in this sport and though India’s national game is Hockey, not many really look at Hockey as a major money spinner. The masses are attracted to this sport not in 1000’s but in millions. It has an estimated fan following of over 300-400 million Indians (including expats esp. with the emergence of the Internet which allows them to catch matches live using live feeds).

The BCCI is a private body – http://en.wikipedia.org/wiki/Board_of_Control_for_Cricket_in_India. For 2006/07, the BCCI reported earnings of almost Rs. 650 crores and is probably the richest cricketing body in the world!

The working of the BCCI is already well explained in the Wiki link so I will not get into it again. The recent Twenty20 win of the Indian cricket team was celebrated well by the BCCI with a public felicitation ceremony at the Wankhede stadium at Bombay/Mumbai where our sportspersons received a heroes welcome and they were rewarded equally well with prizes of almost $3 million from the BCCI itself.

There are multiple reasons why the BCCI did this.

First, the emergence of a rival league, the ICL, has caught the BCCI unaware and they are wary of emerging competition. They need to pay their players well to retain them as those players are their money spinners. If you want one classic example of why the BCCI is governed by politicians, just look at their financial statement for 2006/07. Politicians are there wherever there is big money involved – be it real estate, or rich sporting bodies that enjoy a huge fan following.

Second, the BCCI wanted to prove their money prowess to the public at large.

Third, a measly 5% probability, they genuinely wanted to reward their players who got them that world cup.

It will be interesting to see how things pan out in the coming years with the rival leagues competing against the BCCI and more importantly what kind of safeguards our government provides (I doubt if there would be major safeguards given how many politicans are involved in the BCCI’s functioning).

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Written by Naveen Athresh

October 6, 2007 at 2:38 pm

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