Friday, May 12, 2006

The money is on Modi


The full interview can be found here.

On November 29 last year, Jagmohan Dalmiya’s world turned upside down. He had lost the Board for Control of Cricket in India’s (BCCI) elections and had to relinquish power. As with the end of all eras, old tales, true or not, were brought out for an airing. Among them was that Dalmiya had once said, “What will I do if I don’t control the board?”

Even before the elections, Lalit Modi was expected to replace Dalmiya as moneymaker-in-chief. When he won, and was made vice-president of the BCCI, he was popularly and lazily described as the new Dalmiya. I ask Lalit Modi what he thinks of the description. We are at his home, a large sea-facing bungalow, sunk in couches too comfortable for business. He slides back, almost vertical, and is buried between cushions. White linen and khaki hang loosely off his round shoulders. And he smiles a lot. Perhaps because it is a Saturday afternoon and he’s clearly lounging. But he doesn’t smile now, as I ask him about the moniker. He starts, pauses – a surprise because he is rarely short of words – and says brusquely, “I am very offended when they call me the new Dalmiya.” People who know him say he’d rather Dalmiya be recalled as the old Modi. “I’m all for people doing the jobs they are supposed to. I do mine. Mr. Dalmiya wore many hats, he did many things. I’m not like him.” It is not just this aspect, but nearly the entire comparison Modi objects to. This feeling does not figure during financial evaluations of this regime’s successes. During a match at Chandigarh – of whose association Modi is vice-president – earlier this year, cricket writers were given sheets of tabled numbers in the style of a competitive advertisement. On one side was the money Dalmiya had raised in years, on the other was what Pawar’s group had done in months. There was no comparison.

The present value of the board’s properties contrasts starkly with those during the previous administration. Matches that brought in 7 crores now bring in, on average, over 72 crores. In the next five years, the BCCI will earn over a billion dollars, of which $830 million will come from television rights. Modi says he knew the value of these rights a decade ago when his company, Modi Entertainment Network, helped ESPN buy television rights for cricket across the world in the mid-1990s. “Cricket in India was a religion,” he says, abandoning his reclining position for one more alert. “Everybody wanted to watch it, but nobody was marketing it in the right direction. So we then, at ESPN, under Rupert Murdoch’s nose, went in and bought the rights of the English Cricket Board, the Indian Cricket Board, Australia, New Zealand, West Indies, Sri Lanka, and by the time Murdoch got wind of it, he bought South Africa and I think Zimbabwe. But we had pretty much wrapped up the whole world. People, including Jagmohan Dalmiya, told me at the time, ‘You’re foolish. You’re paying us so much money.’ We signed a contract for US$12 million. Indian cricket had never seen that kind of money in those days.”

But money intended for Indian cricket often diverted from its proper course. Modi says of that time that while television companies were professional, board members were spurred by other factors. “When we dealt with the boards – which we had to on a regular basis – we always came across barriers. People, for some reason or the other, were not ready to listen or adapt or let the game go forward. There were vested interests, and within them even more vested interests. There were roadblocks after roadblocks. Once they realized the value of the rights, people wanted a cut out of those rights. They would want an X-Y-Z – I won’t name names – to be made the agents for giving the rights. In other words the money would flow through those agents. The broadcaster had no choice but to buy the rights from that agent. One particular board, say board A, would appoint an agent to market its rights. The agent would buy the rights for a million dollars, say. Then he would sell those rights for $10 million to the broadcaster. The broadcaster would make $50 million on those rights. So the value was never coming to the cricket board, only to the agent and the broadcaster. If you start to analyze the last ten years’ contracts of each and every board, if you look at the middle men in each and every board, you’ll find a revealing story.”

This regime, disenchanted with Dalmiya’s autocratic functioning, has begun initiating cases against the former BCCI chief. He was interrogated by the Economic Offences Wing in March and April after the board accused him of misappropriating $49,000, a charge he denied. Either way, Modi believes that Dalmiya lost the game significant money. I asked him how much he thought Dalmiya had lost the board. “It’s very difficult to quantify precisely. In a ballpark, easily between 400-500 crores a year. Easily. Because if you look at the year 2000, that year Nimbus had made a bid for 500 crores for Indian TV rights, and we gave it for 160 crores to Doordarshan. Now, why would we do something so stupid? Because we don’t like Nimbus?” In February this year, Nimbus won the rights for $612 million, a figure that industry analysts said would ruin the company. Modi says, “I can guarantee you Nimbus will not go out of business. Nimbus will make $200 million on that deal. If they paid us $600 million they’re going to make $200 million on that deal. There is a margin of $200 million on that deal. Without doubt. These people are not foolish people. They are businessmen. They’re running conglomerates.”

Having a monopoly helps. Modi understands this, and says it his duty to use his leverage. His job, he says, is to make the most value for the cricket board. “I knew the ins and outs of production and sponsorship deals, and I knew airtime prices, broadcasting prices, I knew the television companies’ balance sheets inside out. I knew where they made their money and lost their money. So I called everybody in and played one against the other. It was simple as that.”

Modi rises from his seat, points to me, and says with a rising voice, “Right where you’re sitting I’ve had people come in and tell me to make the tender in a certain manner. But there are no deals. The deal is very simple: you come into the room, hand in your bid, and if you win it you take it. Same thing for team sponsorship. When I made the Nike deal, they were hungry. You have to build that hunger. When you do marketing, you can be a laid-back marketer and put out a tender and you’ll get a laid-back number. I guarantee you that. Or you can go out there and be an aggressive marketer and show the value to them. How do you show the value? You show them the number of times they’ll be on TV, how the logo will be presented, the ratings, the viewership.

“People said my numbers were mad. They tried to form cartels. My job is the break cartels. I didn’t want a cartel because they would undervalue my business.”

I ask if he’s a libertarian. “Wha…?” Letting free markets decide. “Absolutely. I believe in free markets deciding everything. If there is no value, there is no value. Let people decide. In certain cases you might lose, in certain you might win. You have to be risk-prone too.”

Lalit Modi could not play cricket. “I was a batsman but not very good at it.” Born in New Delhi in 1963, he went to school in Shimla and Nainital, and then studied at Duke’s University in North Carolina. By various accounts, it was an interesting time. Last year, the previous board appointed a committee to investigate allegations that Modi was charged in a drug trafficking case, and suggested that he be barred from office. Modi, raring to hit the courts for a fight, was advised not to by IS Bindra, his mentor within the BCCI.

In the US, he says, he had no choice but to watch American sports. And through television he began to understand the model on which sports were based. Later, only when he was a television executive did cricket truly appeal to him.

Modi is a driven man. “He wants to be the great cricket tycoon of India,” a senior journalist says, before taking a curious turn: “He wants to prove things to his family.” (Modi belongs to the family that runs Modi Enterprises, which counts Godfrey Phillips, the tobacco company, among its ventures.) This was repeated by a reputed television producer who worked for ESPN, who also added, “Because his business ventures were failures.” True or not, a search on Google brings up a news report that states, “Fashion TV president Michel Adam has said that the channel is considering options to press criminal and civil charges against Modi Entertainment Network president Lalit Modi for fraud, extortion, harassment, copyright and trademark infringement in the next few days in Europe.”

Sources close to Modi speak of his blinkered devotion to making things work. One says, “His ideas are novel. Not everything he says is applicable, though. But he wants people who can get the job done. He doesn’t have patience with people who dither.” Another, who works for Modi, said, “He’s an insomniac. I get calls from him at 2am and then at 6am. He just doesn’t sleep. He wants things done.”

How these things are done count for something too. After a failed attempt in Himachal – “The chief minister asked me to leave and, you know, we don’t fight with political powers” – Modi’s entry into the BCCI through Rajasthan, a decrepit association led by the Rungta family for over three decades, is legendary, but the senior journalist says, “Yes, the Rungtas did nothing, but that doesn’t justify the tactics he used there.” However, Modi maintains that everything was done in the courts. “57 members of the Rajasthan Cricket Association were members and peons of the Rungta household. We found that there were 32 district associations and 57 individual members. The individual members were Rungta’s family members. So I became a member. I didn’t give my full name in those days because my name would crop up and all of a sudden – pssch! – people would want to cut off my entry. So I gave my name as Lalit Kumar and not my full name as Modi.” His application was passed and he became a member of the association. After convincing everyone that they were rubber stamps for the Rungtas, Modi says, they changed sides and he took charge. Now he’s planning a cricket theme park, a hall of fame, and is set to introduce financial advisors and career councellors to players. Also, he says, “The government has given us land to build the world’s largest air-conditioned stadium, we’re spending over 400 crore to build the new stadium. There’s no problem in raising all that money from corporates if you show them the right vision, the right direction.” It is said that corporates were certainly shown the right direction when they coughed up close to $2800 for a single seat for a Jaipur game last year.

In any event, Modi is keen to professionalise the board. Until the paid professionals arrive – and they are being sorted out as you read this – he says he has dedicated 14 hours a day to cricket. For a year and a half, his life will be cricket. I ask him if progress can be made without paid professionals. “Once the basic infrastructure is in place, thereafter the game will ride on its own. It won’t happen overnight. Change is on the one hand good, on the other hand painful, and on the third, it takes a lot to implement it. We need to change our constitution, put all that in place, and we’re doing all that. Until then, we need to be involved. If we leave it half-way, it’ll all return to where it was.”

These days, Modi is viewed in circles with some apprehension. Officials at sports channels refused to speak about him, and so did Dalmiya’s faction. Those who did, spoke in whispers. It is testament to the clout he wields. “Doston ka dost hai, aur dushmano ka dushman,” a close source said. “If he likes you, that’s great. But if he hates you, he’s going to screw you until the last nail is in your coffin.”

Modi is called the most important administrator in world cricket today. This is because India contributes over half of international cricket’s revenue, and Modi is keen to right an imbalance that tilts towards Australia and England. The brashness with which he forced a change in the International Cricket Council’s calendar, to give India more games at home, won him recognition as well as infamy. “People don’t understand that when I do things like that, it’s for cricket in India,” he says. But this, the journalist Ashok Malik reckons, is connected to Modi’s aggressive marketing strategy for the BCCI’s products. This includes a pet project – a board-run television channel based on similar lines as the setup at Manchester United.

Later this year he will announce plans for an inter-city cricket league which will involve foreign players. I ask him if that is where he sees cricket moving to eventually. His eyes light up. “Oh yes. It’s gonna happen.”

Since January, when the London-based Observer broke the news that Modi wanted the calendar changed, fears have been expressed over whether naked commercial interests would lead to exploitation and Test cricket suffering. He insists that the BCCI will abide by the ICC’s recommended number, and Tests will not suffer.

I ask Modi about failure. He says the thought is always there, but he does not think about it. “I believe that you should keep doing. You can talk as much as you want and say what you want, but it all comes down to just doing the job.” Interestingly, it is the talk and its possible implementation that has rattled people. Is he trying to take over cricket entirely? Media organizations fear that they will be forced to adhere to the BCCI’s conditions – in effect a censorship of sorts – for continued access. Already Mike Atherton, the former England opener, has said that during the recent India-England series, commentators were asked not to criticize the BCCI or mention sensitive subjects. Most commentators, employed by the BCCI, are former cricketers with few skills otherwise, and so they toe the line.

In January, at a press conference, when Modi was asked about the inevitable censorship, he denied it would happen. Why would we do that, he seemed to ask. But there are compulsions, and with Modi building the BCCI’s brand, he will, like any CEO, seek to avoid criticism of his product.

As he takes deal-making to new levels in cricket, there are more questions asked of him, of his motives and ambitions. The pursuit of power and money is now more naked, and this has led to fears of exploitation, a split in international cricket, and even an implosion. These are aside from those of cricket enthusiasts who view new things with suspicion. It is for this reason that the Dalmiya tag fails to leave him. It is a double-edged thing. On the one hand the name stands for financial wizardry, and on the other it is less charitable.

This article was published in Tehelka on May 12, 2006.

9 comments:

Anonymous said...

"I ask Modi about failure. He says the thought is always there, but he does not think about it"

If this is the kind of logic that wins you a $880 million dollar contract,then his assertion that tv companies are not stupid seems a bit unlikely.

Great Post though.

Ram

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I think modi is amazing... who dosent

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modi is possibally the best man alive. if u think any cricket adminstrator is better double check. he runs over 11 companys. what more do u want him to do... he also is involved with indian tennis and also he has a lot to do with the rca not only the bcci

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