Adam Smith’s invisible hand is now our most successful cricket player

Two buses ferrying the cricketers went past, tailed by police vehicles. None of the players bothered to look out as road-side crowds waved frantically to catch the attention of these VIPs.

Welcome to the quirky world of cricket capitalism, where the market decides what can be done. The rules are set by an invisible hand, and if fans of the game think something is okay, it must be okay. The way cricket works as an industry in India offers parallels with the corporate sector.

For instance, the ₹125 crore performance payout by the government for the World Cup winning team is like the disproportionate bonuses (and stock-option benefits) that CEOs get when their companies do well. Shareholder approval is all it takes.

The recently concluded Indian Premier League (IPL) championship saw cricketers being bid for and their services bought for the season. A couple of international players went for above ₹20 crore. This startled some people, but it is what the market dictates; if there is a buyer at any price, no matter how high, it is justified.

The same holds for regular payments made to players in our cricket team. There are different grades of cricketers. Those in ‘A’ category get more than those in B or C. This pecking order is also seen across companies, where management graduates and engineers get more than others.

This is the fixed component for both sets. And victories in a match or tournament, or high profits for a company, lead to bonuses or performance linked incentives. While it is a team game, its rewards vary disproportionately, just like in companies where top-rated employees get bigger bonuses.

The underlying principles at work are also similar. There are asymmetric practices, especially for the top management. When a company does not perform, there are no claw backs, but managers may lose their variable pay (sometimes just a part of it).

For Indian cricketers too, failure to win the one-day international World Cup last year did not reduce their pay. Financially speaking, the asymmetry remains: It’s heads they win, tails nobody loses.

Given the rather opaque process of cricket team selection, two human resources-related issues stand out that are glaring in the corporate world too. The first is that top players are rarely asked to leave even if they do not perform. Indian cricketers who become public icons have an especially charmed place in the team.

Some can carry on as captain in one format of the game or another, as they wish, and then expect to turn coach or selector. This is so for a number of CEOs who keep getting extensions well past the normal retirement age and then move on to become directors on boards.

The second is the concept of layoffs, which companies experience. Even when a company is doing well, cost rationalization exercises are undertaken, with some of the staff asked to leave. Rarely does the top management fall in this category, of course. The same holds in a different manner for the cricket team.

As only 11 players can be in the playing team, and star cricketers cannot be asked to step aside even if their playing form is poor, junior players find themselves left out. There are examples of good players who cross the age of 35 and retire from the game without playing for India.

Then there are the commentators or critics, who keep creating hype around players that keeps them in the limelight. One will never know if it is part of the plan to keep an under-performing star in the team on the reasoning that it’s just a temporary loss of form.

Not to forget the advertising contracts which may be left worthless if a star is dropped. This holds in the corporate world too; analysts and reporters will praise top leaders for bringing about a transformation, but almost never criticize them when the company keeps failing.

And finally, annual reports and investor presentations have messages from corporate top bosses that curiously read the same regardless of their performance. Usually, these refer to the economy, often deemed inhospitable, what with global turmoil and high interest rates, etc.

Against these challenging conditions, the company is said to have struggled to eke out returns for shareholders. Similar language is used when our team loses. Unfavourable weather conditions are cited, as also some unfortunate decisions by umpires or some silly shots that cost them the match.

Free-market capitalism has taken over Indian cricket, which resembles the corporate world more than ever. Interestingly, the same goes for games like soccer in Europe and basketball in the US, among other sports. We can conclude that once a sport becomes commercial, it cannot escape the invisible hand of Adam Smith’s coinage playing a great big role in the background.

These are the author’s personal views.