Sangakkara and the IPL Auction

Sri Lankan cricketer Kumar Sangakkara has decided to not participate in this year’s IPL auction. In the opinion of this blog, this is an extremely smart decision, for Sri Lankan cricketers are unlikely to be available for a large part of this year’s IPL, thanks to their tour of England starting in May. Let me explain.

The IPL Auction is a strange beast. Each team has a salary cap, and players are auctioned across teams such that a team spends no more than its salary cap (in total). Now, in case a player is not available for a particular part of the tournament (due to a clash in schedules due to international commitments, essentially), the fees paid to the player is pro rated according to the number of matches for which he is available. However, while calculating the team’s salary cap, the player’s full season salary will be counted.

For example, if Sangakkara were to participate in the auction, and win a salary of Rs.5 Crore. Now, if he is available for only 40% of his team’s games, he would be paid Rs. 2 Crore. However, when his team’s total salary is determined, the full amount of Rs 5 Crore is taken into account.

Assuming that the salary cap is the real reason as to why teams don’t bid too much for a player (as opposed to capacity to pay), teams will not want to let go of a large amount of their salary cap for a player who is unlikely to be available for the full tournament. Thus, if Sangakkara were to enter the IPL Auction this year, he is likely to be undervalued, and hence he has decided to not take part in the IPL at all.

What Sangakkara is betting on is that in the auction teams will have a short-term perspective, and will be looking at only this year’s commitments in order to determine a player’s availability . Ideally, since the auctions are for purchase of a player for three years, teams should be taking into account the tours scheduled for the IPL seasons of those years (the gap in India’s schedule will show when the IPL will take place, and a player belonging to any country that has cricket scheduled at that time according to this chart will not be available for the IPL). However, perhaps due to the uncertainty in next year’s schedules (thanks to the proposed ICC revamp), teams are only going to take into account this year’s commitments in order to guide their bidding.

Sangakkara has said that he plans to take part in next year’s IPL, and he hopes for a much better valuation then compared to this year, for he will be free of international commitments. Given that the salary cap for the teams increases by only 5% (Rs. 3 Crore) next year, what he will be banking on is that teams might release some high value players they will be employing this year.

Tailpiece: Given that the English domestic calendar invariably clashes with the IPL, English Test players are going to be forever undervalued in the IPL. At least they should be if teams are intelligent about their bidding.

Tailpiece2: Samit Patel and Alex Hales have a deal with their county Nottinghamshire that they will be allowed to play in the IPL only if they can get a fee of USD 400000 (INR 2.5 Crore). They have both put their base prices as Rs. 2 Crore. It will be interesting to see if and how teams go about picking them!