Indian Premier League Cricket (Audio)

0:00 I am listening to the Kolkata Night Riders anthem as my pumpup song. Oh, nice. It is so awesome. Have you seen the music video with Shah Ruk Khan, the owner of the Kolkata Night Riders? No. He is the main character with the Bollywood dance around him. Okay, I'm going to go watch it right now. And it's a little cheesy cuz I think it's from 2008 era, but it is perfect pumpup music. Oh, yes. We've got the player silhouettes in fire. Yes, that's exactly the one. This is incredible. How have I not seen this before? This is something that American sports definitely need to adopt. Oh man, we've got like a construction crew. Too hot, too cool. That is exactly the right

0:45 reaction. Okay, I'm going to pause it. We're not even going to record an episode. I'm going to watch this over. All right, let's do it. Let's do it. Who got the truth? Is it you? Is it you? Is it you who got the truth now? Truth. Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Welcome to the spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. 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, h, I'm not that interested in

1:31 cricket. And to all of our US listeners out there, I am guessing you feel the same way. But I was very wrong. Hey, there are 20 million hardcore cricket fans in the US today. Great point, as we will get into later in the episode. 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 17 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

2:17 matches that lasted 5 days and they completely transformed it. It is compressed down to 3 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 onfield dance performances, cheerleaders, fireworks, and the way they started the league itself was a highstakes 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. It's an amazing story. 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

3:03 Morris, Rupert Murdoch, Reliance, Tata, and even Google. There's a very, very complicated founder figure. There's corruption. There's potential self-deing, 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 20x in value since 2008 to be worth more than $16 billion 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 or an NBA game or a Major League Baseball

3:48 game. 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 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 20 years from now, the IPL will be the largest sports league on the planet, period. Bigger than the NFL. That is the case I'm going to make on this episode. 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. Yes.

4:36 Oo, that's a great way to put it. Even more lucrative. 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. Yeah, July 15th. Save the date, mark your calendars with our good friends at JP Morgan Payments. And if you want to be the first to know when we have any details to announce, acquire.fm/nyc. We can't wait to see you there. We can't wait to see you there and we can't wait to be there. Yep. If you want to know every time an episode drops, check out our email list. It's

5:23 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 fm/e to join the list. Join the Slack and talk about this with us afterwards with the whole Acquired community acquired. 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 Service Now, talking about the art of enterprise sales that he used to

6:10 grow Service Now to over $10 billion in revenue. Before we dive in, we want to thank our presenting partner, JP Morgan Payments. Yes, just like how we say every company has a story, every company's story is powered by payments. And JP Morgan Payments is a part of so many of their journeys from seed to IPO and beyond. So with that, this show is not investment advice. David and I may have investments in the companies we discuss and this show is forformational and entertainment purposes only. David, take us in. Well, we start in the early 1990s with a colorful character, shall we say, named Lallet Modi. No relation to Nahendra Modi, the prime minister of India, but he is from another famous Modi family. Lit is the son of the

6:59 renowned Indian industrialist KK Modi who had built a fairly large conglomerate in India. you know, in the vein of Reliance or Tata or whatnot, it seems like all these big Indian companies are conglomerates. Like it was actually kind of hard to find a scaled Indian company that did one thing. Yeah. The industrial structure in India at least today seems to be more like South Korea or Japan with the big conglomerates. Yep. But in this case, Mod'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 lit as the air apparent son in this family to this business, he gets sent to college in the

7:46 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." Yes, we should get into that. 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 because they're all glued to the TV watching Monday Night Football. Yep. And this is kind of the perfect time for it because

8:32 here in the early '9s, 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 Lit 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 help 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 yes so in kind of a genius fashion lit uses the sales force that the Modi company has for their tobacco products. They have 80,000

9:20 100,000 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 distributing cigarettes. So lit says, "Hey, we can leverage this sales force and use those people to go hook up with these early wild west protocable operators out there in these towns and villages in India and bring them Disney content." 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

10:08 content to. Can you send this content there?" Yep. There is a national overthe-air broadcast network in India, national network called Dor Darian. 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 or what have you, and we'll rebroadcast those channels out to you via wire into your home." 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. Yep. He is the JV partner that Disney is entering India with. Got it. So now here we are

10:53 in the early '90s. Disney isn't the only major global media conglomerate that sees the potential of this newly television hookedup Indian consumer market. There's News Corp out there and Rupert Murdoch. And Rupert, of course, really built the television side of News Corp, but 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 a News Corp into a new country and Fox Sports and eventually all the regional sports networks in the US. Exactly. So News Corp had just launched a new brand and channel in India called

11:39 Star. And Rupert's going around looking for how he's going to run this playbook in India. What sports is he going to 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 going to come back to that in a little bit. 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. Yeah there's no English Premier League of cricket at this point in time. Cricket is just this

12:25 international game. And now that the Indians are getting televisions, the Indian national team playing cricket is becoming must-see television. 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. Yep. Is watching when the Indian national team is playing. Yep. So Rupert hoovers up these rights pretty cheaply and all of a sudden Star is now the place to watch cricket in India. Lot 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 got to get in this game. We got to be getting cricket, too." Yep. So L and ESPN and Disney, they go to IMG, the

13:12 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 testimony program that brought in Jack Nicholas and Arnold Palmer and then ultimately Roger Federer and all of the athletes who partnered with Rolex over the years. Yep. So Lal and ESPN and IMG, they go to the National Cricut 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 sold these pretty cheaply to Rupert. We'll pay you more. We'll take them. We should run an auction process here." And it's worth knowing the BCCI's

13:59 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. 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 and they all actually roll up to the IC 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

14:45 gives you a sense of the way that cricket was spread around the world by the British. Yes, it is the British Commonwealth countries that are historically the cricket playing nations and are part of the ICC. Yep. 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. Yes. 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 want to

15:32 broadcast this. Uh, how much do we owe you for the rights?" Cricket was newly extremely popular in India. It was 1983, 8 years before where India had won the Cricket World Cup for the first time. This is 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. Yep. And it's all tied up with the television penetration of India. Yes. 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 national team and the board is like well how much do we

16:18 owe you for this? They don't know how to respond. So there's this great history of they're sort of 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?" And then you guys like, "Uh, yeah. Yeah, that sounds great. Let's do that." So, they only just discovered that this thing had value. They even had these rights and that they could sell them. And then it got really concretized into law a couple

17:06 years later. There's a legal battle between the BCCI and this legendary leader of the BCCI, Delmaya. And he goes to war against the national state broadcaster, Dardian. 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. Yep. And that guy, Delmaya, he was the BCCI board member who was negotiating with South Africa. He was the guy on the call who heard $200,000 and was like, "Okay." Yeah. It's like, "Look, South Africa has to pay us." And then they come home, they get into a legal battle and that even the Indian government has to pay us. We really own these rights. Yeah. He was like the proto Lallet Modi.

17:53 Lot before lit. Yes. There's one other really fun sort of history turns on a knife point element to cricket in India. So like you said Ben cricket was the most popular sport in India before 1983 but that didn't mean that much and it hadn't captured the country's imagination that much yet. Also England always hosted the World Cup. The center of gravity was England and so it wasn't India's thing. It was just a thing they participated in. It was a British thing. There's an amazing line about this by an author named Ashis Nandi who wrote a book called the Dow of Cricket and he says cricket is an Indian game accidentally discovered by the English. While we're on this topic of things the BCCI realizes they own and in particular

18:40 Dela 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, Delmaya introduces central contracts for Indian players and pensions for retired cricketers as a part of the BCCI's rebbit. 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

19:26 combo that would eventually lead later to the IPL as we have it today. Yep. So all this launches ESPN in India and there's back and forth for a couple years between Star and ESPN. and 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. Antirust uh regulation in India is not quite what it is in the US at this point in time. No. So Star and ESPN merge and to hear Lot tell the story. Rupert Murdoch is kind of a you know sore loser here that Lot 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 Lot out of his baby, out of this company post

20:13 merger. Now, is that really what happened? That's Lett's side of the story. Um, Star Disney, the merged entity, would allege that Lot under reported 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, Lik gets booted out of the business and despite his family's 50% ownership in that original ESPN Disney joint venture, he gets nothing. He's out in the cold. Brutal. 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

20:59 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. He's the villain. Rupert stole it away from the Modi family. My sworn enemy from here onwards. And thus begins a 10 to 15year journey that is not just the ultimate revenge play by lit on rupert but accidentally along the way starts the biggest sports entrepreneurial story phenomenon that has ever existed. 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

21:44 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 Lit 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. Yeah. 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 the 80s early 90s the euphemism

22:32 I believe that the Indian business environment is referred to as a low trust environment i.e. This is part for the course. Yes, if you make an investment, you should be babysitting it very carefully, very actively making sure that your interests are protected. 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. And I will say these phrases, corruption, kickbacks, that is a westerners'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. Totally. You Disney, you news corp, you are

23:17 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 Lit's got this blood vendetta against not just News Corp and Star, but like Rupert Murdoch personally specifically. And what's the way to hit him where it hurts the most? Well, it's the biggest piece on his chessboard pillar of News Corp. It's sports. And it's what Lit thinks is like his birthright like he brought to India was professionalizing and televising sports. He needs to take that away from Rert. So how are you going to do that? Well, who controls cricket in India? It's the national cricket board, the BCCI. So Lot figures, okay, I need to

24:05 engineer getting myself installed 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 they're states within India. So in 1999, Lot 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 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

24:54 vastly undermonetizing 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. I know how many eyeballs these are getting and like you guys now you're selling them for 105 million a year. These are worth hundreds of millions of dollars a year, right? other than the latest slate of Bollywood movies, this is what the Indian population cares about. So why are we making10 to 15 million dollars on it? 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 darkhorse candidate to come in and reform the BCCI and fully commercialize this quasi governmental

25:42 entity. 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. 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. I would really like to have a relationship with you all. 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 Lit doesn't have this conflict of interest is cuz he got ousted. He's ousted. Exactly. And his

26:29 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 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 going to get as the title sponsor. And maybe at

27:17 this point in time, you're also getting the logo on the broadcast, but pathetically commercial versus cricket today. 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 for this sponsorship? I don't know, a million bucks. $100,000 per year. I thought a million was low. Wow. 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. And I

28:06 think that calculation is done by viewer hours. Yeah. If you look at all sports watched, cricket is 93% of the hours people paid attention. 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%. 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 and the middle class is rapidly expanding. So like this is exactly as you know if you're Pepsi or you're Tata $100,000 to sponsor. 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.

28:52 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." No, they are playing 105 days of competition per year. all nationally televised 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. You say day at this point in time there are two forms of cricket. There are one-day internationals which is the new fancy version of cricket that came about what in the '7s '8s '7s '8s and that really was to enable tournaments to happen like you can play a match in one day takes all day these are eight hour games so it's all day the

29:38 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 roundrobin tournament with Otherwise, there's no way you can tournament where every match, 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? Uh I believe it's because it's a test of the strength, will you know the team 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 Lords, Lords is the hallowed cricket ground in

30:24 England. Yes. To play this five-day thoughtful, quiet, strategic. The vibe is like golf even though you're playing something that looks like baseball. Totally. I have to bring in some personal history here. So, I am a quarter British. I'm genetically predisposed to, you know, already be into cricket. But when I was growing up, my grandmother was British. Probably every other summer I would go spend two, three, four weeks with my family in the Midlands in the countryside in England visiting my grandmother's family. And you know, as a little kid, like what would be on TV in the summertime in England? It was this test cricket. And so I grew up, even though I played baseball and I love baseball at home, in the summers when I would go to England, I'd turn on the TV, I'd watch this test cricket, like, "Oh, this is super cool." But yes, exactly like you say, Ben, this

31:11 is the gentleman's game of gentleman's games. You play it in like a white V-neck cableknit sweater, right? In the middle of the summer, by the way. Yes. And the incentives are all funny, too. It's not about swinging these big home runs. Your goal is basically to hit little line drives and keep it on the ground and make sure that you're able to score one run at a time, not six runs. You have a lot of time over the course of 5 days to let your strategy play out. And so you're not trying to make the absolute most use of every ball bold the way that you are in modern versions of cricket. To give you a little sense of this test cricket and I believe one day internationals as well, there are four possible outcomes of the game. You can

31:57 win, you can lose, you can tie. Wait, so what's the fourth? The fourth outcome is a draw, which is different than a tie. A tie is if the score is tied at the end of the match, which almost never happens because you're playing for at least eight hours, if not five days. You know, the scores are in the hundreds here. So, the odds that they're going to be tied are very, very low. I see. A draw happens when one team is not able to finish their innings in the time of the match. So, if you get to the end of the day, like, oh, sun goes down, it's time for dinner, and all of your batsmen have not yet gotten out in your innings. Oh, well then you could be behind, ahead, whatever. Like, oh, just didn't finish. It's like a DNF. Did not finish. What?

32:42 Just a draw. And so then you have this funny strategy where you're trying to drag the game out if you're losing. If you're behind and you're batting second or in a test match in your second innings if you're batting second and you're behind. Yeah. You're just trying to draw the game out. Amazing. All right. So we're going to leave the world of test cricket behind in the 70s. There's a lot of test cricket still played today, but Oh, yeah. It's still a big thing for these big international tournaments, the World Cup, all that. That's one day internationals. This ODI format. All of this amazing and delicious sidebar is just to point out that there's a lot of inventory here. The Indian national team is playing 105 days per year and the Sahara Group is getting their logo on their white cablek knit vests for $100,000 a year. I think

33:29 one day internationals they actually did start wearing more athletic clothing. That's right. That's correct. That's not the white sweaters. Indeed. So lit here now in 2005 when he finally gets on the BCCI first thing he does is he goes to Sahara and he says the price is going up. It is now $1 million Ben as you were saying per day of competition. So you are going to go from spending $100,000 a year to spending $15 million per year. And oh by the way if you don't want to do that that's fine. I'm happy for you not to do that. I'm then going to go put this out to auction and we'll see who is willing to pay that. Wow. To give you a sense of just how much latent value there is here, I don't think it goes to auction. I think

34:14 Sahara just says okay. Yeah, they're very aware that this is a very good deal even at this price. I mean, if you want to reach the nation of India, there are two ways to do it. Bollywood and cricket. That's it. Yep. So when this massive escalation happens in 2005, I believe this is correct, overnight, this becomes the highest paid jersey logo deal of any sport on the entire planet. Oh, interesting. So basically not even commercial to now the single largest logo sponsorship in the world. And now why is LAT able to all of a sudden extract this huge record-breaking amount of value for this sponsorship whereas before it was really

35:00 not even commercial? We alluded to it before but the rise of the Indian middle class is what's driving everything here. So, one stat I saw was that in the early 90s when we started our story a little bit ago, Lot was first getting involved. Disney and Star were entering the Indian market. There were only about 2 million households in India that had a disposable income of $10,000 or greater. Wow. By the time here we are now that lit gets on the BCCI and is wrecking all these deals, it's 10x that. So there's call it 20 30 million households now in India that are by that definition at least middle class. Fast forward to today it's another 10x plus that number. You know there's 400 close to 500

35:47 million people households in India that have that level of spending. It's actually even more. It's 550 million people who are a part of India's middle class. Now that middle class is defined differently than the American middle class. It's $7,000 to $45,000 in annual income. But that really gives you a sense. You said that in the early '90s there were 2 million people that made more than 10K and now half a billion people make more than 7K. Yeah, those numbers are pretty close. So we went from 2 million to 500 plus million. That is an emergence of the middle class in unbelievably rapid succession there. And I think the thing to keep in mind about India is anytime you're saying a percent of the population,

36:33 you're still talking about a large number of people, right? The absolute amount of people is huge. The middle class in India today is 31% of the population, but 31% of India is more than all of America, right? Yeah. You just said it was 550 million people. Yes. I mean, full stop, pause, let this sink in. The middle class in India per this definition but still like that is enough annual income that you can spend it on consumer goods is bigger than all of America. That's what's going on here. Another stat we may as well just start really contextualizing the shift here. The Indian government says that 250 million people have been lifted out of poverty between 2015 and today

37:21 they lifted an entire America's worth of adults out of poverty. Yeah. In India to all of a sudden buying Pepsi, buying cell phones, buying mobile data plans, buying oh I don't know Nikes and Reebok. So what's the next thing that lit does after this Sahara deal? There's no gear sponsor. There's no kit sponsor for the team at this point in time. I think some of the individual cricketers had had some super cheap early deals with, you know, Nike or Reebok or whatever. Lick goes to the three big companies, Nike, Adidas, Reebok, and says, "Hey, I'm putting out forbid for auction being the kit provider, the gear provider." kit

38:06 being the British term for athletic gear or cycling. Or cycling. Yes. To the Indian national team. And yeah, if you want to win this, I'm expecting minimum $50 million a year. Just to float a number. So Nike comes in and wins at $52 million a year. Oh, and by the way, since Lot knows that there's going to be competitive bidding between these three shoe companies, he makes a media event out of it. So he has them all submit their bids in like sealed envelopes. He has a whole press conference, opens the envelopes in front of the media, makes it a whole circus. It's like LeBron's The Decision. So this is enormous. L he's two months in to his tenure on the BCCI board and he just found

38:52 $150 million a year. Whereas previously sponsorships were nothing. They were making call it 10 $15 million a year in TV rights. He just 10xed that from something that's worth far less than the TV rights. Yep. So then he sets up a personal meeting with Rupert Murdoch who at this point in time via Star has all the TV rights to Indian International Cricket. Oh yes. But first before we tell that story, we want to thank our presenting partner JP Morgan Payments. The modern fan experience, as we are talking about here on the show, extends far beyond just attending an event. There are so many touch points across

39:38 the customer journey before, during, and after. And when these involve commerce, we as fans expect these to be fast, consistent, and frictionless across platforms. If you're a business, you need secure, flexible technology that simplifies these complex shopping journeys. And this is where JP Morgan Payments innovation is a star player, helping businesses create an amazing omni channel retail experience that deepen their customer relationships. Yep. So, let's stick with sports here for a minute. As you all know, we did Acquired Live at Chase Center last year. Woo! The arena itself is known for being incredibly innovative. And what's behind that is a simple approach centered on creating a world-class fan experience prioritizing both convenience and security. So, enter biometric payments. Last year they introduced pay-by-face

40:24 biometric kiosks at concessions that are powered by JP Morgan Payments. We actually tried it at Chase Center ourselves when we were there. The technology is wild. It completely streamlines the checkout process. You just add payment details and take a quick selfie to easily set it up. Businesses love it too since JP Morgan's technology means you can trust the secure checkout experience with biometric data that's totally unique to each person, ultimately reducing fraud. And actually our show at Chase Center was one of the first events there to offer this experience. Yes, it was. Listeners, as you know, when you delight customers with amazing frictionless endto-end experiences, it can of course drive growth in your business. And with JP Morgan Payments, you know you're getting a reliable platform too that can handle peak demand. They literally process one out of every two e-commerce

41:11 transactions in the entire United States. Wow. Another great example, the Formula 1 Crypto.com Miami Grand Prix was the first Formula 1 race to use JP Morgan's biometric payments technology. The pilot was a huge success with 100% of the transactions authenticated and processed in under a second. They've since expanded biometric payments in physical merch stores and launched online retail to meet the increased demand from their fans beyond the race. When you're dealing with complex ecosystems, this kind of scale and flexibility is possible only with payment solutions that are easy to implement. And they'll be back in Miami again this year. Woo. Acquired listeners can check out jpmorggan.comacquired to learn more about the innovative payment solutions elevating fan experiences and how payments can drive growth for your business. Okay, David. So, Rupert

41:57 Murdoch back entering the picture. Ah, well, Lot probably thinks here that it's coming full circle. We're only just getting started. He sets up a personal meeting with Rupert Murdoch and he sets the meeting for a friendly Friday afternoon tea. How very cricket. And remember at this point I think Star is paying 1015 million a year for these TV rights. Lit walks in, sits down and says, "Mr. Murdoch, I am informing you that your contract is terminated right now. We are going to rebid the contract and you are welcome to submit a bid. We are mandating that the minimum bid is $500 million for four years. And Murdoch

42:47 like basically spits his tea out. He's like, "Uh, you're crazy." That's what 10x the current value. Totally. So obviously he's offended by that, but he's like, "Who are you and why do you think this is going to work?" Remember Star and ESPN had merged. There's no other sports channels in India. There's no other sports in India. Rupert's like, "Who's going to bid on this? You're all hot air here. There's no way that this is going to work. I'm the only game in town. You're basically trying to extort me and oh yeah, rip up my contract that I have with the BCCI. You're two months into the job. Like, get lost." Right. You need me. You need me. Yeah. Hm. But of course, Lot has a plan for this. He's going to do just what he did back with

43:33 ESPN in the first place back in the day. It's not that hard to set up a new network to come in and bid on these rights. And by the way, it is now clearly, demonstrably, and provably so much more valuable than back in the day. We're now 15 years into the television penetration of India, shall we say? There are tons of other broadcasters and cable channels out there. They're just not sports channels. Well, what's a sports channel? That's just a marketing term. It's just a channel. You add another channel. You make uh ABC Sports, NBC Sports, CBS Sports, Fox Sports. Anybody can do this. So, LI goes to Sony, who's the number two broadcaster in India. He goes to Sky from the UK and

44:21 says, "Hey, you want to enter India?" And he ultimately goes to an Indian entertainment company called Nimbus, which was a broadcaster, but also didn't have a sports channel. And he says to all of them, "These rights are now available. Minimum bid is 500 million for 4 years. This is going to be very profitable for you. It's very easy to set up a sports network. I've already done it. I will help you do it. You are welcome to bid." Nimbus ends up winning the auction with a $620 million bid for four years. Wow. They set up the Nimbus Sports Channel. It uh I believe quickly becomes the number one sports channel in India. I mean there's nothing else like if you got cricket, you're the number one sports channel in India and Star and Rupert are out in the cold. Wow. So, Lit

45:08 really did make the BCCI an economic powerhouse where they really didn't have material revenue before. And now suddenly they have hundreds of millions of dollars coming in what 200 million a yearish between TV and sponsorships. Yeah. They've got 150 million from sponsorships and then they've got Yeah. What's that? 25 from this. Yeah. And then another 150 million from broadcast. Yeah. So hundreds of millions of dollars a year. Unbelievable. Totally unbelievable. with more potential to monetize beyond that. I mean, he got 150 million from two sponsorships. You can have more than two sponsors here. Yeah. He completely commercialized the BCCI. Transformative. You know, he would say when he later gets kicked out of the BCCI and there's tons of controversy and

45:54 everything we'll get into later. People are accusing him of self-deing doing all these things. He's like, I created billions of dollars of value for cricket in India, the BCCI, the government, all the players involved from nothing. And he's absolutely right. Yep. Absolutely right. And by the way, he shut Rupert Burdock out of all of it. So, here we are now. He's won. He's extracted his revenge. He's taken over Indian cricket. He's created the single biggest pool of money anywhere around the globe in cricket as a sport. I mean, this is way more money that we're talking about here than England or Australia or the West Indies or Sri Lanka, New Zealand. You know, the other cricket playing nations. England and Australia are big media markets, but

46:40 they're not this big. Well, on a sheer population basis, they just can't come anywhere near India. Totally. And we're not even at the end of 2005 yet. This guy is a force. But as you might expect, he's not quite satisfied. Shocking. If we've learned anything studying all these characters over the entire arc of Acquired's history, they're never satisfied. 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 285 games,

47:27 including the postseason. So, more than double that. And that's the scarcest sports media in the world. Yes. And the only reason that the NFL plays that few games is because the bodies of the players just can't take anymore. They would fall apart. Right. Major League Baseball, almost 2500 games are played per season. Yes, thousands of games. Cricket is not like American football. This sport was designed to be played five days in a row. Yes, the cricketer's bodies are not falling apart. There is a lot more juice to squeeze here. So thus sparks unquestionably truly unquestionably this is in zero way a controversial statement the most

48:13 brilliant most successful sports entrepreneurial business plan of all time. the Indian Premier League, a domestic citybased cricket league in India that lit is gonna set up in the model of the very best elements of the NFL, of the English Premier League, of the NBA, of international cricket. Yep. Of international cricket, 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

48:59 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 organization that lit now deacto controls 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. Absolutely. They innovate beyond the other leagues, too. Yeah, totally. 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

49:45 that exists. All right. So, so how does he do it? Yes. What is it? You're telling me it's the most amazing thing ever. Prove it. So, besides lit 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 are 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 that we talked about. And then there's the one-day 8-hour matches that are for

50:33 international tournaments and competitions. One day internationals. Yep. 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. 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. And the only people still left watching it are old men basically. Y women have never really cared and kids are like, I'm interested in football, you know, European football. Like I I don't care about this. Not to mention, who can take five days off work all day to go watch something? Yeah. This is happening

51:18 during the day or even one day during the international tournaments. Yes. It is made for retired men or especially in the old days the elite people who didn't have jobs. Exactly. That was the whole point of the game. It was for the nobility. Yes. Exactly. But not going to work in the modern world. Yep. So in 2003 the English cricket board finally realizes like hey we're desperate. We got to do something. So there was another form of cricket that was mostly played recreationally and by school teams that was 20 over cricket. So rather than these five-day events or the one-day events, it was a limited number of balls of pitches essentially to use the

52:04 baseball analogy for each side and that was 20 overs. An over is six balls. Each team gets 120 balls bowled to them and you got to make do with just those 120 balls. So all of a sudden you're going from test cricket which is thousands of balls bowled pitches equivalent in the baseball world over 5 days. Then you've got the one day international one day version of the game hundreds. You're going down to 240 total balls bowled 120 for each side. Compare that to a Major League Baseball game for instance has an average of about 300 pitches per game about 150 each side. So now all of a sudden cricket went from like the boring version of baseball to the more exciting version of baseball purely and with this

52:51 just very interesting different thing. The balls are scarce. You have to get the most points possible based on a small fixed number of opportunities to hit it. Right? A baseball game can go on forever. Pitches could go on forever, extra innings, etc., etc. Nope. These T20 games, it is a strict balls bold count. Yep. It's tight. And that means games take 2 and 1 half to three hours. That means games can be played in prime time in the evening for the very first time in the sport. Finally, we have a cricket for the masses. I mean, how was anyone even supposed to watch these ODIs unless it's on a Saturday? You now can watch cricket every night of the week because there's a three-hour prime time format for everyone of every class to watch. Yep. So, all of a sudden, you

53:38 start seeing these green shoots in England 2003, 2004, 2005. Domestically, they start playing T20. They start televising the matches. Younger people start paying attention again. There's a revitalization. So, obviously, the international game sees this. Lit sees this. He's thinking about starting up a domestic league in India. This is the perfect opportunity. What an amazing gift of a new format of the game. Perfect for prime time. An incredible opportunity. There's one other thing that fell in their lap, which is the fddy duddies who love test cricket absolutely hated it. Yes. Which made it more exciting. Yes. And so the way that the original T20 was advertised, even

54:26 before we get to IPL, you just look at there's a famous match of Australia versus New Zealand. New Zealand doesn't take it seriously at all. They come out with crazy hairds and they're wearing whatever. T20 is kind of a joke from the start and once the players do that, then the advertising kind of leans into that. This is not a serious sport. This is like party time and you know we just have to be playing cricket. This is all but the Savannah Bananas version of baseball. Yes. Which we'll talk about the Savannah Bananas later for folks who uh don't know or who are not in the US. Savannah Bananas is like the Harlem Globe Troters of baseball. It's a purely entertainment spectacle. It's a spectacle for sure. And IPL is not quite that. I mean, the T20 is definitely

55:12 competitive, but the old-timers look at it as a joke, even though it's a highly skilled thing, and that's a perfect spark. Totally. So, the Australian domestic T20 league that gets started right around this same time, to give you a sense of this, is called the Big Bash League. That's the image that they're projecting. And the big bash league is like they are legitimately a real sports league today and probably the second biggest, second best T20 cricket league in the world behind the IPL, but this is not targeted at the test cricket loving audience, right? And it sends the right message, too, because you were trying to bash the ball. This is a game of batsmen. There's an amazing moment that happens. I forget exactly which competition it's in, but someone gets six sixes in a row. It's like the most amazing thing ever to watch. It's

55:58 basically home run derby. Yes. When there's no limit on the number of balls, you're trying to play for a draw. If you're behind, you're trying to make things go longer. Now, all of a sudden, it completely changes the strategy of the game. You only have 120 balls and you need to maximize your score. Y So, rather than trying to run out balls or whatnot, like sixes become way more important. Yep. So, Lot knows this is the perfect opportunity. He goes back to IMG who remember he had initially partnered with with Disney and ESPN way back in the day to start broadcasting cricket in India in the first place and says hey I need to hire you as consultants from the BCCI we're going to set up a whole new league and Andrew Wildblood who runs IMG's India operations becomes essentially LAT's

56:45 partner in setting up how are we going to structure this what are we going to create as the business plan of this new league we've got some time. We've just done these major rights deals and sponsorship 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 in 2007. We got two to three years to set this up. And then in the spring of 2007, a rebel league starts up under their nose in India. Another domestic T20 league with city-based franchises announces that they're going to launch and they're going to call it the Indian Cricket

57:33 League and it's backed by the broadcaster ZTV. Not only was it called the Indian Cricket League, which is just a great name, that is actually an entity name that Lit had registered in the '9s. Yes. I don't know if Lot was thinking he would actually call IPL the Indian Cricket League, but then something else launches called the Indian Cricket League. Yeah, it's a good point. This opportunity for a domestic cricket league was not some like aha brainstorm that lit had once he took over BCCI. Everybody knew that this would be a huge opportunity, right? This is like social networking in 2004. 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

58:18 the timing just wasn't right. All right. So, what is this Indian cricket league? Where did it come from? What is ZTV? So, way back in 1996, Subash Chandra, the founder of ZTV, 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 Llet saw. Sports are the most important thing. India increasingly cares more and more and more about cricket. This is going to be the perfect thing to distribute over my airwaves. 96 to04 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. Oh interesting. So this must have been right before lit joined the board

59:04 and then restructured the whole thing. Must have been right around that time. Finally, two more years goes by. He wins. He gets a 5-year deal between the BCCI and ZTV for the exclusive rights to broadcast cricket. Oh wow. I didn't even find this that they had a deal with BCCI. They had a deal. Wow. Oh, 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 stateowned broadcast channel. Interesting. Which of course destroyed the profitability of this enterprise

59:51 that ZTV 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 ZTV's attempt to renegotiate this because at this point in time lit is starting to work on setting up IPL. Yeah. And I think the ZTV 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 h just hold tight. We're going to make some changes here. Not knowing what's going on yet with IPL, ZTV 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 going to

1:00:37 start a new T20 league outside of the BCCI universe without their cooperation." Ah, so this is spring 2007 when they announce ICL. Yes. The VCCI immediately says any players who sign up for the Indian Cricket League are banned for life from playing for India National League 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 is freaking out. He's like, "Wait, wait, what?" So he then tries to make this big appeal. The economic benefit that's going to come from a domestic league like this, everyone's going to watch this. that's going to promote the local economies of all these places. We're going to 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

1:01:23 up doing. It's going to be broadcast on ZTV. I'm going to fund a million dollar prize pool. BCCI High 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. Amazing. 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 going to 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

1:02:09 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. Yeah. So they do play actually two seasons, 2007, 2008 and into 2009 and then they fold. 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. Well, I mean, this brings up probably the most important power and playbook theme that I was going to 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

1:02:54 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. Well, I think that's right, but it is a two-sided equation. Like BCCI worked themselves into the choke point or ended up in the choke point or the lynch pin 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 Delm 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 own the two things that mattered.

1:03:40 Yes, that is absolutely true. The players are the primary thing though. The broadcasters will follow the players. The Star is desperate to rebroadcast cricket at this point in time. They would have 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. Yep. So LE and Andrew Wildblood and IMG like, okay, we got to accelerate this. We were planning to launch what becomes the IPL in 2009. We need to launch now, next season, April 2008. I

1:04:26 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. 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. Yes. And they were initially really dragging

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