Mistaking Style for Substance: Investor Exuberance in the 2008 Indian Premier League Auction

Vani Borooah, John Mangan

    Research output: Contribution to journalArticle

    2 Citations (Scopus)
    3 Downloads (Pure)

    Abstract

    The formation of the Indian Premier League (IPL) in 2008 sought to unlock the commercial potential that the popularity of T20 cricket offered by modelling itself on football's English Premier league. The IPL acted as a holding company, securing the participation of players through a guaranteed base price and then selling these players to the various IPL franchises though an auction system which determined their final payment. There were thus two components to a player's "value": the base price determined by the IPL and the final price paid at the IPL auction by the winning bid for that player. The basic assumption made in this paper is that the base price for a player is founded for the most part on the publicly available information about him. However, auction under IPL 2008 was characterised with large and unexpected base-final price differences. This raises the possibility that the bidding process was driven by the “irrational exuberance” created within the newly formed franchises. This paper measures the scale of such exuberance and evaluates, on the basis of their IPL record, whether players were good or bad buys.
    Original languageEnglish
    JournalJournal of Sports Economics
    Volume152700
    DOIs
    Publication statusPublished - May 2011

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