Bangalore Royal Challengers it seems

United Bangalore would have been so much better.

Just a little context here. Some ten-twelve years back, when the National Football League was started, FC Kochi became the first professional football team in India. Following it’s decent performance in the first couple of editions of the League, a similar team called Bangalore United was proposed. The promoters went to Vijay Mallya for sponsorship, which he agreed to on the condition that the name of the team be changed to United Bangalore, for obvious reasons.

And I just think that would’ve been so much better a name than what they’ve chosen now.

IPL Auctions

The IPL auction is due to start in an hour. I seriously wish I were there. Preferably representing one of the franchises, maybe the UB group. Every franchise team there needs one guy who is good at economics and quantitative stuff. I’m kicking myself for not thinking on these lines earlier.

The structure of the auction itself is interesting. Players’ names will get picked randomly, and teams will have to bid for them in an open auction. The money goes to the BCCI coffers. Yes, the more intuitive thing to have done would have been to let the teams build their own teams. However, that wouldnt’ have fetched much for the BCCI. Unless it levied some extra “income tax”.

I have a feeling that the eight franchises have got together in a hotel room last night and mutually decided who gets whom. The gentleman’s game can do well with a gentleman’s agreement (though the last such agreement – about close catches – turned ungentlemanly). So the Madras team will have requested the others not to bid for Dinesh Karthik, and in return they won’t bid for Gilchrist or Dhoni or Sangakkara or …? There will definitely be a few clashes. The fact that the franchisees didn’t allow VVS Laxman to be a marquee player clearly shows one other franchise (apart from Hyderabad) is interested in him. These will probably be the only guys who will get aggressively bid for.

It is clear that cut throat competition between the franchises will bring no benefit to them. It will only leave a few of them poorer. Of course, if there is one cash-rich franchise who will want to raise money for the BCCI they might generally bid up for all players. However, the gentlemen’s agreement is likely to take care of this.

Also, I realize that the process of team building here is non-trivial – in fact it is much tougher than in the normal super selector games. Here, there is exclusivity – each guy has to play for only one team, prices are dynamic, players’ names are picked in random order which means you have to make “online decisions” (one problme that has left my head in shambles, both during my BTech project, and earlier in this job).. Each franchise is allowed to take some six people for the auction. I’m sure one of the six for each franchise will be this quant guy. Damn! I wanted to be there!

Ok – here is my prediction. The “big marquee guys” are more likely to go to teams who have a good ranji base in the catchment area – say Jaipur or Delhi. These teams know that they can build a good base of the squad from even outside of these auctions (Delhi has Delhi and UP under it, while Jaipur has Rajasthan, Baroda, Saurashtra and Gujarat) so they’ll prefer to use their money to get in a few stalwarts. Need not be very sale-able names (they’ll go to the teams who have really big business interests – such as Bangalore) but really good guys. Like Gayle or Sangakkara or Oram or Kallis…

Bangalore and Hyderabad are two teams whose promotors have “B2C” (business to consumer) businesses, and don’t have a very strong ranji base. It will be interesting to see what they do – they need to get the bulk of the squad in the auctions, and the marquee players will be of best value to these promoters than for anything else. Maybe they’ll get one or two marquee guys each and spend the rest on mid-table guys.

It’s all oh-so-confusing! And the BCCI are fools to not telecast this auction live! Would’ve brought in good money for Set Max I think. At least a web cast or something would have been good.. .

Two kinds of cribbing

Type1: It’s more like a generalized crib. You crib because you need to get something out of your system. And you expect support. All that is required for you when you do this is for someone to just listen to you. Someone to just listen to you and just generally reassure you. That person may or may not have fundaes over the thing that you are cribbing about.

Type2: This one is more specific. You are cribbing about something specific, and you are in need for a specific solution. Just a general hearing and a “don’t worry it’ll be fine” won’t do in this case. You need specific solutions, and ideas. The person being cribbed to needs to be in a position to be able to help you – which means he/she needs to have domain knowledge about your crib.

This is more like an advanced crib. You are in trouble, and you think you have an idea as to how to get out of it. So your expectations from the person you crib to are higher. And you are in a way also asking more from the person you are cribbing to.

Sometimes, even finding people to crib to (incase of type 2 cribs) is tough!?

Bad journalism

I should’ve written about this a few days back, but consistent NED and a huge pipeline (which i’ve kinda juggled) ensured that I kept postponing it.

The article in question is this piece in one of the inside pages of the Deccan Herald a couple of weeks back. I can’t recal another article in a major newspaper (yes, the DH is the second biggest paper in Bangalore; and the one that most “traditional” people read) that is so horrible.

I was thinking of doing a point-by-point analysis of the piece, but then realize it’s so badly written that it would take too much time to write etc. So just read and enjoy.

And the mainstream media claims that the best bloggers are journalists! Pah?

Lalu international airport limited

Madman Aadisht and I continue to link each other on this airport thing. Here is my latest thought. I’d written something of this sort in September 2006, on my first day at SABRE. Now, I present it again with a little difference.

Given the amount of land that it is sitting on, I think the Indian Railways needs to get into the business of building airports. We have two new airports ready – at Hyderabad and Bangalore, and the key concern for both is regarding how one is going to get there. This is where I think the Railways will be able to do yeoman’s service to the people of the country.

The basic idea is that the Railways should take it upon itself to build secondary airports to all major indian cities. Now there are 2 parts to this, the first being the airport itself and the second being a high speed rail link from the airport to the city. The second seems to be the big problem now, at least in the airports that have been built, and I think the Railways needs to step in.

As for the airport itself, I’ve read that India is full of airstrips. Airstrips that were built during the second world war and never used. Now lying in disrepair. The railways should identify one such for each target city, with the important criterion being that it should be close to some land that the railways owns. And voila, there you have it!

The actual building of the airport can be outsourced. We aren’t short of engineering and project management skills in the country. The railways should just concentrate on linking these airports to the train stations in the center of each of these cities with a high speed rail link (taking no more than half an hour. Given that new tracks will be laid, that shouldn’t be an issue). Also, I’m sure the railways won’t have much trouble in procuring land for the high speed rail tracks. Land for the airport shouldn’t be a problem since they are in godforsaken areas anyways.

So you’ll have a spanking new airport at Gummidipoondi, with bullet train connection to Madras Central. Or another airstrip in say Bidadi, just half an hour away be train from both Bangalore City and Mysore. And yet another in some other godforsaken place near Hyderabad, with excellent rail connectivity to Kacheguda (of course, care needs to be taken to not put the new airport in Naxal-infested areas).

We need all the approvals from the civil aviation ministry and all that. Lalu should be able to manage that. Technology and all that is there. And I’m sure the Railways can make enough money out of this venture to invest in it. That won’t be a problem. And as a small concession it would be ok to have all laborers and workers involved in the new airport to be Bihari.

On a more serious note, I think any forthcoming greenfield airport should start off by first entering into partnership with Lalu.??

On dumping tomatoes, burning wheat and leaving stands unsold

About a month back, I’d written that farmers in Karnataka, when faced with a glut in the tomato crop, elect to throw sack loads of tomatoes on the highways, rather than selling them. During the great depression in America, sack loads of wheat were burnt in order to prevent wheat prices from falling. During the India-Pakistan test match in Bangalore 2 months back, an entire stand (south east i think) was left completely unsold. All these have a common thread of logic – artificially restrict supply so that prices don’t crash, and you make more money.

Yes, I understand this is counterintuitive. How can you expect to make more by selling less rather than selling more? How can you expect to make more money by destroying what you’ve produced after investing thousands of rupees? Here is my take on the same. I’ll start with the necessary conditions for this kind of a situation, and then proceed to try and explain why this works.

1. Monopoly: A monopoly is essential for implementation of this kind of a situation. It is easy to understand why. Suppose there are multiple independent suppliers. Who is going to dump their stock? What is the incentive for you to dump your stock? You would rather that your neighbor dump his stock which is going to increase your profits. The only way out of this is in collusion. All producers get together and decide to dump stocks. Which effectively creates a cartel, and thus a monopoly.

2. Inelastic demand: For dumping to work, the additional revenue we make out of the un-dumped stocks should be more than the revenue we would’ve made from the dumped stock if we hadn’t dumped it. So basically the demand needs to be inelastic – around the region where we are going to dump. What i’m saying is that for a small change in quantity supplied, the price should increase by a large amount. As long as this keeps happening we can dump.

Going back to textbook monopoly economics, what we do to price is to maximize quantity * price. In other words, we supply the quantity where the total revenues are maximized. And it usually happens that this particular level is below the total amount we have produced. So we introduce into the market only as much produce that will maximize our revenues.

But what about the effort that has gone into production of this excess? Just look at the examples that I’ve mentioned. In all of them, you have already spent whatever amount that you had to spend. The costs have already been sunk. Apart from a couple of minor expenses (transportation, facilities, etc.) all expenses have been incurred before we made this decision. In other words Revenues are almost equal to profits. So we maximize revenues, not profits.

Now, taking the case of tomatoes, what do we do with the stock that we don’t want to sell? One option is to store it. That again, we’ll need to do based on how much the stored tomatoes will fetch us in the future, costs of storage et al. Given the facilities in India, it usually turns out that the costs of storage would be much higher than the expected revenues from it. So we only lose money by doing so. So what do we do? Dump them on the highways. Or if they take my suggestion, organize a Tomatina.

The other thing with tomatoes is that farmers don’t cooperate when they are making the decision regarding what to plant. If they did back then, some land that would’ve otherwise been used to sow tomatoes would be diverted to some other crop, which on the margin would yield more. Interestingly, the farmers seem to come together in a cartel only after the tomatoes have been produced!

So what are the policy implications from this? Firstly, infrastructure has to be improved. We need to be able to make storage of tomatoes cheaper, so as to encourage storage rather than throwing away. We need to encourage building of cold storages, and refrigerated transport systems. We need more investments in warehouses. Intuitively, it may appear as if these warehouses are just going to add to the cost of production, and thus push up inflation. If you see the larger picture, they are effectively encouraging efficient usage of land – which in my opinion is the most precious resource.

Second, the farmer needs to be able to easily estimate the revenues he will get by storing his goods. More importantly, he should be able to have a good idea about the revenues he will get from each crop even before he sows. And should be able to lock in the revenues before sowing.

We need to extend futures markets into all agricultural commodities. And keep the lot size reasonable so that it is accessible to small farmers. It is not as if the farmers won’t be able to use technology. Make it accessible to them, and they’ll easily take to it. The cell phone revolution is proof of that. Yes, small lot size could be a problem when it comes to settlement. Cash settled futures need to be explored.

Throwing tomatoes on the highway may be economically efficient when looked at in isolation. Looking at the larger picture, it only points to certain amounts of land and water and other inputs that have been wasted. That have been wasted growing tomatoes which no one needs, when they could’ve been used to grow something else. Agricultural commodity prices have been going up all over the world. Agricultural land and water are precious inputs, and need to be utilized judiciously if we have to continue feeding everyone. Futures markets help us allocating these resources efficiently.

Cross posted at the Indian Economy Blog

Bus to airport

The Bangalore International Airport is scheduled to open two months hence, and the question on everyone’s minds is to how one would get there. This airport is some 30 km outside the city, and though the road is part of the north-south corridor, it’s narrow in places and commute time to the airport will be massive. Plans to have a high speed rail link from the airport to the city center have remained just that – plans. Note the plural. There are way too many plans, and it’s unlikely we’ll have a rail line for another six years.

The BMTC has decided to do its bit by having “airport special” buses. It has commisioned some 40 Volvo buses which will run exclusively ot the new airport from various points in the city. Though the BMTC claims that the frequency of these buses will be once in 10 minutes or 15 minutes depending upon the route, a back of the hand calculation based on number of buses shows it won’t be more frequent than one every half hour. That too in the best case.

There are various other problems associated with this kind of a system. For one, passengers are likely to carry a huge amount of luggage. There needs to be an efficient system to make good use of buses so that a large number of passengers as well as their luggage can be carried. Due to the long journey, standing may not be an option. Another problem with the long commute is that the variance in travel time is going to be huge. To account for this, passengers will have to leave home insanely early.

Here is a better solution. The buses should be run by airlines. Let’s say Kingfisher takes control of some empty site level place somewhere in the middle of the city. Now, there will be dedicated buses for each flight that is going to take off (we might require some 3/4 buses for each flight). I know that this might result in inefficient usage of road space and buses, but wait.

The key to this is that passengers should be able to check in at the kingfisher bus stand! Using a Roving Agent kind of technology. That way, luggage can be managed easily (passengers dont’ need to take care of it till the airport). This means that the luggage can be easily taken care of in the boot of the bus or in a separate truck, and passengers need not be worried. Also, the fact that the luggage is taken care of by the airline means passengers dont’ need to unload the stuff at airports, go through the check in, etc.

So basically what I’m proposing is two or three “starting points” within the city (not more, it’ll be tough to predict, etc.) where people can board the bus after checking in their luggage. Apart from this, people without check in luggage should be able to board the bus at various points on the way to the airport! Each bus will have a “conductor” who has the roving agent with him and is capable of issuing boarding passes.

This is going to be the hard bit, but now that the airline itself is taking responsibiilty of the passengers’ transit to the airport, they can probably delay the flights till all the buses carrying their passnegers have arrived. Of course, they’ll time the departure from the bus stands with sufficient and more time for all buses to reach the airport, but in case of unforseen traffic jams, etc. planes could be held back.

And yeah – once a bus reaches the airport, remember that the checkin is already over and people can just go through security check (maybe there could be a few special security counters for those coming by these buses) and board the aircraft. The process gets much more streamlined!

Of course this is going to cost the airline quite a bit. This can be initially made complimentary, and then maybe added to the price of the ticket. Uniformly. Wthether a passenger opts for it or not. This will encourage more passengers to use this facility rather than driving up to the airport by themselves.

I think this is a far superior situation to having people traveling by public transport to reach teh airport.

The Jaipur IPL Team

I don’t understand why this emerging media consortium had to bid for Jaipur of all teams. I think they just got swayed by this one ODI where effective collection ensured that the revenues from the game are good. Jaipur isn’t that large a city, and I’m not sure how much of a cricket culture it has.

Two cities that I thought deserve IPL teams and didn’t get are Ahmedabad and Kanpur. The latter is one of the five “traditional centers” and has been hosting test cricket for almost 60 years now. UP has also been doing well in the Ranji and has quite a few people in the Indian squad – the catchment would’ve been so much better. The only problem with the Green Park is that there are no floodlights. One hopes that they are installed in due course and this city is allotted an IPL team.

The catchment areas for each team were announced recently. And it turns out that three out of four teams in the Jaipur catchment area are from Gujarat! So what prevented Emerging Media to bid for Ahmedabad then? The Motera is floodlit, and more importantly two of the four semifinalists in this year’s Ranji were from Gujarat, thus providing a real catchment (though one other state has been tagged on to each winning ground as catchment area, it isn’t too natural. Dhoni will never feel at “home” in Kolkata.). Also, from my perception, Ahmedabad has a much better cricket “culture” compared to Jaipur.

It would’ve been more understandable if the group that owns Jaipur had some kind of a connection with Rajasthan. However, there doesn’t seem to be any – the group is almsot wholly foreign – which makes matters of their choice even more perplexing. Were they put off by Ahmedabad because both Ambani brothers were bidding there? In any case, since the highest 8 bidders got teams (removing duplicate ownership), it is clear that what Emerging Media paid for Jaipur was more than what ADAG offered for Ahmedabad. Why didn’t they have enough sense to bid for Ahmedabad also?

All in all it seems to be a decision that completely misses out of the situation on the ground. I’m sure Emerging media would’ve been advised by some bankers/consultants who have absolutely no clue about the cricket situation in India, who would’ve used factors such as population, proximity to Delhi, etc. to pick Jaipur as the better winner. As mentioned earlier, I’m sure that one game where Jaipur got record revenues (due to good revenue management practices) would’ve also helped.

Two points before I close. Firstl, does anyone have data regarding the failed bids for the IPL teams? What Anilbhai etc. bid? If anyone does, please share it with me.

Second, the players’ auction is scheduled for Feb 20. Players have been split into classes (fast bowlers, spin bowlers, keepers, etc.) and their names will be drawn in random order, and the bidders should bid for the guy whose name just got picked. Wonder if it’s the most efficient process.

The ITC Quiz and other stories

  • When you have a company like ITC sponsoring a quiz, you can always expect lots of prizes in kind. Last year’s finalist prizes included a bag of cheap biscuits (mostly marie/krackjack types – sunfeast of course) and a packet of Aashirvad rajma. This year, they seemed to mess up on that. I think two finalist teams didn’t receive anything. There was some misunderstanding.
  • A podium finish guaranteed much better though. There was this huge heavy box of stuff – mostly cream biscuits, a few packets of Kitchens of INdia ready to eat stuff, a few packets of pasta and two jars of pickles. I think the law doesn’t allow you to give out cigarettes for promotional purposes, else I guess we could’ve expected lots of that also. And yeah, we also got book coupons for fairly good amounts.
  • Bingo is pretty good (no it wasn’t part of the “package”. I bought it ). Had some mad angles yesterday. Definitely significantly superior to Lay’s. The key is that bingo uses local flavours. It’s also much healthier than lay’s – rice, gram and corn flour as against potatoes.
  • Ate ATS chikki yesterday after what seemed like ages. They seem to be strong believers in the “price point” funda – each packet costs a rupee and is much smaller than it used to be 10 years back. We used the used wrappers of 10 such chikki packets, and a superpacket , and a used tea cup in order to create a scupture depicting the dangers of environmental pollution.
    [info]sw_aadisht

    took a pic of the same. I’ll link to that once he uploads it.

  • Yesterday, I answered my second ever western music question in my long (it’s been 14 years since that KQA lone kid 2nd place) quizzing career. The first one was answered last week, at the Unmaad open quiz.
  • Most of my western music listening is restricted to three bands. At Unmaad I answered a question about Deep Purple, opening my WM account. Yesterday, I answered one about floyd. Led Zep remains. And
    [info]udupendra

    (my teammate yesterday along with

    [info]sw_aadisht

    ) promises lots of those in the KQA Music Quiz he’s doing next weekend (on the 17th).

  • The ITC guys had a system of point carry over from prelims. Without any scaling what-so-ever. So effectively each prelims question was worth 1/10 as much as a finals question. We didn’t complain though – having just scraped through after missing all the “peters”? and “st. peters” in the prelims
  • An externality of the point carry over was that the probability of a tie became minimal. It was like the second leg of a Champions League match. Where after each goal, you are in or out. No chance of a draw.
  • My answer to how Gilmour and co. overcame Waters’ pig copyright in order to use it in Division Bell concerts extended out lead on the top. Unfortunately, we were going to blow it up in the final stage 2 round. We ended a narrow second. Less than 10 points (the value of each final question) separated the top three teams