Indian Premier League Cricket (Audio)

When you saw this episode pop up in your feed, you either jumped for joy and hit play immediately (in which case you’re not reading this), or you said “Huh. That’s a surprising episode.” Well, if you’re in group two, boy do we have a treat for you! IPL is the fastest-growing, most dynamic and most disruptive force in the sports industry today… and this may come as a shock to many Americans, but it might just be on track to surpass the NFL as the world’s most valuable sports league. The IPL is currently valued at $16B, with a TV rights deal that’s higher in per-match dollars than the NBA and the English Premier League. And all this for a league that’s right now just 10 teams who collectively only play 74 total games per season… and oh yeah, the whole thing is only 17 years old! Tune in for an absolutely amazing story, filled with genius, drama (Rupert Murdoch! Disney! Bollywood!) and a perfect encapsulation of the rise of modern India. *Links:* - Ed Cowan’s Business Breakdowns of IPL: https://joincolossus.com/episode/cowan-ipl-reinventing-cricket/ - Worldly Partners’ Multi-Decade IPL Study: https://worldlypartners.com/businesshistory - Episode sources: https://www.acquired.fm/episodes/indian-premier-league-cricket#sources *Carve Outs:* - Severance: https://www.imdb.com/title/tt11280740/ - Stratechery: https://stratechery.com *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  I am listening to the Kolkata Knight Riders anthem as my pump up song.

• 0:05David Rosenthal?

  Oh, nice.

• 0:06Ben Gilbert?

  It is so awesome. Have you seen the music video with Shah Rukh Khan, the owner of the Kolkata Knight Riders?

• 0:13David Rosenthal?

  No.

• 0:13Ben Gilbert?

  He is the main character with the Bollywood dance around him.

• 0:17David Rosenthal?

  Okay, I'm gonna go watch it right now.

• 0:19Ben Gilbert?

  And it's a little cheesy because I think it's from 2008 era, but it is perfect pump up music.

• 0:25David Rosenthal?

  Oh, yes. We've got the player silhouettes in fire.

• 0:29Ben Gilbert?

  Yes, that's exactly the one.

• 0:31David Rosenthal?

  This is incredible. How have I not seen this before?

• 0:36Ben Gilbert?

  This is something that American sports definitely need to adopt.

• 0:39David Rosenthal?

  Oh, man, we've got like a construction crew. Too hot, too cool.

• 0:44Ben Gilbert?

  That is exactly the right reaction.

• 0:46David Rosenthal?

  Okay, I'm gonna pause. We're not even gonna record an episode. I'm gonna watch this.

• 0:52Ben Gilbert?

  All right, let's do it.

• 0:53David Rosenthal?

  Let's do it.

• 1:11Ben Gilbert?

  Welcome to the spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

• 1:18David Rosenthal?

  I'm David Rosenthal.

• 1:19Ben Gilbert?

  And we are your hosts. Today, we cover the most interesting story in sports, cricket. Now, when David pitched me this idea a few months ago, I thought, eh, I'm not that interested in cricket. And to all of our US listeners out there, I am guessing you feel the same way, but I was very wrong.

• 1:38David Rosenthal?

  Hey, there are 20 million hardcore cricket fans in the US today.

• 1:42Ben Gilbert?

  Great point.

• 1:43David Rosenthal?

  As we will get into later in the episode.

• 1:45Ben Gilbert?

  Great point. And listeners, this story really isn't about the game of cricket anyways. It's about how to create a massively successful sports league from scratch, something that I thought was impossible after doing our NFL and NBA episodes, which each took 100 years to get to where they are today. Indian Premier League cricket started a mere 17 years ago in 2008.

• 2:07Ben Gilbert?

  And even more than a sports league, the IPL is a case study in how to create the perfect entertainment product. They took this sleepy, polite, British sport with matches that lasted five days, and they completely transformed it. It is compressed down to three hours. It's a high-octane slugfest that is all about power hitting and hitting sixes, the sort of cricket equivalent of a home run. It's got Bollywood glamour and on-field dance performances, cheerleaders, fireworks. And the way they started the league itself was a high-stakes auction to a group of billionaires and movie stars. And of course, they carefully studied all the mechanics that made the NBA and the NFL as successful as they are today, and then applied them on steroids.

• 2:52David Rosenthal?

  It's an amazing story.

• 2:53Ben Gilbert?

  On top of all of this, the story itself has just about the most palace intrigue of any company we've ever studied. You've got Disney, Philip Morris, Rupert Murdoch, Reliance, Tata, and even Google. There's a very, very complicated founder figure. There's corruption, there's potential self-dealing, betting, rigging, and miraculously, the league has been successful despite all that. So successful, in fact, that it is the fastest-growing major sports league in the world, growing 20x in value since 2008 to be worth more than $16 billion today. Insanely, the media rights to each match are so valuable that

• 3:36Ben Gilbert?

  they're second only to the NFL. The TV broadcast rights, let me just say this again, for each match are worth more than an English Premier League soccer match.

• 3:46David Rosenthal?

  Or an NBA game, or a Major League Baseball game.

• 3:48Ben Gilbert?

  Yes. There's one angle where IPL cricket looks like pure, unadulterated capitalism applied to the world of sports, but there's another angle where it looks a lot more like a religion, or a unifying cultural force, or even a mechanism of diplomacy, as we shall see. And David, I don't want to spoil too much, but last night, before we were recording, you were pitching me that 20 years from now, the IPL will be the largest sports league on the planet, period, bigger than the NFL.

• 4:18David Rosenthal?

  That is the case I'm going to make on this episode.

• 4:20Ben Gilbert?

  Woo.

• 4:21David Rosenthal?

  It's funny, on our NFL episode, we came to the conclusion that the NFL is this perfect blend of communism and capitalism. And I was thinking, oh, maybe the IPL will be an even more perfect blend. No, it's the perfect blend of capitalism and religion.

• 4:35Ben Gilbert?

  Yes. Ooh, that's a great way to put it.

• 4:37David Rosenthal?

  Even more lucrative.

• 4:39Ben Gilbert?

  Yep. So, listeners, is this a bubble waiting to pop? Or the future of entertainment? Today, we dive in. If you want to know every time an episode drops, check out our email list. It's the only place where we share a hint at what our next episode will be, and share episode corrections, updates, and little tidbits that we learned from previous episodes. And we actually had quite a few little ones from all of the Rolex enthusiasts. So, thank you to the deluge of people who wrote in with little corrections to particular reference numbers about the Rolex episode. That's acquired.fm/ email to join the list. Join the Slack and talk about this with us afterwards with the whole Acquired community, acquired.fm/Slack. And if you want more acquired between each episode, check out ACQ2,

• 5:24Ben Gilbert?

  our interview show where we talk with founders and CEOs building their businesses in real time. This most recent one was with Bill McDermott, the CEO of ServiceNow, talking about the art of enterprise sales that he used to grow ServiceNow to over $10 billion in revenue. So with that, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David, take us in.

• 5:51David Rosenthal?

  Well, we start in the early 1990s with a colorful character, shall we say, named Lolit Modi. No relation to Narendra Modi, the Prime Minister of India. But he is from another famous Modi family. Lolit is the son of the renowned Indian industrialist KK Modi, who had built a fairly large conglomerate in India, you know, in the vein of Reliance or Tata or whatnot.

• 6:22Ben Gilbert?

  It seems like all these big Indian companies are conglomerates. Like, it was actually kind of hard to find a scaled Indian company that did one thing.

• 6:30David Rosenthal?

  Yeah, the industrial structure in India, at least to date, seems to be more like South Korea or Japan with the big conglomerates.

• 6:38Ben Gilbert?

  Yep.

• 6:38David Rosenthal?

  But in this case, Modi's conglomerate primarily is based around the tobacco industry.

• 6:45David Rosenthal?

  And they have a JV partnership with Philip Morris and are one of India's leading tobacco and cigarette companies. So Lolit, as the heir apparent son in this family to this business, he gets sent to college in the US for his education. First, he goes to Pace University and then he transfers to Duke University. He ends up not finishing and coming back home and rejoining the family business. But when he comes back, inspired by his time at Duke and how basketball crazy Duke is, he's like, man, the thing that really struck me about America is how sports crazy everyone is there and how big a business sports is in America and how big the sports media business is around it.

• 7:28Ben Gilbert?

  Yes.

• 7:29David Rosenthal?

  We should get into that.

• 7:30Ben Gilbert?

  Specifically, I saw him reference Monday Night Football as this appointment viewing. My friends all would gather around it. We couldn't do anything Monday nights at that time because they're all glued to the TV watching Monday Night Football.

• 7:42David Rosenthal?

  Yep. And this is kind of the perfect time for it because here in the early 90s, Indian households are for the first time starting to get television. And so there hadn't been a sports culture, there certainly hadn't been a sports media culture in India up until this point, but it's fertile ground. So Lolit goes to the Walt Disney Company. Disney, of course, owns 80% of ESPN at this point in time and says, hey, my family has this JV with Philip Morris, you know, help them enter the Indian market. We can help you, Disney, do the same thing. And at first, it's not sports. It's not ESPN yet. It's Disney, Disney, kids, movies, merchandise, entering the market that way.

• 8:23Ben Gilbert?

  Yes.

• 8:24David Rosenthal?

  So in kind of a genius fashion, Lolit uses the sales force that the Modi company has for their tobacco products. They have 80,000, 100,000 sales reps that are going to convenience stores, corner stores, you know, in every part of the country in India, this vast, vast country where the majority of people do not live in large cities. They've got a sales channel relationship into these stores distributing cigarettes.

• 8:49Ben Gilbert?

  Huh.

• 8:50David Rosenthal?

  So Lolit says, hey, we can leverage this sales force and use those people to go hook up with these early Wild West proto cable operators out there in these towns and villages in India and bring them Disney content.

• 9:04Ben Gilbert?

  It's amazing. And so this isn't like distributing home video, right? This is finding the local person who has set up all the wires to go out to the other homes in the neighborhood and going to that person and saying, hey, I know you have hundreds or thousands of homes that you're sending content to. Can you send this content there?

• 9:23David Rosenthal?

  Yep. There is a national over the air broadcast network in India, a national network called Dordarshan. But just like happened decades earlier in the US, little mom and pop cable operators are starting to pop up and saying, oh yeah, we'll run a wire. You know, we've got a satellite dish. We're pulling down signal from CNN or what have you, and we'll rebroadcast those channels out to you via wire into your home.

• 9:46Ben Gilbert?

  Makes sense. So at this point, Modi is sort of acting as a middleman between the content creation business and the distribution business. He neither has to create the Disney movies and the Disney content, but he also doesn't have to lay wires.

• 10:00David Rosenthal?

  Yep. He is the JV partner that Disney is entering India with.

• 10:04Ben Gilbert?

  Got it.

• 10:05David Rosenthal?

  So now here we are in the early 90s. Disney isn't the only major global media conglomerate that sees the potential of this newly television hooked up Indian consumer market. There's News Corp out there and Rupert Murdoch. And Rupert, of course, really built the television side of News Corp with Fox on the back of two things. It was news at first, but then it was really sports that helped Fox totally take off. I mean, the NFL Sunday deal here in the US is what put them on the map. This is the blueprint for bringing Fox into and News Corp into a new country.

• 10:43Ben Gilbert?

  And Fox Sports and eventually all the regional sports networks in the US.

• 10:47David Rosenthal?

  Exactly. So News Corp had just launched a new brand and channel in India called Star. And Rupert's going around looking for how he's going to run this playbook in India. What sports is he going to broadcast? And pretty quickly he figures out that there's really only one sport that matters in India. And that's cricket. And it just so happens that he thinks he can actually get the rights to broadcast Indian national cricket pretty darn cheaply. We're going to come back to that in a little bit.

• 11:16Ben Gilbert?

  And the question is, what is cricket at this point? You know, this is the Indian national cricket team playing other countries in these international matches. And then there's a big World Cup, but it's not like each city has a team or something like that.

• 11:32David Rosenthal?

  Yeah, there's no English Premier League of cricket. At this point in time, cricket is just this international game.

• 11:39Ben Gilbert?

  And now that the Indians are getting televisions, the Indian national team playing cricket is becoming must see television.

• 11:46David Rosenthal?

  Yeah, it's Monday Night Football. It's the playoffs. It's probably every Indian male who has access to a TV. And I say male because at this point in time cricket is a male game.

• 11:57Ben Gilbert?

  Yep.

• 11:58David Rosenthal?

  Is watching when the Indian national team is playing.

• 12:00Ben Gilbert?

  Yep.

• 12:01David Rosenthal?

  So Rupert hoovers up these rights pretty cheaply. And all of a sudden, Star is now the place to watch cricket in India. Lalat sees this. He's got the partnership with Disney. He's always been interested in sports. And he's like, well, hey, guys, you have ESPN. We got to get in this game. We got to be getting cricket, too.

• 12:19Ben Gilbert?

  Yep.

• 12:20David Rosenthal?

  So Lalat and ESPN and Disney, they go to IMG, the big international sports agency, which we didn't plan this at all. Amazing crossover with our Rolex episode. The same IMG. IMG, of course, helped Rolex design the testimony program that brought in Jack Nicklaus and Arnold Palmer, and then ultimately Roger Federer and all of the athletes who partnered with Rolex over the years.

• 12:44Ben Gilbert?

  Yep.

• 12:45David Rosenthal?

  So Lalat and ESPN and IMG, they go to the National Cricket Board in India that controls these broadcast rights. The National Cricket Board is called the BCCI, the Board for the Control of Cricket in India. And they say, hey, you've sold these pretty cheaply to Rupert. We'll pay you more. We'll take them. We should run an auction process here.

• 13:09Ben Gilbert?

  And it's worth knowing the BCCI's responsibility is not really a profit maximizing organization. It's kind of a regulatory body. It's not the government, but they're tasked with developing the sport of cricket and in particular cricket in India, ensuring that the sport has longevity and it has all the infrastructure that it needs. They're like the stewards of making sure that Indian cricket has a long and successful future.

• 13:38David Rosenthal?

  And all of the other cricket playing countries from England to Australia to Sri Lanka to the West Indies, they all have the same type of structure in their countries.

• 13:47Ben Gilbert?

  And they all actually roll up to the ICC, which today is called the International Cricket Council. But interesting to know, when it started in 1909, it was the Imperial Cricket Conference. So that gives you a sense of the way that cricket was spread around the world by the British.

• 14:02David Rosenthal?

  Yes, it is the British Commonwealth countries that are historically the cricket playing nations that are part of the ICC.

• 14:08Ben Gilbert?

  Yep.

• 14:08David Rosenthal?

  So we've been talking about how these early cricket rights here in the 90s, Starr and Murdoch, they're able to get them super cheap. It actually wasn't until right before all this goes down that India even realized they had the broadcast rights to cricket at all.

• 14:25Ben Gilbert?

  Yes.

• 14:25David Rosenthal?

  They didn't even know. And this is crazy, you can't make this up. How do they find it out? In 1991, the South African national cricket team comes on a tour to India. It's international cricket, they're playing in India. And the South African Cricket Board is like, hey, we want to broadcast this. How much do we owe you for the rights?

• 14:47Ben Gilbert?

  Cricket was newly extremely popular in India. It was 1983, eight years before, where India had won the Cricket World Cup for the first time. This is really a big deal. The nation comes together, they're all excited about it. Then 87 is the first time the World Cup is actually hosted outside of England. It's actually in India and Pakistan. So the power of the cricket globally is starting to shift to India. And so this is only four years after India hosted the World Cup for the first time and cricket's kind of on the rise.

• 15:15David Rosenthal?

  Yep. And it's all tied up with the television penetration of India.

• 15:19Ben Gilbert?

  Yes.

• 15:20David Rosenthal?

  The first time that it's even possible for these to become big national pride type events. So here, South Africa is just coming for a tour, the national team, and the board is like, well, how much do we owe you for this?

• 15:34David Rosenthal?

  They don't know how to respond. So there's this great history of they're sort of like talking amongst each other. Well, what do we think we should say? We should say $10,000? Is that crazy? Let's start with 20. See what they say. $20,000 and then, you know, they can bargain us down from there. So they go to the meeting or phone call with one representative, the BCCI with the South African board. And before the BCCI representative can open his mouth at all, the South African board member says, we're thinking $200,000. Does that sound good to you? And then you guys like, ah, yeah, yeah, that sounds great. Let's do that. So they only just discovered that this thing had value. They even had these rights and that they could sell them.

• 16:16Ben Gilbert?

  And then it got really concretized into law. A couple of years later, there's a legal battle between the BCCI and this legendary leader of the BCCI, Dal Maya. And he goes to war against the national state broadcaster, Dar Darshan. And the outcome of this legal battle is yes, even the Indian government, the state broadcaster, has to pay the BCCI for these rights. The BCCI is the owner of the rights and they can sell them to anyone they want.

• 16:46David Rosenthal?

  Yep. And that guy Dal Maya, he was the BCCI board member who was negotiating with South Africa. He was the guy on the call who heard $200,000 and was like, well, okay. Yeah.

• 16:56Ben Gilbert?

  It's like, look, South Africa has to pay us. And then they come home, they get into a legal battle. And even the Indian government has to pay us. We really own these rights.

• 17:03David Rosenthal?

  Yep. He was like the proto Lolit Modi, Lolit before Lolit.

• 17:07Ben Gilbert?

  Yes.

• 17:09David Rosenthal?

  There's one other really fun sort of history turns on a knife point element to cricket in India. So like you said, Ben, cricket was the most popular sport in India before 1983, but that didn't mean that much. It hadn't captured the country's imagination that much yet.

• 17:28Ben Gilbert?

  Also, England always hosted the World Cup. The center of gravity was England. And so it wasn't India's thing. It was just a thing they participated in.

• 17:35David Rosenthal?

  It was a British thing. There's an amazing line about this by an author named Ashish Nandi, who wrote a book called The Tao of Cricket. And he says, cricket is an Indian game accidentally discovered by the English.

• 17:47Ben Gilbert?

  While we're on this topic of things the BCCI realizes they own, and in particular, Dal Maya, and I hope I'm pronouncing that correctly, is the one who gains these rights the same way that he solidifies the broadcast rights. In 2001, Dalmaia introduces central contracts for Indian players and pensions for retired cricketers as a part of the BCCI's remit. The BCCI is the one who pays the players. This is so critical. And at the time, it's almost like, oh, of course, the BCCI pays the national team. But it sort of sets up this umbrella that no matter how an Indian cricketer is playing cricket,

• 18:30Ben Gilbert?

  we are the one who pays them, or at least who sort of has a contract with them. And that, along with the BCCI's ownership of media rights, is this killer combo that would eventually lead later to the IPL as we have it today.

• 18:43David Rosenthal?

  Yep. So all this launches ESPN in India. And there's back and forth for a couple of years between Star and ESPN. They're bidding over these cricket rights with the BCCI. Eventually, in 1996, they decide, hey, let's stop fighting each other. Let's just merge. Antitrust regulation in India is not quite what it is in the US at this point in time.

• 19:04Ben Gilbert?

  No.

• 19:05David Rosenthal?

  So Star and ESPN merge. And to hear Lolit tell the story, Rupert Murdoch is kind of a sore loser here that Lolit came in and increased the money that he had to spend for these cricket rights, ultimately had to merge with ESPN. He decides that he's going to kick Lolit out of his baby, out of this company post-merger. Now, is that really what happened? That's Lolit's side of the story. Star Disney, the merged entity, would allege that Lolit underreported revenues that they were collecting and was accepting kickbacks from the cable operators, all sorts of stuff. There's a big lawsuit about it, goes on for a couple of years. And at the end of it, Lolit gets booted out of the business.

• 19:50David Rosenthal?

  And despite his family's 50% ownership in that original ESPN Disney joint venture, he gets nothing. He's out in the cold.

• 19:59Ben Gilbert?

  Brutal.

• 20:00David Rosenthal?

  So from his perspective, he's like, hey, I started Disney India. I modernized cable in India. I brought sports to India. I did this. And now all of a sudden I'm out in the cold and I get nothing. And in his mind, Rupert Murdoch is the reason that this happened.

• 20:19Ben Gilbert?

  He's the villain. Rupert stole it away from the Modi family.

• 20:22David Rosenthal?

  My sworn enemy from here onwards. And thus begins a 10 to 15 year journey that is not just the ultimate revenge play by Lalit on Rupert, but accidentally along the way starts the biggest sports entrepreneurial story phenomenon that has ever existed.

• 20:45Ben Gilbert?

  Yep. Crazy. Out of this feud. And I will say, more than any other episode that we've done, it seems like every element of this has two completely different sides to the story, both of which the leaders of that side dig in and maintain their side. In most companies we study, there kind of becomes one canonical truth. And it's mostly written by the victors. But in the history of the IPL, and especially with Lalit Modi, there's always two completely different stories representing how it went. And nobody ever gives an inch on either side of them. They just say, oh, that's all lies. That never happened. No way did that ever happen. Zero truth to that.

• 21:29Ben Gilbert?

  And so it is a little bit difficult to tease out what actually did happen, given there is no convergence of story.

• 21:35David Rosenthal?

  Yep. And this is probably the right moment to say a word about the nature of doing business in India, at least at this point in time.

• 21:42Ben Gilbert?

  The eighties, early nineties.

• 21:44David Rosenthal?

  The euphemism, I believe, that the Indian business environment is referred to as a low trust environment, i.e. this is par for the course.

• 21:53Ben Gilbert?

  Yes. If you make an investment, you should be babysitting it very carefully, very actively, making sure that your interests are protected.

• 22:02David Rosenthal?

  A lot of corruption, a lot of kickbacks, and particularly doing business in India as a foreign company at this point in time is at your own risk, shall we say.

• 22:11Ben Gilbert?

  And I will say these phrases, corruption, kickbacks, that is a Westerner's way or an American way of describing it. I think another way to look at it is just, these are just the norms. This is the way you do business. I don't know what you expected.

• 22:26David Rosenthal?

  Totally. You, Disney, you, News Corp., you are foreign corporations coming into our country and trying to play by your own rules here. Like, no, this is India. You play by our rules. So the net of it is Lolit's got this blood vendetta against not just News Corp. and Star, but Rupert Murdoch personally, specifically. And what's the way to hit him where it hurts the most? Well, it's the biggest piece on his chessboard, pillar of News Corp. It's sports. And it's what Lolit thinks is like his birthright. Like, he brought to India was professionalizing and televising sports. He needs to take that away from Rupert. So how are you going to do that?

• 23:09David Rosenthal?

  Well, who controls cricket in India? It's the National Cricket Board, the BCCI. So Lolit figures, OK, I need to engineer getting myself installed on the BCCI board. But it turns out the way that you get to be on the board of the BCCI is first, you need to be either president of or just on the board of a state cricket association. So there are states within India. So in 1999, Lolit manages to join the board of one of the smaller Indian state cricket associations. That ends up not working out. And then in 2003, he manages to get appointed to the Rajasthan State Board and then quickly engineers what basically amounts to a coup of the board

• 23:54David Rosenthal?

  and gets himself elected in 2003, 2004 as president of the Rajasthan Board. So now he's got a path to the BCCI. He starts waging a campaign that the BCCI is vastly under monetizing the television rights to international cricket. Mind you, he was like directly involved in buying them for cheap when he was back at ESPN, but now he's like, I know how valuable these are. I know how many eyeballs these are getting. And like, you guys, now you're selling them for 10, 15 million dollars a year. These are worth hundreds of millions of dollars a year.

• 24:28Ben Gilbert?

  Right. Other than the latest slate of Bollywood movies, this is what the Indian population cares about. So why are we making 10 to 15 million dollars on it?

• 24:38David Rosenthal?

  Yeah. This is an outrageous claim in 2004. It also just happens to be right, but saying something like this is crazy. He is a dark horse candidate to come in and reform the BCCI and fully commercialize this quasi-governmental entity.

• 24:55Ben Gilbert?

  Right. That is the important thing. Their remit was not make the most money. They were not acting as a capitalist enterprise with shareholders. It was to preserve and promote the game of cricket to make sure that our national team is good.

• 25:09David Rosenthal?

  Yep. But most of the members are industrialists from the industrialist families, just like Modi. You know, their interests are Disney, News Corp, these big multinational corporations. Hmm, I would really like to have a relationship with you all. Oh, maybe there's stuff we can do together. Maybe we, we should advertise our company's products on these cricket events. Oh, maybe we can get to know you and advertise on other programming that you're doing. So it's rife with conflicts of interest, shall we say. And the only reason that Lolit doesn't have this conflict of interest-

• 25:39Ben Gilbert?

  It's because he got ousted.

• 25:40David Rosenthal?

  He's ousted, exactly. And his life mission is to extract revenge here. So this campaign succeeds and in 2005, he finally gets appointed to the BCCI. And this is wild. Within a span of like two months, he completely upends everything. He's not the chairperson of the BCCI. He's just a newly elected board member, one of, you know, I don't know, five or seven board members. He comes in like a wrecking ball. So the first thing he does, he goes to the main sponsor of the team, like the title presenting sponsor of the Indian national cricket team.

• 26:20David Rosenthal?

  Think at this point, probably already the logo is on the jersey. That's like, one of the main things you're gonna get is the title sponsor. And maybe at this point in time, you're also getting the logo on the broadcast.

• 26:34Ben Gilbert?

  But pathetically commercial versus cricket today.

• 26:38David Rosenthal?

  Well, let me give you a sense of how commercial it is at the time. So the presenting team sponsor is the Sahara Group, which is another one of these big Indian family conglomerates. How much do you think they are paying the BCCI for this sponsorship?

• 26:55Ben Gilbert?

  A million bucks.

• 26:57David Rosenthal?

  $100,000 per year.

• 26:59Ben Gilbert?

  I thought a million was low. Wow.

• 27:03David Rosenthal?

  Well, just you wait, a million is low. Mind you, when we've said that cricket is the biggest sport in India, nothing else matters. It borders on religion. It has 93% mind share of sports in India.

• 27:18Ben Gilbert?

  And I think that calculation is done by viewer hours.

• 27:21David Rosenthal?

  Yeah.

• 27:22Ben Gilbert?

  If you look at all sports watched, cricket is 93% of the hours people paid attention.

• 27:27David Rosenthal?

  If you look at American football at the NFL in America, it's like, I don't know, 37% or something like that. It is less than 50%. Cricket in India is 93%.

• 27:37Ben Gilbert?

  Yeah, it's a one-sport country. And it happens to be a one-sport country with one of the two largest populations in the world that is growing the fastest in the world.

• 27:47David Rosenthal?

  And the middle class is rapidly expanding. So like, this is exactly as, you know, if you're Pepsi or you're Tata.

• 27:54Ben Gilbert?

  $100,000 to sponsor.

• 27:56David Rosenthal?

  Oh, my God. Oh, my God. Unbelievable. Now, you might think, oh, OK, well, you just told me that this sport is sort of in the model of the Olympics right now. It's international competition. Maybe they're not playing that much. You know, is this team only playing for two weeks in the summer? Maybe there's just not that much inventory. No, they're playing 105 days of competition per year.

• 28:18David Rosenthal?

  All nationally televised.

• 28:20Ben Gilbert?

  And not to mention, one of those days is when they play Pakistan, or more than one of those days, and the whole country stops to pay attention on that day. That game alone, you would think, would be millions of dollars.

• 28:31David Rosenthal?

  You say day. At this point in time, there are two forms of cricket. There are one-day internationals.

• 28:37Ben Gilbert?

  Which is the new fancy version of cricket that came about, what, in the 70s, 80s?

• 28:41David Rosenthal?

  70s, 80s. And that really was to enable tournaments to happen. Like, you can play a match in one day. Takes all day. These are eight-hour games. So it's all day. The country's eyes are glued on this. The other form of cricket, the classical form of cricket, is test cricket. Test cricket, a match lasts five days. So one-day internationals were invented so that you could have kind of a round-robin tournament with different teams. Otherwise, there's no way you can have a 10-country tournament where every match takes five days.

• 29:09Ben Gilbert?

  Right. The vibes are very different, shall we say. The test cricket is very... Do you know why it's called test, by the way?

• 29:17David Rosenthal?

  Uh, I believe it's because it's a test of the strength, will, you know, the team.

• 29:22Ben Gilbert?

  And in particular, to test the English team. When they first brought cricket out to the rest of the Commonwealth, it was that those teams could then come and test against the English team. When they came to Lord's...

• 29:35David Rosenthal?

  Lord's is the hallowed cricket ground in England.

• 29:37Ben Gilbert?

  Yes. To play this five-day, thoughtful, quiet, strategic... The vibe is like golf, even though you're playing something that looks like baseball.

• 29:47David Rosenthal?

  Totally. I have to bring in some personal history here. So I am a quarter-British. I'm genetically predisposed to, you know, already be into cricket. But when I was growing up, my grandmother was British, probably every other summer, I would go spend two, three, four weeks with my family in the Midlands, in the countryside in England, visiting my grandmother's family. And, you know, as a little kid, what would be on TV in the summertime in England? It was this test cricket. And so I grew up, even though I played baseball and I loved baseball at home, in the summers, when I would go to England, I'd turn on the TV, I'd watch this test cricket. Like, oh, this is super cool. But yes, exactly like you say, Ben, this is the gentleman's game of gentleman's games.

• 30:27Ben Gilbert?

  You play it in, like, a white v-neck cableknit sweater.

• 30:31David Rosenthal?

  Right. In the middle of the summer, by the way.

• 30:33Ben Gilbert?

  Yes. And the incentives are all funny, too. It's not about swinging these big home runs. Your goal is basically to hit little line drives and keep it on the ground and make sure that you're able to score one run at a time, not six runs. You have a lot of time over the course of five days to let your strategy play out. And so you're not trying to make the absolute most use of every ball bowled the way that you are in modern versions of cricket.

• 30:59David Rosenthal?

  To give you a little sense of this, Test cricket, and I believe One Day Internationals as well, there are four possible outcomes of the game. You can win, you can lose, you can tie.

• 31:13Ben Gilbert?

  Wait, so what's the fourth?

• 31:15David Rosenthal?

  The fourth outcome is a draw.

• 31:17Ben Gilbert?

  Which is different than a tie?

• 31:18David Rosenthal?

  A tie is if the score is tied at the end of the match, which almost never happens because you're playing for at least eight hours, if not five days. The scores are in the hundreds here, so the odds that they're going to be tied are very, very low.

• 31:31Ben Gilbert?

  I see.

• 31:31David Rosenthal?

  A draw happens when one team is not able to finish their innings in the time of the match. So if you get to the end of the day, like, oh, sun goes down, it's time for dinner, and all of your batsmen have not yet gotten out in your innings, oh, well, then you could be behind, ahead, whatever, like, oh, just didn't finish. It's like a DNF, did not finish.

• 31:55Ben Gilbert?

  What?

• 31:55David Rosenthal?

  Just a draw.

• 31:57Ben Gilbert?

  And so then you have this funny strategy where you're trying to drag the game out if you're losing.

• 32:01David Rosenthal?

  If you're behind and you're batting second, or in a Test match in your second innings, if you're batting second and you're behind, yeah, you're just trying to draw the game out.

• 32:09Ben Gilbert?

  Amazing. All right, so we're going to leave the world of Test cricket behind in the 70s. There's a lot of Test cricket still played today, but-

• 32:16David Rosenthal?

  Oh, yeah, it's still a big thing.

• 32:17Ben Gilbert?

  For these big international tournaments, the World Cup, all that, that's One Day Internationals, this ODI format.

• 32:23David Rosenthal?

  All of this amazing and delicious sidebar is just to point out that there's a lot of inventory here. The Indian national team is playing 105 days per year, and the Sahara group is getting their logo on their white cable knit vests for $100,000 a year.

• 32:41Ben Gilbert?

  I think One Day Internationals, they actually did start wearing more athletic clothing.

• 32:46David Rosenthal?

  That's right, that's correct.

• 32:47Ben Gilbert?

  That's not the white sweaters.

• 32:48David Rosenthal?

  Indeed. So Lolit, here now in 2005, when he finally gets on the BCCI, first thing he does is he goes to Sahara and he says, "The price is going up." It is now $1 million, Ben, as you were saying, per day of competition.

• 33:05David Rosenthal?

  So you are going to go from spending $100,000 a year to spending $105 million per year. And oh, by the way, if you don't want to do that, that's fine. I'm happy for you not to do that. I'm then going to go put this out to auction and we'll see who is willing to pay that. Wow. To give you a sense of just how much latent value there is here, I don't think it goes to auction. I think Sahara just says, okay.

• 33:28Ben Gilbert?

  Yeah, they're very aware that this is a very good deal, even at this price.

• 33:33David Rosenthal?

  I mean, if you want to reach the nation of India, there are two ways to do it. Bollywood and cricket. That's it.

• 33:40Ben Gilbert?

  Yep.

• 33:40David Rosenthal?

  So when this massive escalation happens in 2005, I believe this is correct. Overnight, this becomes the highest paid jersey logo deal of any sport on the entire planet.

• 33:57Ben Gilbert?

  Oh, interesting.

• 33:58David Rosenthal?

  So basically not even commercial to now the single largest logo sponsorship in the world. And now, why is Lalat able to all of a sudden extract this huge, record-breaking amount of value for this sponsorship, whereas before it was really not even commercial? We alluded to it before, but the rise of the Indian middle class is what's driving everything here. So one stat I saw was that in the early 90s, when we started our story a little bit ago, Lalat was first getting involved. Disney and Star were entering the Indian market. There were only about 2 million households in India that had a disposable income of $10,000 or greater. Wow. By the time here we are now that Lalat gets on the BCCI and is wrecking all these deals,

• 34:44David Rosenthal?

  it's 10x that. So there's, call it 20, 30 million households now in India that are, by that definition, at least, middle class. Fast forward to today, it's another 10x plus that number. You know, there's 400, close to 500 million people, households in India that have that level of spending.

• 35:05Ben Gilbert?

  It's actually even more. It's 550 million people who are a part of India's middle class. Now, that middle class is defined differently than the American middle class. It's $7,000 to $45,000 in annual income, but that really gives you a sense. You said that in the early 90s, there were 2 million people that made more than 10K. And now, half a billion people make more than 7K.

• 35:30David Rosenthal?

  Yeah.

• 35:31Ben Gilbert?

  Those numbers are pretty close. So, we went from 2 million to 500-plus million. That is an emergence of a middle class in unbelievably rapid succession there. And I think the thing to keep in mind about India is anytime you're saying a percent of the population.

• 35:46David Rosenthal?

  You're still talking about a large number of people.

• 35:49Ben Gilbert?

  Right. The absolute amount of people is huge. The middle class in India today is 31% of the population, but 31% of India is more than all of America.

• 35:59David Rosenthal?

  Right. Yeah, you just said it was 550 million people. Yes. I mean, full stop, pause, let this sink in. The middle class in India, per this definition, but still, like, that is enough annual income that you can spend it on consumer goods, is bigger than all of America. That's what's going on here.

• 36:19Ben Gilbert?

  Another stat, we may as well just start really contextualizing the shift here. The Indian government says that 250 million people have been lifted out of poverty between 2015 and today. They lifted an entire America's worth of adults out of poverty.

• 36:38David Rosenthal?

  Yeah.

• 36:39Ben Gilbert?

  In India.

• 36:40David Rosenthal?

  To, all of a sudden, buying Pepsi, buying cell phones, buying mobile data plans.

• 36:45Ben Gilbert?

  Right.

• 36:46David Rosenthal?

  Buying, oh, I don't know, Nikes and Reeboks. So, what's the next thing that Lalat does after this Sahara deal? There's no gear sponsor, there's no kit sponsor for the team at this point in time. I think some of the individual cricketers had had some super cheap early deals with Nike or Reebok or whatever. Lalat goes to the three big companies, Nike, Adidas, Reebok, and says, hey, I'm putting out for bid for auction, being the kit provider, the gear provider, kit being the British term for athletic gear.

• 37:21Ben Gilbert?

  Or cycling.

• 37:22David Rosenthal?

  Or cycling, yes. To the Indian national team. And yeah, if you want to win this, I'm expecting minimum $50 million a year.

• 37:31Ben Gilbert?

  Just a float a number.

• 37:32David Rosenthal?

  So Nike comes in and wins at $52 million a year. Oh, and by the way, since Lalat knows that there's going to be competitive bidding between these three shoe companies, he makes a media event out of it. So he has them all submit their bids in sealed envelopes. He has a whole press conference, opens the envelopes in front of the media, makes it a whole circus.

• 37:54Ben Gilbert?

  It's like LeBron's The Decision.

• 37:56David Rosenthal?

  So this is enormous. Lalat, he's two months in to his tenure on the BCCI board, and he just found $150 million a year, whereas previously, sponsorships were nothing. They were making, call it 10, $15 million a year in TV rights. He just 10x that from something that's worth far less than the TV rights.

• 38:20Ben Gilbert?

  Yep.

• 38:21David Rosenthal?

  So then he sets up a personal meeting with Rupert Murdoch, who, at this point in time, via star, has all the TV rights to Indian international cricket.

• 38:33Ben Gilbert?

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• 38:52David Rosenthal?

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• 39:13Ben Gilbert?

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• 39:35David Rosenthal?

  In half, which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 39:53Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. Okay, David, so Rupert Murdoch, back entering the picture.

• 40:25David Rosenthal?

  Well, Lolit probably thinks here that it's coming full circle. We're only just getting started. He sets up a personal meeting with Rupert Murdoch, and he sets the meeting for a friendly Friday afternoon tea.

• 40:42Ben Gilbert?

  How very cricket.

• 40:43David Rosenthal?

  And remember, at this point, I think Star is paying $10, $15 million a year for these TV rights. Lolit walks in, sits down and says, "Mr. Murdoch, I am informing you that your contract is terminated right now. We are going to rebid the contract and you are welcome to submit a bid. We are mandating that the minimum bid is $500 million for four years." And Murdoch, like, basically spits his tea out. He's like, "Uh, you're crazy."

• 41:16Speaker 02

  That's what, 10x the current value?

• 41:18David Rosenthal?

  Totally. So obviously, he's offended by that. But he's like, "Who are you and why do you think this is gonna work? Remember, Star and ESPN had merged. There's no other sports channels in India. There's no other sports in India." Rupert's like, "Who's gonna bid on this? You're all hot air here. There's no way that this is gonna work. I'm the only game in town. You're basically trying to extort me and, oh yeah, rip up my contract that I have with the BCCI. You're two months into the job. Like, get lost."

• 41:50Speaker 02

  Right. You need me.

• 41:51David Rosenthal?

  You need me. Yeah. Hmm. But of course Lolit has a plan for this. He's gonna do just what he did back with ESPN in the first place back in the day. It's not that hard to set up a new network to come in and bid on these rights. And by the way, it is now clearly, demonstrably and provably so much more valuable than back in the day. We're now 15 years into the television penetration of India, shall we say. There are tons of other broadcasters and cable channels out there. They're just not sports channels. Well, what's a sports channel? That's just a marketing term. It's just a channel. You add another channel.

• 42:33David Rosenthal?

  You make ABC Sports, NBC Sports, CBS Sports, Fox Sports. Anybody can do this. So Lolit goes to Sony, who's the number two broadcaster in India. He goes to Sky from the UK and says, "Hey, you wanna enter India?" And he ultimately goes to an Indian entertainment company called Nimbus, which was a broadcaster, but also didn't have a sports channel. And he says to all of them, "These rights are now available. Minimum bid is 500 million for four years. This is going to be very profitable for you. It's very easy to set up a sports network. I've already done it. I will help you do it." You are welcome to bid. Nimbus ends up winning the auction with a $620 million bid for four years.

• 43:18Ben Gilbert?

  Wow.

• 43:18David Rosenthal?

  They set up the Nimbus Sports Channel. It, I believe, quickly becomes the number one sports channel in India. I mean, there's nothing else. Like, if you got cricket, you're the number one sports channel in India. And Star and Rupert are out in the cold.

• 43:32Ben Gilbert?

  Wow, so Lalit really did make the BCCI an economic powerhouse where they really didn't have material revenue before. And now suddenly they have hundreds of millions of dollars coming in, what, 200 million a year-ish between TV and sponsorships?

• 43:47David Rosenthal?

  Yep. They've got 150 million from sponsorships and then they've got, yeah, what's that?

• 43:52Ben Gilbert?

  125 from this.

• 43:54David Rosenthal?

  Yeah, and then another 150 million from broadcast.

• 43:57Ben Gilbert?

  Yeah, so hundreds of millions of dollars a year. Unbelievable.

• 44:01David Rosenthal?

  Totally unbelievable, with more potential to monetize beyond that. I mean, he got 150 million from two sponsorships. You can have more than two sponsors here. Yeah, he completely commercialized the BCCI. Transformative. You know, he would say, when he later gets kicked out of the BCCI and there's tons of controversy and everything we'll get into later, people are accusing him of self-dealing, doing all these things. He's like, I created billions of dollars of value for cricket in India, the BCCI, the government, all the players involved from nothing. And he's absolutely right.

• 44:34Ben Gilbert?

  Yep, absolutely right.

• 44:36David Rosenthal?

  And by the way, he shut Rupert Murdoch out of all of it. So here we are now. He's won. He's extracted his revenge. He's taken over Indian cricket. He's created the single biggest pool of money anywhere around the globe in cricket as a sport. I mean, this is way more money that we're talking about here than England or Australia or the West Indies or Sri Lanka, New Zealand, you know, the other cricket-playing nations. England and Australia are big media markets, but they're not this big.

• 45:06Ben Gilbert?

  Well, on a sheer population basis, they just can't come anywhere near India.

• 45:11David Rosenthal?

  Totally. And we're not even at the end of 2005 yet. This guy is a force. But as you might expect, he's not quite satisfied.

• 45:19Ben Gilbert?

  Shocking. If we've learned anything studying all these characters over the entire arc of acquired its history, they're never satisfied.

• 45:26David Rosenthal?

  Totally. He's, I got to assume, thinking about this 105 days of competitive play that the team is playing. That's 105 cricket matches. That's not a lot of inventory. On the one hand, it's a lot, but it's only one team that you're talking about here. Playing 105 matches, the NFL plays, what I think?

• 45:51Ben Gilbert?

  285 games, including the postseason.

• 45:54David Rosenthal?

  So more than double that. And that's the scariest sports media in the world.

• 45:58Ben Gilbert?

  Yes.

• 45:59David Rosenthal?

  And the only reason that the NFL plays that few games is because the bodies of the players just can't take anymore. They would fall apart.

• 46:08Ben Gilbert?

  Right. Major League Baseball, almost 2,500 games are played per season.

• 46:13David Rosenthal?

  Yes. Thousands of games. Cricket is not like American football. This sport was designed to be played five days in a row.

• 46:23Ben Gilbert?

  Yes.

• 46:24David Rosenthal?

  The cricketers' bodies are not falling apart. There is a lot more juice to squeeze here. So thus sparks unquestionably, truly unquestionably, this is in zero way a controversial statement, the most brilliant, most successful sports entrepreneurial business plan of all time. The Indian Premier League, a domestic, city-based cricket league in India that Lolit is going to set up in the model of the very best elements of the NFL, of the English Premier League, of the NBA.

• 47:01Ben Gilbert?

  Of international cricket.

• 47:02David Rosenthal?

  Yep, of international cricket.

• 47:04Ben Gilbert?

  Leveraging the assets that they have with the BCCI's control over cricket. I mean, this is something that is not emergent in any of these other sports we're comparing to. There's no BCCI for football in the US. There's nobody telling the NFL what they can and can't do. The BCCI is the one who controls the players' contracts with how much they make, who decides what leagues they can play in or can't play in, who cuts media rights deals. This is all happening by this organization.

• 47:37David Rosenthal?

  Organization that Lolit now de facto controls.

• 47:40Ben Gilbert?

  That is not the league. It's a parent to any league or organized play. And so you mentioned that with the Indian Premier League, they get to learn all this stuff from the other great leagues, but they have this asset, this structural advantage that no other sports league in the world has, which is the BCCI control.

• 47:57David Rosenthal?

  Absolutely. They innovate beyond the other leagues, too.

• 47:59Ben Gilbert?

  Yeah, totally.

• 48:00David Rosenthal?

  To me, this is not a controversial statement. The IPL is better set up structurally than the NFL. It is the most perfect sports league that exists.

• 48:11Ben Gilbert?

  All right.

• 48:12David Rosenthal?

  So how does he do it?

• 48:13Ben Gilbert?

  Yes. What is it? You're telling me it's the most amazing thing you ever prove it.

• 48:16David Rosenthal?

  So besides Lalat seeing that there's an inventory opportunity to expand cricket in India here beyond the 105 or so days of competition that the international team is playing, there's also the perfect opportunity at this moment within the cricketing world, which is that the whole game itself is undergoing a major revolution. England had just introduced a brand new version of the game. Up until this point, there were only two versions of cricket that were played professionally. There's the test match cricket, the five-day gentlemanly event with the cable knit sweaters that we talked about. And then there's the one-day, eight-hour matches that are for international tournaments and competitions, one-day internationals.

• 49:01Ben Gilbert?

  Yep.

• 49:02David Rosenthal?

  Back home in England, cricket was basically starting to become a dying sport. The nation that invented the game, that was the home of everything sacred in this sport, in this industry.

• 49:15Ben Gilbert?

  Empty stadiums. I mean, truly empty. They had the most incredible stadiums built for cricket, and you look at these old videos and just empty seats everywhere, empty sections.

• 49:24David Rosenthal?

  And the only people still left watching it are old men, basically.

• 49:29Ben Gilbert?

  Yep.

• 49:30David Rosenthal?

  Women have never really cared, and kids are like, I'm interested in football, European football. Like, I don't care about this.

• 49:37Ben Gilbert?

  Not to mention, who can take five days off work all day to go watch something?

• 49:43David Rosenthal?

  Yeah, this is happening during the day or even one day during the international tournaments.

• 49:47Ben Gilbert?

  Yes, it is made for retired men. Or especially in the old days, the elite, people who didn't have jobs.

• 49:53David Rosenthal?

  Exactly. That was the whole point of the game. It was for the nobility.

• 49:58Ben Gilbert?

  Yes.

• 49:58David Rosenthal?

  Exactly. But not going to work in the modern world.

• 50:02Ben Gilbert?

  Yep.

• 50:03David Rosenthal?

  So in 2003, the English Cricket Board finally realizes like, hey, we're desperate. We gotta do something. So there was another form of cricket that was mostly played recreationally and by school teams. That was 20 over cricket. So rather than these five day events or the one day events, it was a limited number of balls, of pitches essentially, to use the baseball analogy, for each side. And that was 20 overs and over is six balls.

• 50:34Ben Gilbert?

  Each team gets 120 balls bowled to them and you gotta make do with just those 120 balls.

• 50:41David Rosenthal?

  So all of a sudden, you're going from test cricket, which is thousands of balls bowled, pitches equivalent in the baseball world over five days. Then you've got the one day international, one day version of the game, hundreds. You're going down to 240 total balls bowled, 120 for each side. Compare that to a major league baseball game, for instance, has an average of about 300 pitches per game, about 150 each side. So now all of a sudden cricket went from like the boring version of baseball to the more exciting version of baseball.

• 51:15Ben Gilbert?

  Purely and with this just very interesting, different thing. The balls are scarce. You have to get the most points possible based on a small fixed number of opportunities to hit it.

• 51:26David Rosenthal?

  Right. A baseball game can go on forever. Pitches could go on forever, extra innings, et cetera, et cetera. Nope, these T20 games, it is a strict balls bowled count.

• 51:37Ben Gilbert?

  Yep, it's tight.

• 51:39David Rosenthal?

  And that means games take two and a half to three hours. That means games can be played in prime time in the evening for the very first time in the sport.

• 51:47Ben Gilbert?

  Finally, we have a cricket for the masses. I mean, how was anyone even supposed to watch these ODIs unless it's on a Saturday? You now can watch cricket every night of the week because there's a three hour prime time format for every one of every class to watch.

• 52:02David Rosenthal?

  Yep. So all of a sudden you start seeing these green shoots in England, 2003, 2004, 2005. Domestically, they start playing T20, they start televising the matches. Younger people start paying attention again. There's a revitalization. So obviously the international game sees this. Lalat sees this, he's thinking about starting up a domestic league in India. This is the perfect opportunity. What an amazing gift of a new format of the game. Perfect for prime time. An incredible opportunity.

• 52:35Ben Gilbert?

  There's one other thing that fell in their lap, which is the fuddy duddies, who love test cricket, absolutely hated it.

• 52:43David Rosenthal?

  Yes, which made it more exciting.

• 52:45Ben Gilbert?

  Yes, and so the way that the original T20 was advertised, even before we get to IPL, you just look at, there's a famous match of Australia versus New Zealand. New Zealand doesn't take it seriously at all. They come out with crazy hairdos and they're wearing whatever. T20 is kind of a joke from the start. And once the players do that, then the advertising kind of leans into that. This is not a serious sport. This is like party time and, you know, we just have to be playing cricket.

• 53:16David Rosenthal?

  This is all but the Savannah Bananas version of baseball.

• 53:20Ben Gilbert?

  Yes.

• 53:20David Rosenthal?

  Which we'll talk about the Savannah Bananas later. For folks who don't know or who are not in the US, Savannah Banana is like the Harlem Globetrotters of baseball. It's a purely entertainment spectacle.

• 53:31Ben Gilbert?

  It's a spectacle for sure. And IPL is not quite that. I mean, T20 is definitely competitive, but the old timers look at it as a joke, even though it's a highly skilled thing. And that's a perfect spark.

• 53:45David Rosenthal?

  Totally. So the Australian domestic T20 league that gets started right around this same time, to give you a sense of this, is called the Big Bash League. That's the image that they're projecting. And the Big Bash League is like, they are legitimately a real sports league today and probably the second biggest, second best T20 cricket league in the world behind the IPL. But this is not targeted at the test cricket loving audience.

• 54:09Ben Gilbert?

  Right. And it sends the right message too, because you were trying to bash the ball. This is a game of batsmen. There's an amazing moment that happens. I forget exactly which competition it's in, but someone gets six sixes in a row. It's like the most amazing thing ever to watch. It's basically home run derby.

• 54:24David Rosenthal?

  Yes. When there's no limit on the number of balls, you're trying to play for a draw if you're behind. You're trying to make things go longer. Now, all of a sudden, it completely changes the strategy of the game. You only have 120 balls and you need to maximize your score.

• 54:38Ben Gilbert?

  Yep.

• 54:38David Rosenthal?

  So rather than trying to run out balls or whatnot, like sixes become way more important.

• 54:43Ben Gilbert?

  Yep.

• 54:44David Rosenthal?

  So Lalit knows this is the perfect opportunity. He goes back to IMG, who remember he had initially partnered with with Disney and ESPN way back in the day to start broadcasting cricket in India in the first place and says, hey, I need to hire you as consultants from the BCCI. We're going to set up a whole new league. And Andrew Wildblood, who runs IMG's India operations, becomes essentially Lalit's partner in setting up, how are we going to structure this? What are we going to create as the business plan of this new league? We've got some time. We've just done these major rights deals and sponsorship deals for BCCI. Let's be really thoughtful about this. We'll plan to start it in 2009.

• 55:27David Rosenthal?

  So here we are, we're now in end of 2006, beginning in 2007. We got two to three years to set this up. And then in the spring of 2007, a rebel league starts up under their nose in India. Another domestic T20 league with city-based franchises announces that they're going to launch and they're going to call it the Indian Cricket League. And it's backed by the broadcaster Zee TV.

• 56:03Ben Gilbert?

  Not only was it called the Indian Cricket League, which is just a great name, that is actually an entity name that Lalit had registered in the 90s.

• 56:13David Rosenthal?

  Yes.

• 56:14Ben Gilbert?

  I don't know if Lalit was thinking he would actually call IPL the Indian Cricket League, but then something else launches called the Indian Cricket League.

• 56:21David Rosenthal?

  Yeah, it's a good point. This opportunity for a domestic cricket league was not some like aha brainstorm that Lalit had once he took over BCCI. Everybody knew that this would be a huge opportunity.

• 56:34Ben Gilbert?

  Right. This is like social networking in 2004.

• 56:36David Rosenthal?

  The time just wasn't right yet. So he had been thinking about it all the way back when he was first working with Disney to fight against STAR and enter the market, but the timing just wasn't right.

• 56:45Ben Gilbert?

  All right. So what is this Indian Cricket League? Where did it come from? What is Zee TV? So way back in 1996, Subash Chandra, the founder of Zee TV.

• 56:55Ben Gilbert?

  Kind of recognized, hey, exactly what you're saying, David. I'm a TV distributor. He owned a satellite TV company. He saw exactly what Lolit saw. Sports are the most important thing. India increasingly cares more and more and more about cricket. This is going to be the perfect thing to distribute over my airwaves. 96 to 04, he's trying to get the rights to cricket and not getting them. Finally, in 2004, he bid the highest for domestic cricket in India, but the BCCI still did not award the rights to him.

• 57:25David Rosenthal?

  Interesting. So this must have been right before Lolit joined the board and then restructured the whole thing.

• 57:32Ben Gilbert?

  Must have been right around that time. Finally, two more years goes by. He wins. He gets a five-year deal between the BCCI and ZTV for the exclusive rights to broadcast cricket.

• 57:45David Rosenthal?

  Oh, wow. I didn't even find this, that they had a deal with BCCI.

• 57:50Ben Gilbert?

  They had a deal.

• 57:51David Rosenthal?

  Wow.

• 57:52Ben Gilbert?

  One year into the deal, there's something that passes called the Sports Broadcasting Bill, and this requires broadcasters to share feeds in real time, like live feeds, without ads, directly back to the state-owned broadcast channel.

• 58:11David Rosenthal?

  Interesting.

• 58:12Ben Gilbert?

  Which, of course, destroyed the profitability of this enterprise that ZTV is trying to create here of broadcasting cricket if they have to give away the very thing they're collecting without an ability to generate revenue on it. So BCCI ignores ZTV's attempt to renegotiate this.

• 58:30David Rosenthal?

  Because at this point in time, Lolit is starting to work on setting up IPL.

• 58:34Ben Gilbert?

  Yeah, and I think the ZTV side of the story is, where did the Sports Broadcasting Bill come from? Why won't they renegotiate? I think, David, you are correctly reading into the BCCI is starting to say, eh, just hold tight, we're going to make some changes here. Not knowing what's going on yet with IPL, ZTV is like, this is so weird that, you know, I'm not making any money on this thing that I finally got rights to, that I really want the rights to. BCCI won't negotiate with me. So I'm just going to start a new T20 league outside of the BCCI universe without their cooperation.

• 59:07David Rosenthal?

  Ah, so this is spring 2007 when they announce ICL.

• 59:11Ben Gilbert?

  Yes. The BCCI immediately says, "Any players who sign up for the Indian Cricket League are banned for life from playing for India nationally or any other domestic tournaments. This includes if you are a young player who had never even played for the Indian national team yet." Chandra's freaking out. He's like, "Wait, wait, what?" So he then tries to make this big appeal, the economic benefit that's going to come from a domestic league like this. Everyone's going to watch this. It's going to promote the local economies of all these places. We're going to pull in talent from all these other countries," which, by the way, this is straight up the Premier League playbook. This is what IPL ends up doing. "It's going to be broadcast on ZTV. I'm going to fund a million-dollar prize pool."

• 59:54Ben Gilbert?

  BCCI ignores this again, and in fact, what they did was they went and pulled pensions away from any retired cricketers who then went and joined the ICL.

• 1:00:04David Rosenthal?

  Amazing.

• 1:00:06Ben Gilbert?

  They're raising the stakes. They're saying, "No one who has any affiliation with us at all can do this." So then other state organizations like BCCI, the Bengali equivalent, recognized that this was going to be an issue if entrepreneurs started going around the state organizations. So they also banned their players from joining the ICL. So this really hamstrung the whole thing before it could even get going. And then finally, I'll flash forward one year and then we'll come back. In 09, the BCCI announced an amnesty and all players could return to official cricket without penalties if they cut all ties with the ICL. So that was the final nail in the coffin. And then in 2009, they would shut down.

• 1:00:45David Rosenthal?

  Yep. So they do play actually two seasons, 2007, 2008, into 2009, and then they fold.

• 1:00:51Ben Gilbert?

  But this was someone making a true run at, "What if we go around the state institutions, these regulatory bodies of cricket, and try to start something on our own?" It just didn't work, period. You can't go around them.

• 1:01:05David Rosenthal?

  Well, I mean, this brings up probably the most important power and playbook theme that I was going to save to talk about later, but we should talk about now, the cornered resource of the players. If you are creating or running a sports league... It is of paramount importance that you have the best players in the world. If you do not have the best players in the world, you're toast. Nobody wants to watch the second best players in the world play each other.

• 1:01:29Ben Gilbert?

  Well, I think that's right, but it is a two-sided equation. Like, BCCI worked themselves into the choke point, or ended up in the choke point, or the linchpin, or the aggregator position, where they aggregated both all the best players, at least the Indian best players, and the broadcast rights. It's the two different things that Dalmaia did under his term at BCCI, both the centralized contracts for players and the centralized media rights, that they had the Supreme Court-approved right to auction off to any capitalist companies that want to bid for these rights. So they owned the two things that mattered.

• 1:02:05David Rosenthal?

  Yes, that is absolutely true. The players are the primary thing, though. The broadcasters will follow the players. Star is desperate to rebroadcast cricket at this point in time. They would have loved for the ICL to take off and be able to broadcast that and go around the BCCI, but it just wasn't a compelling product. And the BCCI is basically using the mafia tactics of like, hey, if you even think about going and playing there, you are banned for life from, at that point in time, what really mattered, which was the chance to play international cricket for India.

• 1:02:35Ben Gilbert?

  Yep.

• 1:02:36David Rosenthal?

  So Lolit and Andrew Wildblood and IMG are like, okay, we got to accelerate this. We were planning to launch what becomes the IPL in 2009. We need to launch now, next season, April 2008.

• 1:02:51Ben Gilbert?

  I will say, given how rushed this was, it is shocking how well it was all set up. All these dynamics, all the rules and auctions and everything about this league are so well-balanced, given they pulled it forward a year.

• 1:03:03David Rosenthal?

  Absolutely. It's also lucky for them that they do pull this forward in response to the competitive threat from the ICL, because there's another media marketing gift, which is that unexpectedly, India ends up winning the first T20 World Cup that summer.

• 1:03:23Ben Gilbert?

  Yes, and they were initially really dragging their feet. They were resistant to T20, they already had ODI, they loved it. And I think you may have more details than I do. Three of their best players didn't go to the World Cup?

• 1:03:36David Rosenthal?

  So what happened was, T20 was introduced by England in 2003.

• 1:03:42David Rosenthal?

  It takes a couple of years for other countries to catch on, start playing it. Like you said, Ben, you know, there was that Australia, New Zealand thing. 2007 is when the ICC finally starts to recognize, ah, maybe there's something to this. And this is the first T20 World Cup that they organized. So they've been doing the one day international world cup for years, all the way back to before 1983, when India won it. But 2007 is the first T20 version of this that they're putting on. Well, the sort of first team of the Indian national team, they'd already just played the one day international version. So they were tired of the best players, you know, look, tired. I think tired is in quotes for cricketers. They can play any day of the week, but they weren't that interested in the star players. Like, ah, let's let the young guys have a go at this new tournament.

• 1:04:27Ben Gilbert?

  Hmm.

• 1:04:28David Rosenthal?

  So the young guys go and the tournament is being held in South Africa. They go over there not expected to win. The other countries are sending, you know, their first teams to this. Amazingly, the young guys end up winning the tournament in incredibly dramatic fashion.

• 1:04:48Ben Gilbert?

  And guess who they are playing in the final?

• 1:04:51David Rosenthal?

  Pakistan.

• 1:04:52Ben Gilbert?

  Yes.

• 1:04:53David Rosenthal?

  So during the group play stage, the early stages of the tournament, the Indian team is playing the England team. England, home of cricket.

• 1:05:03Ben Gilbert?

  Yes.

• 1:05:04David Rosenthal?

  Massive underdogs here. You've got the young Indian players. Lolit has come over, of course, to South Africa to watch the World Cup. He's working on the IPL accelerated launch in the meantime. And he's like, okay, great. We're playing in T20 World Cup. This is an opportunity. I want to create some exciting moments here. So he tells all the guys on the team, if any of you hit six sixes in an over. So, you know, an over, like we talked about, is six balls in T20, 20 overs.

• 1:05:34Ben Gilbert?

  This is six home runs in an at bat, back to back.

• 1:05:38David Rosenthal?

  Essentially, yes. Very, very, very difficult to do.

• 1:05:41Ben Gilbert?

  Oh, and they're bouncing the ball.

• 1:05:43David Rosenthal?

  Right.

• 1:05:44Ben Gilbert?

  That's, you're trying to hit a ball that is bouncing somewhat unpredictably.

• 1:05:49David Rosenthal?

  The bowlers can either bounce the ball or throw it like a baseball pitch. They can do whatever they want. You don't know what they're going to do. And it might have spin, you know, like in baseball, you can throw a curve ball. A curve ball curves a little more than a fastball does, but can't move that much. When you spin the ball and then it hits the ground, it can move a lot. So you really don't know what's coming.

• 1:06:08Ben Gilbert?

  Not to mention a running start. The pitcher has a running start, the bowler.

• 1:06:12David Rosenthal?

  So Lalat tells these kids, remember they're kids from India, not from wealthy families here, if any of you can hit six sixes in an over, this is going to be such a dramatic event. I know this is going to capture the public's imagination here. I will personally give you a Porsche 911.

• 1:06:33David Rosenthal?

  I swear to God, this is true.

• 1:06:35Ben Gilbert?

  Wow, the acquired universe crossover.

• 1:06:38David Rosenthal?

  The crossovers are amazing. And I believe in fact, that when they were talking about this in the locker room, he might have first offered a Rolex and then the players were like, no, that's not enough for doing like, I need a Porsche 911.

• 1:06:51Ben Gilbert?

  That's amazing.

• 1:06:52David Rosenthal?

  I think that might be the story. Either way, to drive a Porsche 911 in India, period, is like, that's a big statement.

• 1:07:00Ben Gilbert?

  Especially back in 2007.

• 1:07:02David Rosenthal?

  For a young kid, this is the pinnacle of anything they could ever dream of.

• 1:07:06Ben Gilbert?

  Yep.

• 1:07:06David Rosenthal?

  So they're motivated. So they're playing England in the group round and one of the young players, Yuvraj Singh, is up at bat. He hits one six. He hits two sixes, three sixes, four sixes. By God, he hits six sixes in an over.

• 1:07:26Ben Gilbert?

  Crowd's going insane.

• 1:07:27David Rosenthal?

  Against England in South Africa, the crowd's going insane. I believe something like less than 20 people have ever done this in history, even to this day. This is one of the rarest feats, certainly in cricket, if not all of sports. And he did it. And so he comes running over to Lalat, who Lalat's there in the stands, jingling his hand back and forth, be like, I want the keys, my Porsche, my Porsche.

• 1:07:53Ben Gilbert?

  Amazing.

• 1:07:54David Rosenthal?

  And he gets his Porsche. And Lolit would tell you that he paid for it out of his own money.

• 1:07:59Ben Gilbert?

  I'm sure.

• 1:08:00David Rosenthal?

  Lolit's quote on this is, "That lit up the Indian television screen. It turned the entire country upside down. Everybody started to tune in." So they win that match against England. Next thing you know, they find themselves in the final against Pakistan. Now, the Indian national team, the first team at this point in time, despite India being the biggest market for cricket in the world, was not that good. I believe they had not won an ODI, a one-day international world cup in quite a while.

• 1:08:29Ben Gilbert?

  Hmm.

• 1:08:30David Rosenthal?

  Here now, these young guys, the T20 team is in the finals against Pakistan. They win on the last over. An incredibly exciting, dramatic finish. The television audience back home in India for this was 400 million people.

• 1:08:49Ben Gilbert?

  Wow.

• 1:08:50David Rosenthal?

  The numbers are just staggering.

• 1:08:52Ben Gilbert?

  When India plays Pakistan in cricket, it is a national holiday.

• 1:08:55David Rosenthal?

  That game, that match, was the 10th most-watched TV event of the year, period, around the whole globe.

• 1:09:04Ben Gilbert?

  Wow.

• 1:09:05David Rosenthal?

  The young team comes home. Lolit calls up Nike before they leave South Africa and he's like, "I need open-air tour buses for the team, for the whole retinue. You need to meet us at the airport. We are going to do a parade to the stadium in Mumbai and we're going to have a big, huge victory celebration, just like they do in Western sports after they win a World Cup." They come home. The team arrives at the Mumbai airport at 6:00 a.m. The crowds are packed. There are 4 million people on the streets. It takes them 11 hours to get from the airport to the stadium. It's all televised all across the country. It's like a national holiday. And it is the most perfect...

• 1:09:46David Rosenthal?

  Fertile ground in which to insert the imminently about to launch IPL.

• 1:09:52Ben Gilbert?

  Amazing, which will lead us to the specific rules of how the IPL works and the dramatic auction for the initial teams. All right, listeners, now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 1:10:16David Rosenthal?

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• 1:10:30Ben Gilbert?

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• 1:10:40David Rosenthal?

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• 1:10:57Ben Gilbert?

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• 1:11:13David Rosenthal?

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• 1:11:30Ben Gilbert?

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• 1:11:39David Rosenthal?

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• 1:11:50Ben Gilbert?

  All right. So David, India is coming hot off winning the T20 World Cup Cricket Final, and it's time for the birth of the Indian Premier League.

• 1:12:00David Rosenthal?

  Yep, we have finally arrived at what we've been hitting at the whole episode, just the sheer brilliance of how IPL is architected. So if you are from a clean sheet of paper, trying to design the perfect sport league, there are two things that you need to really try and maximize to make it appealing to an audience. First is that it needs to be the best place in the world to showcase human skill and achievement in that sport, i.e. you need the best players in the world playing there. Two, though, and this is where a lot of sports leagues go wrong, you need uncertainty about the outcome. You need competitive parity amongst the teams in the league. This is the any

• 1:12:43David Rosenthal?

  given Sunday element of the NFL that has been the key critical ingredient to making the NFL the most valuable sports property in the world.

• 1:12:51Ben Gilbert?

  Every little year, they're tweaking things here and there to try and make it a little bit more balanced. The NFL would love nothing more than every team to go eight and eight and then have an incredibly competitive, who knows what's going to happen, playoff situation. It was almost a disaster what happened when the Chiefs almost won three Super Bowls in a row. That was so un-NFL that that was a possibility. It took them 100 years, but they became wizards of that competitive balance. And David, I'll say one quick thing. It's not to create the best sports league. It's to create the best business.

• 1:13:25David Rosenthal?

  Yes, I was taking it as tautological that that is what you are trying to achieve.

• 1:13:29Ben Gilbert?

  If you want to create the best business out of sports, you need it to be the most entertaining version of that sport, which means you need uncertainty as much as possible.

• 1:13:39David Rosenthal?

  Now, importantly, this does not mean you are simply creating spectacle and controversy and entertainment without quality sport. You know, that would be the Harlem Globetrotters, that would be the Savannah Bananas, amazing, incredible businesses and products. Never going to be the biggest thing in the world in their sports.

• 1:13:58Ben Gilbert?

  Correct. And on top of that, it has to remain a game of skill, not chance. So it can't be pure BS entertainment show, and it can't be too subject to randomness. It has to be the best people competing in skill against each other to create the most thrilling product, but in the most balanced game design that you could possibly offer.

• 1:14:22David Rosenthal?

  Yep. So because of everything we've talked about to this point in the episode, the first part of getting the best players in the world, that was actually pretty easy for the IPL. That's what created the opportunity.

• 1:14:34Ben Gilbert?

  Assuming it was birthed out of the BCCI, yes. If it had come from elsewhere, it would have been a nonstarter and impossible.

• 1:14:39David Rosenthal?

  Correct. The BCCI has cordoned resource access to the best talent in the world.

• 1:14:44Ben Gilbert?

  Yep.

• 1:14:45David Rosenthal?

  Because they have all the money, and they have the Indian fans who care about watching the best Indian players, and they have essentially veto right over the best Indian players playing anywhere else. Now, the trickier one, competitive parity. This is where so many leagues go wrong. To get competitive parity among the teams on the field, you need every franchise to have access to the same opportunity to win, no matter how much money they have, or how much money the ownership group has outside of the franchise.

• 1:15:19Ben Gilbert?

  Or how big of a market they're playing in.

• 1:15:21David Rosenthal?

  Exactly.

• 1:15:22Ben Gilbert?

  Or how good they were last year. You can't throw the board up in the air too much every single year because you need some continuity of fan base, but you also kind of can't really allow for dynasty creation. There's a million little ways that a misalignment could get in there and ruin competitive balance, and you have to think through all the different variables and balance them all.

• 1:15:44David Rosenthal?

  Yep. And we'll get into this later in the episode, but here in the US, I think this is where Major League Baseball has gotten really, really, really wrong over the last set of decades. It's the Yankees, it's the Dodgers.

• 1:15:55Ben Gilbert?

  They've never successfully implemented a salary cap in baseball, and so guess who's in the World Series? The New York team and the LA team.

• 1:16:02David Rosenthal?

  Yep. And then the worst example of this is the European soccer leagues. It's the top two, five franchises at the top that are spending the most money, buying the best players, and winning every year.

• 1:16:13Ben Gilbert?

  And you have owners that are willing to spend hundreds and hundreds of millions of dollars on players and essentially run the teams in the red because they have to spend so much money on players to win.

• 1:16:24David Rosenthal?

  Yep. So now think about setting up this new league in India. For reasons I'll get into in a sec, you need to have a diverse ownership group. As in, you can't just have super wealthy industrialists owning all of these teams. But if you look at Indian society at this point in time, it's so bifurcated between the billionaires of these conglomerates, the Ambanis of the world and et cetera, et cetera. You know, the Tata family and then other people who you would want involved, but are going to have nowhere near the same amount of godlike resources that these other people have.

• 1:16:59Ben Gilbert?

  Coming out of the 90s, and it's starting to change already here in the mid 2000s. It's essentially an impoverished nation with a very thin slice of billionaires.

• 1:17:08David Rosenthal?

  Yep. So as you're setting up these franchises, you need to make them no brainer investments for whoever makes them. And you can't have this have and have not dynamic. So the first order of business, which is the easiest one, is stadiums. So Ben, you were mentioning teams running in the red in the English Premier League. This is, I think, beyond just overpaying for players, the biggest problem in the English Premier League, which is a lot of teams own their stadiums. And then the debt payments that you got to make on these stadiums are just crippling.

• 1:17:40Ben Gilbert?

  This is soccer for anyone who's not a Premier League fan.

• 1:17:43David Rosenthal?

  Yeah, exactly. You know, these are hundreds of millions, if not billion dollar edifices that you have these teams funding and owning through debt. And then the debt payments are just astronomical on top of astronomical player salaries that they're paying. So first thing that Lolit and Andrew Wildblood and IMG decide as they're setting up the league, no debt, no team is allowed to have debt. And de facto, no team will own their stadiums.

• 1:18:12Ben Gilbert?

  And the driving force of all this is the teams have to be profitable because we want to incentivize this diverse group of people to own them.

• 1:18:21David Rosenthal?

  Yep.

• 1:18:22Ben Gilbert?

  You need to make it so that if you are entering this auction for the first eight teams, you sort of have capped downside. So thing number one, make sure that they're not going to have insane stadium debt right out of the gate.

• 1:18:35David Rosenthal?

  Yep. Well, guess what? India already has pretty big cricket stadiums in all the cities that you would want to put franchises in. And who owns and controls those stadiums? The BCCI. The state cricket associations, which all roll up to the BCCI. So. Problem solved. Problem solved. Awesome. So next and most important is what happens to meteor rights deals for broadcasting the games and central sponsorships within the league. Are meteor rights deals negotiated by each team individually like they are in Major League Baseball? Or are they going to be negotiated centrally and split evenly amongst the teams like they are in the NFL? Obviously, there is a superior model here.

• 1:19:19David Rosenthal?

  And hey, guess what? The BCCI and Lolita are already in position to run this as a central model because they already do that for the international cricket rights of the BCCI that Lolita has just hugely successfully done the $620 million deal for. Yep. So, okay, we're going central rights and then we're going to distribute that central revenue from both sponsorships and TV rights equally to all the teams. But as Lolita and IMG are thinking about how are we going to maximize the TV rights deal that we'll do for this new IPL, this new domestic cricket league, they kind of

• 1:20:00David Rosenthal?

  have a problem from the success that they just had selling the international rights. And that problem is they already saturated the entire market of buyers for this form of entertainment being cricket broadcast in India. Yes, there are other broadcasters who would love to have these rights, but ultimately the end buyers are the consumer brands that are buying advertising against this programming.

• 1:20:29David Rosenthal?

  And the $620 million rights deal was so big that they just absorbed the entire market of cricket advertisers.

• 1:20:38Ben Gilbert?

  Yes. Basically, the broadcasters who now own those rights took on such a big liability that they're trying like crazy to get their sales force to go and sell as many ads as possible.

• 1:20:51David Rosenthal?

  Get Pepsi, get wireless carriers, car companies, et cetera, et cetera.

• 1:20:56Ben Gilbert?

  And keep in mind, this is something I didn't realize until, I mean, last night, like the end of my research. India's advertising market was historically small. So the entire total addressable market for advertising, not digital advertising, not mobile advertising, in 2008 in India was $2 to $3 billion.

• 1:21:16David Rosenthal?

  Right. And a huge chunk of that just went to international cricket.

• 1:21:21Ben Gilbert?

  So even to break even on these rights, those broadcast networks now need to go sell, what was it, $600 million?

• 1:21:29David Rosenthal?

  Yep, $620 million over four years. So call it 150-ish million a year.

• 1:21:34Ben Gilbert?

  So assuming it's a $2 billion ad market, they need to go sell and take up 5% of the entire advertising market per year, just advertising during cricket games.

• 1:21:46David Rosenthal?

  This is before the IPL.

• 1:21:47Ben Gilbert?

  Right. So that is a real liability. They are signing up even to break even to go sell 5% of the ads. They probably need to sell like 10% of the ads to turn it into a real business in the entire country for that year across all products. So this creates, to your point, this new problem for Lolit and the gang creating the IPL.

• 1:22:05David Rosenthal?

  Where are we going to get the money?

• 1:22:06Ben Gilbert?

  You now need to go find a whole new set of advertisers on top of that you've just sold to go and buy a new rights package to advertise into that new rights package.

• 1:22:16David Rosenthal?

  So Lolit actually has a great, amazing quote about this dynamic in the way only Lolit can speak. Here's the quote, "Being the big daddy for all sporting events in India, already with the BCCI bilaterals, which are the international matches bilaterals against other countries, all the money that was there in the market that brands had for spending was consumed. There were no more budgets left. We had sucked it all out by taking the price of BCCI in aggregate from a few million dollars to a billion dollars. I had already sucked that money out." And so when I looked at where are we going to get the money to make IPL work, I needed women and children.

• 1:22:58Ben Gilbert?

  God, it sounds diabolical in his words.

• 1:23:01David Rosenthal?

  He's spot on. It's exactly what the dynamic is.

• 1:23:05Ben Gilbert?

  Yep.

• 1:23:05David Rosenthal?

  And again, back to the now league dynamics of setting up this league versus BCCI just running the one international team. Again, look at the NFL. It is super important that your central revenue stream of your TV rights deals and your central sponsorships, that that be very, very large and that that be the most important revenue stream for your teams because that's what keeps competitive parity. The risk to the NFL's model is that the Dallas Cowboys or the San Francisco 49ers start making too much local revenue and then they're making more money than the other teams and all of a sudden the balance is out of whack.

• 1:23:39Ben Gilbert?

  Yep. Although theoretically, the salary cap keeps that in check.

• 1:23:43David Rosenthal?

  Well, we'll come back to that in a minute.

• 1:23:44Ben Gilbert?

  Okay.

• 1:23:45David Rosenthal?

  So you would think they're kind of between a rock and a hard place here. This is where Lolita and IMG's just incredible entrepreneurial genius comes in. They say, we are going to make the IPL into an entirely different product with a different target advertiser and sponsor than our international cricket.

• 1:24:09Ben Gilbert?

  By having a different audience.

• 1:24:12David Rosenthal?

  Yes. They need to attract women to view the game and then advertisers who are going to advertise products at women for IPL. So totally different market segments in terms of advertisers.

• 1:24:25Ben Gilbert?

  Essentially, you need to make the product one where if mom sits down or if your sister sits down and throws something on for the night, she's going to pick IPL versus whatever else she was going to put on.

• 1:24:35David Rosenthal?

  Yes. And whatever else she was going to put on were soap operas. So I'm going to read a quote here from Andrew Wildwood at IMG, who was Lolita's partner. There were a number of guiding principles behind how we put IPL together. One was that it should reflect the characteristics of modern India, so energetic, colorful, noisy, exciting. Two, it should not compete with the other forms of cricket, but rather, it should compete with other forms of entertainment. So that's evening, prime time view. Not only is India somewhat short in terms of supply of sports content, it's actually quite short in terms of general entertainment content.

• 1:25:17David Rosenthal?

  Apart from Bollywood, Lalat and I agreed that we didn't want to compete with other cricket. We wanted to compete with the soap operas. We therefore needed to create IPL in the image of a soap opera. So that if you didn't watch last night's episode, you're not in the conversation at the water cooler the next morning. Most households in India were single television homes and women controlled the remote control watching soap operas at night. The man of the house had little to say in what was seen. So in order to create a successful television product, we had to make something that women would be attracted to. And that's what caused us to bring in Bollywood.

• 1:25:56Ben Gilbert?

  Hmm.

• 1:25:57David Rosenthal?

  No other sports league in the world has done what IPL has done here. Today, IPL viewership is entirely 50/50 gender parity between men and women. And the reason that that is the case is because they bring Bollywood in to the ownership groups. So Bollywood and cricket were and still are the two biggest things by far in India, as Andrew Wildwood was saying, like there is no number three. It's Bollywood and cricket. And when it comes to Bollywood, there is one star that shines brighter than everyone else. So there's a quote from Madhesh Badali, who is the principal owner of the Rajasthan Royals and wrote a book about his experience. He writes, "Within Bollywood, there are B-listers, A-listers, double A-listers,

• 1:26:40David Rosenthal?

  and way above them all is Shah Rukh Khan, richer and more famous than Tom Cruise or Clint Eastwood and adored by the entire country." Turns out, he and Lalat had known each other since childhood.

• 1:26:53Ben Gilbert?

  Hmm.

• 1:26:54David Rosenthal?

  And there were few others within Indian cricket who could have convinced him to invest and participate so actively in the league. The profile that he provided as the tournament was launching was incalculable.

• 1:27:07David Rosenthal?

  So Lalit knows Shah Rukh Khan, biggest star in India. There's one problem, though. Shah Rukh is not a cricket fan.

• 1:27:15Ben Gilbert?

  No.

• 1:27:15David Rosenthal?

  He's into soccer.

• 1:27:16Ben Gilbert?

  Really?

• 1:27:17David Rosenthal?

  So Lalit goes to him and is like, I need you to be part of the ownership group.

• 1:27:22Ben Gilbert?

  No way. Because retroactively, I watched an interview with Letterman and he's making jokes about he was never good enough. Like, he's fulfilling a childhood dream. He was never good enough to play cricket, so he may as well own a team. That's totally retcon.

• 1:27:34David Rosenthal?

  All post facto retcon. Yes, yes, yes. Here's the real story. This is amazing. We should say, all the quotes from Lalit and the direct firsthand information from Lalit comes from a great series of interviews that he did on the Sports Entrepreneurs podcast that we'll link to in the sources. So Lalit, obviously, knows Shah Rukh. This is the perfect, you know, get him in on the ownership group. He's the brightest star in India. Have him at the matches. Oh, I could tune into a soap opera at night. Instead, I could go watch, like, the biggest star in India there, dancing on the field with all this incredible going on at the matches. But the problem is, he's not into cricket. So Lalit tells the story. Shah Rukh said, Lalit, I don't know how to do this. My passion is football. I have no idea how to run a team or do anything.

• 1:28:17David Rosenthal?

  I, being Lalit, said, Shah Rukh, let me handle it. I'll put a consortium for you together. You just need to write a check. He says, you're going to take my life savings. And it was his life savings in those days. I said, just write the check and we'll talk about it if you end up winning the team at the auction. This is the most incredible gangster-type stuff. So here's what Lalit did. Because he's friends with Shah Rukh, he knows that Nokia, the big handset manufacturer at the time, remember, we're still slightly pre-smartphone era here. We're in 2007.

• 1:28:50Ben Gilbert?

  Yep. And definitely pre-smartphone in India.

• 1:28:53David Rosenthal?

  A way pre-smartphone in India. Nokia is desperate to get Shah Rukh as their celebrity spokesperson in India. And for whatever reason, Shah Rukh is not engaging with them on it. So Lalit says, Shah Rukh, just trust me. Do I have your word that if I put a consortium together for you, you're in? He says, sure. While it turns around and he goes to Nokia and he says, I know you want Shah Rukh. He's not going to do it. But you can become the Jersey sponsor of his new team that he's about to have in this new cricket league that is going to be the biggest cricket league the world has ever seen.

• 1:29:31Ben Gilbert?

  Wait, wait, David, I have an alarm bell going off on my head. What do you mean it's going to be his team? That seems like something you can't promise when there's an upcoming auction and you don't know how the auction is going to end.

• 1:29:42David Rosenthal?

  Hmm, would it be, would it be? Yeah. Well, if he were to have this new team, he's going to be in the stands, he's going to be on the field, he's going to be wearing it, he's going to be singing, he's going to be dancing, he's going to be doing the music video introduction to the team in the league. TV cameras are going to be all over him and he's going to be wearing the shirt with Nokia right there in the front on the chest. And you can have all of that for the low, low price of $5 million per year in cash upfront.

• 1:30:17Ben Gilbert?

  Wait, is this to be the Jersey sponsor of one team?

• 1:30:20David Rosenthal?

  Yes.

• 1:30:20Ben Gilbert?

  Whoa.

• 1:30:21David Rosenthal?

  Jersey sponsor, one team, $5 million in cash. One team that doesn't exist, that theoretically might be won at the auction by Shah Rukh Khan, theoretically?

• 1:30:32Ben Gilbert?

  It is crazy, the amount of things that need to come together here. This is some major chicken to the egg stuff that does need to come together before a ball is ever bowled. The sponsorships, the media rights, the ownership group, an immense amount of money being promised in contracts, changing hands for a league that has never existed.

• 1:30:50David Rosenthal?

  India, baby.

• 1:30:51Ben Gilbert?

  And Lalit.

• 1:30:53David Rosenthal?

  And Lalit, I mean, he's an incredible entrepreneur. So Lalit goes back to Shah Rukh and he's like, all right, I got you, your team. So I'm going to set the minimum reserve price in the franchise auction at $50 million, but it's going to be payable over 10 years. And no matter what you bid and what you win, the first year's payment is going to be $5 million. So if you bid 50, it's $5 million a year for 10 years. You bid 100, it's $10 million over, you know, a year over 10 years on average, but I'm only going to charge you five in the first. I believe that's how it was set up.

• 1:31:26Ben Gilbert?

  I mean, on top of it, if you're trying to get people over the line.

• 1:31:29David Rosenthal?

  Just generally, yeah, make it payable over 10 years.

• 1:31:32Ben Gilbert?

  Right. The capital calls are the way to do it. I mean, it's kind of an incredible way to get someone to bid 50 to 100 million dollars for something that doesn't exist yet to say, "Well, in the first year, you're only out 5 million." And then there's a sweetener, which you're going to get to in the media rights with the way that they tier that down. But Lalit is a genius at structuring your own out-of-pocket money. I'm not sure how much risk you're actually going to be taking, even though all of these dollar signs are eye-wateringly large.

• 1:31:58David Rosenthal?

  Yes. Well, again, meteorites. Importantly, we can't get to the meteorites yet because, like we said, there's the problem of to sell the meteorites, you got to bring a female audience in.

• 1:32:07Ben Gilbert?

  And you got to prove that.

• 1:32:09David Rosenthal?

  And you got to prove that, which means you need Shah Rukh and you need Bollywood. So now he goes back to him. He's like, "I got you, your team. First year payments can be 5 million dollars. Guess what? Nokia is sponsoring your team for 5 million dollars. You are already in the black. You have a profitable enterprise. Day one."

• 1:32:24Ben Gilbert?

  Wait, is this after the auction?

• 1:32:26David Rosenthal?

  No, no, this is before the auction.

• 1:32:28Ben Gilbert?

  Got it. Okay.

• 1:32:29David Rosenthal?

  This is, you know, "I've got you, your team," in quotes here.

• 1:32:32Ben Gilbert?

  I see. Got it.

• 1:32:33David Rosenthal?

  So Shah Rukh's like, "Oh, wow. Okay, great. I'm in. That is an offer I can't refuse."

• 1:32:39Ben Gilbert?

  Wow, a free cricket team. Sure.

• 1:32:41David Rosenthal?

  So we're now fast-forwarding slightly to when the auction actually happens in January 2008. The auction happened. Shah Rukh won the team at 12 o'clock. At 3 o'clock, he had a signed agreement with Nokia to pay the 5 million for the front of the shirt for that year. So he had a wash and was laughing all the way that wouldn't have happened for anybody else. Amazing. Okay, so now back to the fall here when they're getting this all set up. Lalit can now go around to everybody and say, "Shah Rukh is in. We got Bollywood. And, oh yeah, Nokia's in. And they're in for 5 million dollars for jersey sponsorship of a single team."

• 1:33:15Ben Gilbert?

  So now they've set the price.

• 1:33:16David Rosenthal?

  This thing is for real. They have set the market. Exactly. Okay, so now that Shah Rukh's in, all the rest of Bollywood wants to come in because wherever Shah Rukh goes, you know, he's the leader of the pack.

• 1:33:27Ben Gilbert?

  Hmm.

• 1:33:28David Rosenthal?

  The whole rest of the community wants to come along, too.

• 1:33:30Ben Gilbert?

  He's unbelievably charming, by the way. This Letterman interview, he's like butter.

• 1:33:35David Rosenthal?

  Unbelievably charming.

• 1:33:37David Rosenthal?

  I'm trying to think of an analogy in like Hollywood. There is no analogy. So one of the top AAA list actresses, an actress named Priti Zinta, she ends up becoming the principal owner to buy another one of the teams. So this is even more amazing. Now you've got one of the top actresses who's coming in as the principal owner of a team. So now you've got not just Shah Rukh, who even alone, that would have been enough to draw in the women in the general entertainment audience and beat the soap operas. Now you've got AAA top list, one of the best actresses in Bollywood, who's also going to be a principal owner of one of the teams.

• 1:34:18David Rosenthal?

  He's also going to be at all the games, also in the stands, also going to have TV cameras all over her. And then it's just going to bring the whole circus. So Lylet says, "In one way, they are 90% of the market, they being Bollywood. Once I had their reporters and their people in there and all their stars starting to attend and everybody getting their makeup artists and their people and their endorsers and their brands, talking about them attending a match, it changed the whole thing around. Them being on the field sent a whole different message to the crowds who wanted to see these people, who could only otherwise see them on screen, but now they can buy a ticket or they can tune in on TV and they can come see the stars there out even far away every night of the week."

• 1:35:02David Rosenthal?

  And then the pièce de résistance, at least when designing this product for a general TV audience and competing with soap operas, Wildwood meant the quote about competing with them quite literally. So when IMG and Lylet go out to bring the bidding to the TV networks for this, they say, "Here's our schedule and time slot. We are going to have matches every night of the week, seven days a week." One match at a time at 8:00 PM. We're going to go directly up against the soap operas, which also run every night of the week at 8:00 PM. These are going to be three-hour matches, 8:00 PM to 11:00 PM.

• 1:35:46David Rosenthal?

  And it's going to be like Monday Night Football every single night of the week, only one match at a time for two months. And you're going to have all the biggest Bollywood stars there, all the triple-A-listers, who, by the way, will never act in soap operas because they're only acting in the big-time movies.

• 1:36:02Ben Gilbert?

  Right.

• 1:36:03David Rosenthal?

  We're going to have them in our soap opera. We've got them coming captive in the stadium with the cameras on them. And then, also, by the way, from a sports programming perspective, this is also going to be the best cricket in the world. So all the men who are already watching the international cricket, they're going to come here, too. The whole family is going to watch.

• 1:36:23Ben Gilbert?

  And for anyone who's a little skeptical of this, just think, in the US, how many people watched NFL games in the last few years just hoping to catch a glimpse of Taylor Swift when the camera goes to her for the, gosh, I don't know, 30 total seconds per game that it's on? I mean, the amount of newsworthiness that came out of, oh, here's what Taylor looked like when she was in the stands making an expression.

• 1:36:45David Rosenthal?

  Here's the jacket she wore.

• 1:36:47Ben Gilbert?

  Imagine if she's the owner of the team.

• 1:36:49David Rosenthal?

  Yes, imagine if Taylor owned the Chiefs. That's what is going on here. There really is no comp for this in sports, except for the single game of the Super Bowl. I think the Super Bowl is like this in the US, where it's a family event. Everybody watches. I mean, Jenny watches, my wife, she has no interest in football. She hates Sundays and Monday nights during the season when I want to watch football. Like, she could care less. But the Super Bowl, even though she has no interest in football, she will tune in to watch that, just because it's an event. She wants to see the commercials, she wants to see who's there, et cetera. This is what IPL is every single night of the week.

• 1:37:27Ben Gilbert?

  The IPL is like the Oscars, or it's awards season, but it's every night instead of just four Sundays.

• 1:37:33David Rosenthal?

  Yep, exactly.

• 1:37:34Ben Gilbert?

  Okay, so so far, you've got three pillars of competitive balance that they've managed to stabilize here, at least at the start.

• 1:37:42David Rosenthal?

  Yep, you've got, first, the stadiums and no debt, not owning stadiums, asset-light business model. Second, you've got a diverse ownership group, which is necessary, both to ensure that no one group has financial resources outside the system that can outspend any other, but more importantly, you really need Bollywood to be involved here to unlock the media budgets.

• 1:38:05Ben Gilbert?

  Yep.

• 1:38:06David Rosenthal?

  So then now, three falling into place here is the media budgets and being able to get a huge central broadcasting rights deal.

• 1:38:14Ben Gilbert?

  Yep, which gets evenly distributed.

• 1:38:17David Rosenthal?

  Yep, exactly. So here we are now by January 2008. All the pieces are in place to get that deal. Lolita and IMG are ready to take it out to the markets for bidding. Of course, per usual, there's just one problem, which is that Nimbus, remember, which had spent $620 million to buy the international cricket rights from BCCI, they're like, wait a minute, we already own this. We paid you $620 million over four or five years or whatever it was for the rights to all of BCCI cricket. This is what we're paying you for. IPL is a BCCI product. We should have this already.

• 1:38:55Ben Gilbert?

  Makes sense to me. I see the argument.

• 1:38:57David Rosenthal?

  Uh, and of course, you know, what do you think Lolita says? It's like, nope, IPL was not specifically laid out in the contract. And if you would like to sue me, you are welcome to go ahead and sue me. Good luck here, winning.

• 1:39:08Ben Gilbert?

  Of course, it wasn't specifically called out by either party. And so therefore Lolita gets to say, this is something different.

• 1:39:17David Rosenthal?

  And I mean, look, Nimbus is already making out, great, they went from being like a middling broadcaster that had no sports rights to all of a sudden having all of the sports rights. And yes, they paid a lot of money for it, but they're making a lot of money for it here, too. Which, this is always Lolita's argument of, I make money for everybody. And this just is how business in India gets done, or at least was how business in India gets done in this timeframe, you know, call it 2008. Sure, from our US, American and Western perspectives, we can look at this and be like, well, what was actually the letter of the contract? And shouldn't there be a process here? And does Nimbus have these rights?

• 1:39:56Ben Gilbert?

  And you just want to deal in good faith. You just want to assume that if someone knows that they're about to launch a huge new cricket league that's not included in your contract, and you're operating under the idea that it is included in your contract, what's in the contract doesn't matter as much as what you both feel like you're agreeing to. And it's a shame that if what you're relying on is, well, the letter of the contract says this, you know.

• 1:40:17David Rosenthal?

  Yep, exactly.

• 1:40:18Ben Gilbert?

  Okay, so Nimbus does not have the broadcasting rights. How do they get sold?

• 1:40:22David Rosenthal?

  So Nimbus, they're out. Star is still out because another amazing Lolik quote, he just doesn't let bygones speak bygones. He's talking about how he sets up the broadcasting rights auction. Rupert Murdoch, I had blacklisted. I would never allow him in due to what had already happened. So I blacklisted Rupert Murdoch.

• 1:40:45David Rosenthal?

  Amazing. I mean, this was 10 years ago that that happened. ESPN and Disney corporate says that they are interested in bidding on these rights separately from Star, which they're already at JV. And but they think this is so interesting, they're interested in bidding. Ultimately, though, they can't get comfortable enough to put an actual bid in. They say, we will broadcast it, over the top as Disney, soon to be Disney Plus in the coming years, but we're only going to do it on a rev share basis. We won't give you cash upfront, we'll just share advertising revenue with you. And obviously, that's not what Lolik wants because he needs the cash to have the central sponsorship guarantees, central media guarantees out to the franchises.

• 1:41:25Ben Gilbert?

  Right, because if no one's going to bid on one of these teams for 80 million bucks, unless somebody is guaranteeing you there is media revenue there.

• 1:41:34David Rosenthal?

  Exactly. So what does he do? He just runs the same playbook he's always been running, which he goes to another broadcaster who does not have a sports channel or sports presence. This time, it's Sony, which is the number two broadcaster in India at this point. But like Nimbus before and Disney before that did not have a sports channel. And he says, I will make you a sports channel. And by the way, this isn't just sports. This is sports and Bollywood and the greatest entertainment product that India in the world has ever seen.

• 1:42:01Ben Gilbert?

  Yep.

• 1:42:02David Rosenthal?

  And the minimum bid for this is 600 million for 10 years. But I am expecting a billion over 10 years, which would put it roughly on parity with the India international cricket rights that NIMBS had bought.

• 1:42:16Ben Gilbert?

  Hmm.

• 1:42:16David Rosenthal?

  The year before. So Sony's like, okay, we're interested. We see the value here, but 10 years is a big commitment for what is essentially a startup.

• 1:42:26Ben Gilbert?

  And we don't know that it's going to work. I mean, again, not a ball has been bowled.

• 1:42:30David Rosenthal?

  Exactly. Not a ball has been bowled. No teams have been established yet. There are no official ownership groups that have bid on franchises. Yes, this is a very compelling business plan, Lolita and IMG, but no domestic cricket league has ever proven valuable anywhere in the world.

• 1:42:45Ben Gilbert?

  Hmm.

• 1:42:46David Rosenthal?

  You know, there are domestic leagues in Australia, in England, in New Zealand, et cetera, but they're peanuts. You know, they're the minor leagues. So, fine. They're not going to justify a $100 million a year, billion dollar over 10 year meteor rights dealing. But they say, we are interested. So what we would like to do is we would like to buy just the first year at the same pro rata price as the $600 million minimum bid for 10. We'll pay you $60 million for year one. So, you know, it's something. It's money on the table, but it's not really going to send the signal of strength to franchise bidders that Lolita wants for the auction coming up.

• 1:43:29David Rosenthal?

  He really wants the 10 year deal to project stability and cash flow certainty that also, by the way, is going to match up the 10 year payable period of the franchise fees. That's why he wants 10 years. So he and IMG say to Sony, like, okay, we hear you. Hang on. They turn around and they go to a sports rights group based out of Singapore called World Sport Group. And it's basically just like the Nokia and Shah Rukh Khan deal. They say to WSG, World Sports Group, here's what we need you to do. We need you to bid and buy the 10-year media rights deal at the billion-dollar price that we want, but we'll only charge you $60 million in year one.

• 1:44:14Ben Gilbert?

  So then they would owe the remaining 940 over nine years?

• 1:44:18David Rosenthal?

  Exactly. And so you're going to put up $60 million in year one, and this is for the global rights, by the way, to IPL broadcasting. And what you're going to do is you are going to turn around and immediately sub-license the Indian domestic broadcast rights back to Sony, who is good for that $60 million on the table. Cash on the table. And then you, as your, you know, vig for facilitating this, you will have the rest of the world international broadcast rights that you can then go sell and profit from at your pleasure.

• 1:44:51Ben Gilbert?

  Oh, my God. But, I mean, it's kind of crazy. Sure, there's the rest of the world, but without that, what you're basically saying is, sign this contract, you'll be cash-neutral in year one, and then you will have a massive liability in years two through 10. Good luck. Hopefully, you can make money on it.

• 1:45:09David Rosenthal?

  Yes. Well, so here's the Lala quote. "I knew that once we had the TV deal signed, all the rest would follow." Remember, he's already set all this up with Shah Rukh Khan. You know, he's got the players, he's got Shah Rukh Khan, he's got the stadiums. He knows this is going to work if they can secure the bag on the TV money. So he says, "Although the deal was for $1 billion, I told the broadcasters I only needed $60 million in year one. Let's get the first year done. We'll worry about the rest later. I promise, if we don't achieve what we set out to achieve, I won't carry on the IPL after year one." So he's basically saying, "You have a gentleman's agreement from me that if this doesn't turn

• 1:45:51David Rosenthal?

  out like we think it does, I will pull the plug on the whole thing and you won't be on the hook, WSG, for 940 million in years two through 10."

• 1:45:59Ben Gilbert?

  So if you believe that, then it really is a free option for the international rights for year one.

• 1:46:06David Rosenthal?

  Exactly. Like I said, it's the same Shah Rukh deal. It's like, hey, I am finding you the money to cover your costs in year one. And you are in the black, you can make... Whatever profits you want from the rest of it.

• 1:46:20Ben Gilbert?

  Yep. Fascinating.

• 1:46:22David Rosenthal?

  Which, again, legality or to the Western view ethics aside, actually is brilliant. What an amazing way to start something from nothing.

• 1:46:32Ben Gilbert?

  Yep. Transactions create value. Let's throw that abstract idea out. When I pay you for something and you deliver me that good or service, value is created in the world by that transaction happening. Otherwise, it wouldn't happen. Otherwise, I'd say I'd rather keep my money. You'd rather keep your good or service. And so if you can make transactions happen, where it actually is in the interest of both parties to do it, where they otherwise wouldn't have happened, that is literally a value creative event.

• 1:47:00David Rosenthal?

  Totally. And what Lolita is architecting here is not just saying transactions. He's saying no risk transactions. I'm going to create no risk transactions where you have no downside and all upside. And he actually genuinely is able to align all the players here such that like, nobody is really holding the bag.

• 1:47:21Ben Gilbert?

  But there's an if. It's there is no risk to this transaction. If you trust that I'm going to pull the plug in year two if it's not working and you don't owe me $110 million a year for something that you're not getting value out of.

• 1:47:33David Rosenthal?

  Yeah, exactly. You need to have some level of trust here. Actually, a pretty high degree of trust.

• 1:47:39Ben Gilbert?

  That's essentially the trade. In exchange for telling the world that I trust you, I am getting a free option to sell the international rights in year one.

• 1:47:48David Rosenthal?

  Yep.

• 1:47:48Ben Gilbert?

  I am valuing your trustworthiness.

• 1:47:51David Rosenthal?

  Yep. Well, you could argue if you're WSG, whether you should have or should not have valued Lolita's trustworthiness. Because what he offers does end up coming to pass, just not in the spirit in which he offered it.

• 1:48:06Ben Gilbert?

  All right. So how's it go?

• 1:48:08David Rosenthal?

  Okay. So they announced the billion dollar deal with WSG and Sony. This is like a earthquake that hits the cricket world. No domestic league had ever remotely been valued from on a meteorites basis like this before. Not to mention, the league doesn't exist yet. There are no franchise owners, you know, et cetera. It's just a business plan. Then, on the back of that momentum, 10 days later, at the end of January, they launch the franchise auction. And like we said, the minimum reserve bid for each of the eight franchises is $50 million for the ownership groups. But the TV money is now in place. This is why it was so important.

• 1:48:44Ben Gilbert?

  Yep. So how much of the TV money are they entitled to? That will help me evaluate whether I should bid 50-plus million dollars for a franchise.

• 1:48:53David Rosenthal?

  So here is the prospectus that gets distributed out to potential bidders on these franchises. Of the central media rights revenue, the broadcast deals, like they've just done with WSG and Sony, and also the central sponsorship deals, 50%, one half of that, will get distributed out to the collective eight franchises to be distributed equally. But here's the kicker. Lalit is the master of manipulating time in his deals. That is what it will be at steady state. In the first year, it will be 80%, 8-0. So eight out of every $10 that are coming in centrally to IPL will get distributed out.

• 1:49:38David Rosenthal?

  Just happens to be eight teams, so each of the eight teams is going to get 10% of the total central money that's coming into the league. And then it's going to be a sliding scale over the next 10 years that's going to take it down to 50%. And so how does the math work out now? Okay, you already know what the TV rights deal is. It's $60 million in the first year, hard cash that's coming in. And then there's upside from sponsorships that Lalit might go sell, but he needed to get the franchises in place before he sells the sponsorships.

• 1:50:08Ben Gilbert?

  So that's about $5 million in cash to each team in revenue from that deal in year one?

• 1:50:14David Rosenthal?

  Bingo. TV rights alone, $5 million in cash coming in each year. And remember what he told Shah Rukh Khan? What's the deal on the franchise fees? Paid over 10 years, but I'm going to let you pay the effective minimum price in year one. Only $5 million in year one. Magically, it works out. You get a free franchise for the first year.

• 1:50:38Ben Gilbert?

  Amazing.

• 1:50:38David Rosenthal?

  Amazing, no matter what you bid.

• 1:50:40Ben Gilbert?

  You're probably going to be break even or close to it, even after paying players, which we'll get to very early in the life of your franchise.

• 1:50:48David Rosenthal?

  And guess what? Magically, once all the central sponsorships are sold, it ends up being $10 million per team distributed from the central revenue pool. Exactly the straw man that you are setting up, Ben.

• 1:51:01Ben Gilbert?

  You're giving me 10 and you're saying, no matter how much I pay for this team and year one, I only owe you five? That sounds like a great trade.

• 1:51:07David Rosenthal?

  And it's an asset-light business model. You don't have to invest any balance sheet dollars. There's no stadiums, no hard assets, et cetera. Well, if you are a smart sports investor, the first most important question you would ask next is

• 1:51:21Ben Gilbert?

  What's the salary cap?

• 1:51:22David Rosenthal?

  What's the salary cap? What about the players?

• 1:51:25Ben Gilbert?

  Which, here's a funny thing. In most leagues, what's the salary cap is the same as asking, on my P and L, what is the expense line for players? Interestingly, in the IPL, they don't pay the full salary cap. Plenty of teams are running around there with 75, 80, 90% of salary cap. And having a competitive team, it's actually a different question in the IPL of asking, what's the cap versus actually, what's my team expense going to be?

• 1:51:52David Rosenthal?

  Yes, and what makes the IPL unique relative to every other sports league in the world? What they uniquely innovate on this is the auction system. Players in the IPL are auctioned off, just like a Sotheby's auction, like a piece of fine art, or as the media say when covering it, like cattle and sheep.

• 1:52:17Ben Gilbert?

  It's like the draft, but with money.

• 1:52:20David Rosenthal?

  It is the draft with money, and it is absolutely freaking brilliant.

• 1:52:26Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Ligora, the agentic operating system that is redefining how the world's best legal teams work.

• 1:52:40David Rosenthal?

  Yep, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 1:52:56Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 1:53:11David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 1:53:35Ben Gilbert?

  And they recently launched Legora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 1:53:54David Rosenthal?

  And Legora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Legora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 1:54:24Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at legora.com/acquired and just tell them that Ben and David sent you. Okay, so David, I said the player auction is like the draft with money, but that's not really giving it enough credit. The NFL Draft did manage to turn itself into a huge ridiculous viewer spectacle. Big thing at Radio City Music Hall in New York and TV coverage.

• 1:55:06Ben Gilbert?

  But the player auction is both a live spectacle and a key piece to the way that they balance the whole league. And the rules for the annual player auction were nailed down even before the initial bidding for the teams happened, which is important to understand. You need to know before you bid on a team as an owner, how this whole auction process is going to work.

• 1:55:27David Rosenthal?

  It is tied as top priority for the most important thing to know, along with how the central revenue is getting distributed, because By far the biggest expense for any premier sports team attracting the best players in the world is player salaries. Put aside capital expenditures and potential debt payments for stadiums. That's not part of this league. And that makes sense, by the way, that player salaries should be your biggest expense because that is the most important raw ingredient to your business.

• 1:55:57Ben Gilbert?

  Yep.

• 1:55:57David Rosenthal?

  So different leagues have different ways of dealing with this in different sports. And we talked about this a little already, but I would say until the IPL auction innovation, what was generally regarded as the most effective way to deal with this is a hard salary cap. And that's what the NFL has. Every year you have a dollar amount that is the same for every team. You cannot spend more than that dollar amount. It is simply not allowed. And how high that dollar amount is, is the result of collective bargaining between the players' union and the ownership group.

• 1:56:31Ben Gilbert?

  Yep. Which is a very sane way to do it.

• 1:56:35David Rosenthal?

  Just taking the three big US sports leagues. NFL, clearly the gold standard, has the best way to manage competitive parity, which is the hard salary cap. Next is the NBA. They're somewhere in the middle. The NBA has a soft salary cap, which means, yes, there's a salary cap, but under some exceptions, you can go beyond it. And then there is an associated luxury tax with going beyond it. This is a big problem. Not as big a problem as baseball, which I'll tell you about in a sec. But the reason this is a problem is it all of a sudden introduces the amount of wealth that your ownership group has outside of the business of running the team and outside of the league now starts to play a factor in how much you can spend for players and

• 1:57:20David Rosenthal?

  starts to affect the competitive balance of the league.

• 1:57:23Ben Gilbert?

  Or maybe to put it in a more generic way, the amount of access to capital the ownership group has. Because whether or not they're wealthy, if they're in a market where you're in a team that can produce a lot of local revenue, well, then you can afford to pay for more expensive players out of your local revenue and pay the associated luxury tax fees.

• 1:57:42David Rosenthal?

  Now, in theory, the luxury tax should address this because you're then now redistributing some of that. Extra money that you're spending on salary and an equal amount to other teams. But in practice, it doesn't really work out this way. So if you look at competitive dynamics in the NBA versus the NFL, you get dynasties in the NBA like the Warriors or the Lakers or the Celtics or the Spurs a few years ago.

• 1:58:04Ben Gilbert?

  Yep, Cavs, Heat.

• 1:58:06David Rosenthal?

  Yep, the Heat. The Spurs are the anomaly because they're not in a major market. But all those other cities, all those other teams I was talking about, San Francisco, Bay Area, Los Angeles, Miami, these are big markets.

• 1:58:19Ben Gilbert?

  Right, the luxury tax sounds great in practice, but the existence proof that you are now naming shows the flaw.

• 1:58:26David Rosenthal?

  So that's the NBA, somewhere in the middle. Then you've got Major League Baseball. Major League Baseball has no salary cap at all. They do have what is called a quote unquote competitive balance tax, which sort of operates like a soft salary cap like the NBA. But in practice, it's a total sham. Because in the NBA, there are at least strict rules about when and how and how much you can exceed the salary cap by. In baseball, it's just like, hey, there's some tiers. And if you go into the higher tiers of excess over the competitive balance threshold, you pay more. But there's no cap on how much you can pay. You can pay an infinite amount and then just pay penalties to an infinite amount. So last year in 2024,

• 1:59:10David Rosenthal?

  nine teams in Major League Baseball exceeded the competitive balance tax threshold. By far, the worst offender were the Los Angeles Dodgers, who exceeded it by $100 million, which is just ridiculous. And then, of course, they won the World Series, like, duh.

• 1:59:29Ben Gilbert?

  Gee.

• 1:59:30David Rosenthal?

  Gee, how did that happen? And why did the Dodgers feel comfortable exceeding it by $100 million and paying such a huge luxury tax? Oh, guess what? They're in Los Angeles, the biggest media market in the US. And oh, guess what? Major League Baseball does not have central media rights. The Dodgers have their own TV deal in Los Angeles, which is by far the most valuable in the sport. So they've got the funding, as you said, the access to capital to do this. And of course, they're going to win the World Series. It's a big problem.

• 2:00:00Ben Gilbert?

  Yep. Why would anyone tune in to watch that?

• 2:00:03David Rosenthal?

  Totally. I mean, Sure. Then you've got also the separate problem with baseball of 162 games. Like, who cares about a game on a Wednesday night in the middle of the summer?

• 2:00:12Ben Gilbert?

  Totally. I tuned in to watch the ALCS and the World Series last year. It was great. I will say, the ALCS, I'm from Cleveland, the Guardians' total payroll was $106 million, playing the Yankees, who is $309 million. I mean, it's amazing the Guardians got close.

• 2:00:29David Rosenthal?

  Right. I mean, that's just such a stark example. You've got one team that has 3X the annual salary payroll of the other team. Like, there's just no way.

• 2:00:38Ben Gilbert?

  Yep.

• 2:00:38David Rosenthal?

  Spring training is more compelling than the regular season. At least, spring training is fun.

• 2:00:44David Rosenthal?

  And I say this as somebody who deeply loves baseball, but, okay. So that's at least state of the art in the big North American sports leagues. As I said, before the IPL comes along, NFL is the gold standard. I mean, they are the true any-given-Sunday league. Not true in any of the other North American leagues. European soccer is even worse. It's a very, very small number of teams in La Liga or Bundesliga or English Premier League that are winning.

• 2:01:11Ben Gilbert?

  Not to mention, they have relegation. If you perform badly, rather than adjusting the league balance, they just kick your team out of the league, which is great as an owner. Wow, my media rights and my everything is so valuable that, oh, actually, it all just went away because I'm out of the league entirely.

• 2:01:25David Rosenthal?

  Right. That is the ultimate disincentive to investment and ownership in a league. You definitely don't want that.

• 2:01:32Ben Gilbert?

  Yes.

• 2:01:33David Rosenthal?

  Okay. So Lolit comes up with this incredibly brilliant idea and says, you know what? Instead of having a salary cap, I've got something that I think might work even better. All these auctions that I keep running for all these media rights and sponsorships and everything, they work really, really, really well because they collapse everything down to a super-clear, one-time-in-the-moment transaction, and I can set the guardrails for minimum-maximum.

• 2:02:00Ben Gilbert?

  And Lolit, this man is so good at using the business laws of physics out there in the world to figure out what things are actually worth. He just makes sure every time somebody pays what it's worth. There's never any money left on the table on any side. It is very clearly does price discovery and makes the transaction happen for the exact right amount of money.

• 2:02:20David Rosenthal?

  I'm trying to remember, there's some episode we did recently where we referred to either the company or the founder as a value maximization pioneer.

• 2:02:28Ben Gilbert?

  Oh, value capture pioneer.

• 2:02:30David Rosenthal?

  Value capture pioneer, yeah. Lolit Modi is a value maximization pioneer.

• 2:02:35Ben Gilbert?

  Yes, it was Qualcomm, by the way.

• 2:02:38David Rosenthal?

  Ah, Qualcomm. So here's Lolit's quote on how the auction comes about. "I got the idea of the player auction because our family company had a partnership with Sotheby's Auction House in India, where you offer the item to the highest bidder. What's wrong with that? Great transparency. I also knew it would be the talk of the town, extremely controversial. That was a central part of my strategy." And then he says in a different quote, "Our number one pillar, I would call it the pillar of the IPL, was that we needed to have a department called controversy. And controversy allows us to get front page news. If you're controversial, good or bad, doesn't matter. As long as people talk about us, they hate us, they like us, great, no problem.

• 2:03:22David Rosenthal?

  They want to talk about us, let them talk about us, and we don't clarify anything."

• 2:03:25Ben Gilbert?

  I love it.

• 2:03:26David Rosenthal?

  Amazing. Okay, so back to the auction. Of course, this is going to be controversial. Like I said earlier, you know, the media is writing about this like, "The world's best cricketers auctioned off like cattle and sheep." But this ends up being the perfect economic system for all the parties involved because it gets around a key problem with salary caps, even hard salary caps with hard limits. They're always susceptible to dealings outside of the structure. So the NFL is really good about policing this, but that's not to say that this doesn't happen, either explicitly or implicitly. Let's say you're a player.

• 2:04:04Ben Gilbert?

  The NFL, by the way, has $255 million of salary cap available per team. So let's use this example. You're up to 245. You have two players left and you want to sign them both for $8 million. What do you do? You don't have room in the cap. You only have 10 million. You don't have 16 million available.

• 2:04:22David Rosenthal?

  Right. Now, you're setting up something that in practice, I think the cap probably would do its job. And there's enough policing to ensure that the low trust environment thing you would do would say, oh, great, sign both players for half and then go to them on the side and say like, oh, hey, by the way, these other companies that I control, they're going to do a sponsorship deal with you. Like you're going to become a celebrity endorser for them. And that's going to be another $3 million contract that you're going to get on the side.

• 2:04:46Ben Gilbert?

  Or look, you get to be an owner and a team at a low basis. And immediately you gained $3 million of on paper wealth or something.

• 2:04:54David Rosenthal?

  Point being, you can't police what happens outside of the sort of artificial construct of like a direct salary contract negotiation.

• 2:05:02Ben Gilbert?

  Yep.

• 2:05:03David Rosenthal?

  And the way I think this plays out in practice in the NFL is let's say you're a player, mid to late career. Travis Kelsey is a great example here. Travis Kelsey probably at some point in recent years, I don't remember when he was up for free agency, but could have gone somewhere else and arguably could have signed for more money than the Chiefs were willing to pay him. However, he has other business interests, especially now that he's got his podcast, you know, et cetera. Does he really want to be seen as the heel who's turning his back on the Chiefs?

• 2:05:37Ben Gilbert?

  Ooh, that was a good pro wrestling reference there, the heel.

• 2:05:40David Rosenthal?

  Exactly. Yeah, right, right, right. Hey, this is all a soap opera. It's all entertainment at the end of the day. Okay. Point being, there's all sorts of considerations about why a player might be willing to accept more or less money for a given team to play in that city or not to have his storyline affected in a certain way, et cetera. Auctions eliminate all of that.

• 2:06:01Ben Gilbert?

  So the point you're making here is if you have only $10 million of cap left, but you need 16 million, you might be able to use some emotional tactics or non-monetary tactics to get $16 million of value out of just $10 million of cap, depending on the relationship that you have with each player and what their unique situation is.

• 2:06:22David Rosenthal?

  Exactly. Then you get into all sorts of gaming of you're signing multi-year deals, right? And you can set the number of years of that deal that's negotiated, and you can set the dollar amount in each year and the cap impact in each year. This happens all the time.

• 2:06:35Ben Gilbert?

  Right. You trade money from one year or two another in order to free up cap space.

• 2:06:40David Rosenthal?

  Yep. Oh, I've got the perfect example. Quarterback deals, the biggest deals in the NFL. So obviously, they're going to want to make a lot of money, and that's going to have the biggest impact on your cap because they're by far the highest paid player on your team. At the same time, they also want to win a Super Bowl. And so a highly effective argument for a quarterback to take less money up front than they might otherwise is to say like, hey, we've got a window right now. We've got some star wide receivers. We've got a star running back. We've got some star defensive players. We'll give you a big contract and we'll guarantee your money out in the out years. But if you take less money in these early years to allow us to keep, to retain, or go get some key weapons for you in the parlance of the NFL, you know, some receivers for you,

• 2:07:24David Rosenthal?

  be a team player here, right?

• 2:07:26Ben Gilbert?

  Yeah.

• 2:07:26David Rosenthal?

  This stuff happens all the time. So the great beauty of the auction that Lolit sets up is that he sets both a maximum spend, a purse for every team coming into the auction, and a minimum spend.

• 2:07:42Ben Gilbert?

  And that minimum's like 75% of cap, right?

• 2:07:45David Rosenthal?

  75% of the maximum. And he sets the maximum at a level that keeps every team in the black. So he knows now what the central TV, right? And sponsorship dollars are that are coming in. He knows what the franchise fees that all the owners are going to be paying are. So he can basically mastermind all of their P and Ls. And he sets the maximum that you can spend in the auction such that every team is still going to be profitable. And then he also sets the minimum spend so that one team doesn't say like, oh, hey, I want to be super profitable and I'm only going to buy scrubs at the auction and have a really low salary base. Now, you might think, wait a minute, an auction. That seems like it's going to be way more susceptible to the stuff you were just talking about, David, with the salary cap and all the deals and incentives that are happening outside.

• 2:08:29David Rosenthal?

  No, it avoids all of that because it collapses everything down to a single point in time. Everybody in the same room with the same finite resources. It turns it into a monopoly game. It doesn't matter what happens outside the room. Sure, the owners could say, "Oh, my star player, you come play for me. I'm going to give you an endorsement deal worth millions of dollars." Sure, no problem. That doesn't get you any more resources to spend at the auction.

• 2:08:52Ben Gilbert?

  Well, and even if you and the player collude on a lower price to save cap space, it doesn't mean that the bidder at the table next to you isn't just going to bid a higher amount for that player. Everyone ends up going for their actual market value.

• 2:09:05David Rosenthal?

  You can collude all you want, and it will never work. Because everyone goes for their market value, because an auction is a point-of-time event that maximizes market value for each asset.

• 2:09:14Ben Gilbert?

  Right.

• 2:09:15David Rosenthal?

  And the order that players come up, they come up in lots, and then the order within those lots is randomized. And it is all architected in a way such that the only way for a team to gain an advantage over any other team in the auction is to have superior market intelligence, which has come to mean have superior analytics and superior player evaluation. So in the first year of the league, the Rajasthan Royals, who have the lowest salary, they actually don't hit the minimum salary and they get fined by Lolit. So the maximum salary that he sets for year one is $5 million, or maximum purse for the auction. And then that means the minimum purse is, I think, $3.3 million. The Royals don't even hit $3.3 million.

• 2:10:00David Rosenthal?

  They're so cheap.

• 2:10:01Ben Gilbert?

  Wow.

• 2:10:02David Rosenthal?

  They were the cheapest franchise that was sold at the franchise auction, too. So they get penalized by the league. They end up winning the championship because they come into the auction with better analytics than everyone else.

• 2:10:14Ben Gilbert?

  Amazing. I do think the one thing that's really important in this, though, to your point of collapsing it all into one single point in time, all contracts are three-year contracts, which really reduces the gaming.

• 2:10:27David Rosenthal?

  Well, I think that there's two important impacts of that. One, most important for competitive dynamics is you can do all the gaming, all the colluding, all the side deals that you want, that won't get you any more resources in the auction. And it also won't get you any superior information unless you were to do something really crazy, like collude with a player to say, "I'm not going to bid on you. You will go to another team and then I will pay you money to play worse for that team, like to throw matches." Which, hey, by the way, kind of might start to happen in the next couple of years here, as we'll see.

• 2:11:03Ben Gilbert?

  Aye.

• 2:11:04David Rosenthal?

  Story yikes. But you would have to get really dark to impact the competitive spirit of the game here. And then the other important impact that I think you were saying there, Ben, is because all of this collapses to a single point in time, it means the IPL and lolik can say all player contracts are standard contracts. There's no terms, there's no negotiations, every player will be at three years, and both sides have an option to pull out after each year. So the team could say after year two, "You're not playing good anymore. I'm cutting you. I'm going to send you back to the auction pool." Likewise, a player could pull out. And that also means no agents. So at this point in time, I think most IPL players probably do have agents, but agents just can't impact things that much.

• 2:11:47Ben Gilbert?

  Because it's a standard contract.

• 2:11:49David Rosenthal?

  Value discovery happens in the auction process, and then all the contracts are standard.

• 2:11:54Ben Gilbert?

  It's like what YC tried to do with the safe. It's just, look, you fell in the number. It's the cap. Whatever the cap is, is the cap.

• 2:11:59David Rosenthal?

  Exactly.

• 2:12:00Ben Gilbert?

  Really reduces the legal fees.

• 2:12:02David Rosenthal?

  Yep. So now you might say, "Well, wait, why would players agree to this? This seems really team and owner-friendly and not player-friendly."

• 2:12:12David Rosenthal?

  And indeed, if you look at the percentage of revenue that IPL players make in the IPL versus in the NFL, players are essentially getting 50% of the league's revenues.

• 2:12:23Ben Gilbert?

  In fact, almost every sports league now, it's on average, players get 50%, except on English Premier League soccer, it's something like players get 60% plus percent. But like we were saying, the economics of those teams are upside down and it's actually a bad thing for the league.

• 2:12:38David Rosenthal?

  Yep. In IPL, even today, I think players are getting 12 to 15% of the revenue of the league.

• 2:12:44Ben Gilbert?

  It's extremely low. Yeah.

• 2:12:46David Rosenthal?

  But they're thrilled. This is great for the players for two reasons. There's a carrot and a stick here. The carrot is before the IPL, they weren't making any money.

• 2:12:56Ben Gilbert?

  There was nothing. Yeah. This is constantly Lolit's argument. Yeah, I know my side is making out great, but guys, we're all making out much better than before.

• 2:13:04David Rosenthal?

  Yep. Before this, all the players were paid by their international boards, which meant, one, you had to make it onto the international team in your country. There was just one team. So there were such a small number of players that could even get paid at all to play cricket. Now, all of a sudden, you have eight teams within India. So it increases the pool of players. Two, there's just way more money to go around. Yeah, you're only getting 12, 15% of the revenue, but it's a really big pie. And then the third reason is the actual IPL season is very short and you are not locked up for the rest of the year. So it's like, oh yeah, you can come play in the IPL for the two-month window that is their season. You can then go play for your international team or other leagues

• 2:13:47David Rosenthal?

  around the world, do whatever you want the rest of the year, earn as much money as you want elsewhere.

• 2:13:51Ben Gilbert?

  Yeah. It's funny. My issue with the salary cap disparity, it wasn't that big a deal in 08, 09, 2010. If the cap was $5 million and each team is only making 10 million total from the central pool, it's actually a fine agreement. It's the fact that the media rights and the sponsorship rights have since blown up like crazy, but the salary cap is pretty moderated in how much it's allowed to grow. And interestingly, it's not an IPL thing. It's a BCCI thing. The BCCI determines those contracts with the players.

• 2:14:25David Rosenthal?

  Of course they do. So that's all the carrot incentives. And then that brings up the stick incentive, which is at least if you're an Indian player, the stick incentive is, hey, you're going to be happy with this or we're not going to let you play on the international team in India.

• 2:14:40Ben Gilbert?

  Yep, that's exactly right.

• 2:14:41David Rosenthal?

  But all that said, even if you were to have a better collective bargaining system, players were to make more in the auction purse relative to the revenues of the league, this would still be an incredibly beautiful system. Every other sports league in the world should adopt this. They won't because the existing systems that they all have are too entrenched, but this is the new optimal system for running a sports league. The last point to the structure of the auction is every three years, there's a super auction where everybody gets back in the pool and it all resets, except each team can retain four players.

• 2:15:18Ben Gilbert?

  Because you want that local fandom, those franchise players to stay franchise players.

• 2:15:23David Rosenthal?

  You want the equivalent of Tom Brady playing for the Patriots and building that brand equity for the Patriots. Importantly, though, there is still a salary cap that applies to that retained pool. That then does start to get a little harder to police and opens the door up for more side deals and other incentives, et cetera. But for the most part, it really is an incredibly elegant system here.

• 2:15:47Ben Gilbert?

  Okay, so here's the thing we glossed over, listeners, and if you've been paying a lot of attention, you might have caught it and expected us to address this. It's actually an enormous deal. We said, right now, the teams in year one get 80% of the central pool revenue, and over time, that goes down to 50%. The question you should be asking yourselves is, well, wait, where does the other 50% go? Because if you listen to our NFL episode, we said the NFL basically is a clearinghouse that retains $0 at the end of every year and redistributes 100% to the teams. What do you mean teams only get 50% of the central pool? The BCCI retains 50% of the central

• 2:16:28Ben Gilbert?

  pool revenue, which eventually gets huge. I mean, these media rights deals, these team sponsorship deals, I don't want to spoil the numbers yet, but that is one enormous difference between any other sports system, especially the big four in the US, and what we're talking about here, is there actually is a governing body for the sport in the country that sits atop the league.

• 2:16:51David Rosenthal?

  That takes half the money.

• 2:16:54David Rosenthal?

  You know, India.

• 2:16:57Ben Gilbert?

  It's crazy. It's totally crazy, but it's super not clear where the money goes. Definitely, they spend a lot of money on stadiums and upkeep and developing the game and hiring coaches.

• 2:17:08David Rosenthal?

  Yep. Here's the rationale. I will give you the argument. The role of BCCI is they are the stewards of the game in India. And as the largest and most important cricket-playing country in the world, de facto, they're the stewards of the game around the world. So what that money is intended to go to is two things. One, infrastructure, like you said, improving the stadiums, et cetera, et cetera. Spoiler alert for later in the episode, doesn't really go there right now. And then the second and arguably more important thing that the BCCI does with that money is player development. So still today, because the IPL is in its infancy relative to other established sports

• 2:17:50David Rosenthal?

  leagues, the teams and franchises themselves aren't set up to develop talent in the way that, say, Major League Baseball is the most developed on this front. If you're a Major League Baseball organization, you have minor league baseball teams around the country and academies around the world where you are signing and developing players.

• 2:18:10Ben Gilbert?

  You've built out a spring training facility.

• 2:18:12David Rosenthal?

  Yep. And not just that, but it is a 365-day, around-the-world, global operation where you are identifying, developing, preparing talent to play at the highest levels of the game. Right now, none of the individual teams, franchises themselves in the IPL are doing that. They are starting, but mostly that work falls on the BCCI.

• 2:18:37Ben Gilbert?

  Yep. I just call this out to say two things. One, as we now move forward in the story to the actual franchise auction and who is buying them, it's very different than buying an NFL team where you are entitled to 100% of 1/32 of the league-wide revenue. As a team owner in the IPL, you're entitled to 50% of the league-wide revenue.

• 2:18:59David Rosenthal?

  And does the BCCI need hundreds of millions, if not billions of dollars, to do player development and sort of nonexistent stadium infrastructure development? No.

• 2:19:07Ben Gilbert?

  And the second reason is to put the question back to you, David. You're harping on the fact this is the new gold standard, which I agree with. Do you need a BCCI in order to create this system? Do you need a parent governing body above the league? Because the league is just the thin agreement between a web of capitalist entities called teams. And then the question is, do you need some force above that?

• 2:19:33David Rosenthal?

  Oh, this is great. You're setting up a question I have at the end of the episode. So we will come back to that.

• 2:19:37Ben Gilbert?

  Great.

• 2:19:38David Rosenthal?

  So, okay, that's how the franchise auction works. That is in the information memorandum that goes out to all the franchise bidders for the franchise auction. I mean, basically, the net of this, as we've implied all along, is you're getting a pretty sweet deal, almost no matter what you bid.

• 2:19:53Ben Gilbert?

  This is one of these crazy situations in the world where it's not about how big of a finance brain you have to figure out, oh, is this a good investment opportunity? It's access. If one of these franchises is offered to you, you should have just said yes immediately and bid whatever everyone else was going to bid. This was a complete no-brainer. And the question was, did it get offered to you or not? That's the investment decision.

• 2:20:20David Rosenthal?

  Yes.

• 2:20:22David Rosenthal?

  Lolita and the BCCI would say, oh, no, no, no. Of course, it was open and transparent.

• 2:20:26Ben Gilbert?

  Anyone could have walked in.

• 2:20:28David Rosenthal?

  Sure. In practice, on the ground, almost assuredly, what you just said there is 100% true. So, minimum reserve auction price for the franchise auction is $50 million per franchise, which would be paid over 10 years, $400 million for the collective eight franchises. They end up selling for $724 million collectively. So there's a lot of bidding that happens.

• 2:20:52Ben Gilbert?

  So what, 90-ish million a team is the average?

• 2:20:55David Rosenthal?

  Yes. The most expensive franchise is the Mumbai franchise, unsurprisingly, being the biggest city where Bollywood is located, et cetera. That, gosh, really, you couldn't script this any better. The is bought by Mukesh Ambani, the wealthiest person in India and the CEO of Reliance for $112 million, highest bid in the auction, but not like that much more. The spread here is not that big between the highest and the lowest.

• 2:21:22Ben Gilbert?

  The way that the weighing machine of this market turned out is, hey, the teams actually are all pretty equally valuable. They did a great job balancing the league. That's exactly what I read to Ambani only paying 110 million.

• 2:21:36David Rosenthal?

  Totally. The central revenue stream, this is an incredibly well-architected league.

• 2:21:40Ben Gilbert?

  Yep.

• 2:21:41David Rosenthal?

  The cheapest franchise, as we said, is the Rajasthan Royals, which is bought by a UK investor consortium led by Manoj Badali, who's actually lives in the UK in London, for $67 million, so roughly half the price of the Mumbai franchise. Shahrukh Khan's group gets the Kolkata Knight Riders for 75 million. Priti Zinta's group gets the Kings Eleven Punjab for $76 million, suspiciously close in price to the $75 million Shahrukh Khan bid, but only $1 million more. Anyway, this, I think, is known at the time, one of the other board members of the BCCI, who would soon become the chairman of the BCCI, a gentleman named N. Shrinhavasan, who also is an industrialist who owns the Indian Cements

• 2:22:24David Rosenthal?

  Company, he buys the Chennai Super Kings for $91 million, despite also being a board member of the BCCI.

• 2:22:30Ben Gilbert?

  Hey.

• 2:22:31David Rosenthal?

  Hey, what do you know?

• 2:22:33Ben Gilbert?

  He's very interested in the development of the game.

• 2:22:35David Rosenthal?

  Exactly. Very interested. This is a huge, resounding success. And then, on the back of the franchise auction, a couple of weeks later now, the player auction actually happens and it goes exactly as predicted. Interestingly, MS Dhoni, who's a legendary Indian cricket player, he goes for $1.5 million in the auction, which was a huge spend. I mean, remember, the cap on the purse is $5 million. So you're spending one and a half of your five on one player.

• 2:23:06Ben Gilbert?

  And how many players per team?

• 2:23:08David Rosenthal?

  There are 11 players that play on the field at a given time. So, you know, One of your 11 playing players, you're spending 30% of your cap on. So anyway, all this, just like Lolita prophesized, huge headlines, just adds to the media buzz. And then, at least from a competitive parity standpoint, it actually works. So the Rajasthan Royals, despite being the cheapos, they bring better analytics than anyone else to the auction. They win the championship in the first year. Now, we should also point out that they have not won a championship since then in the subsequent 16 iterations of the IPL season. But today, there are 10 teams in the league and seven of the 10 teams have won the championship

• 2:23:53David Rosenthal?

  in the, what is it, call it 17 seasons that have been played so far.

• 2:23:57Ben Gilbert?

  Yep.

• 2:23:58David Rosenthal?

  And every single team has at least been runner up, second place lost in the championship game.

• 2:24:03Ben Gilbert?

  Sounds well balanced.

• 2:24:04David Rosenthal?

  So if you're trying to design a competitive parity league, this is a A++.

• 2:24:10Ben Gilbert?

  You can see why so many people tune in every single night in prime time and to march through end of May.

• 2:24:17David Rosenthal?

  Yep.

• 2:24:18Ben Gilbert?

  Okay, so the promise of all this sounds totally amazing. And we know it worked eventually, but most of the things that we study on this show that worked eventually kind of don't work at first.

• 2:24:28David Rosenthal?

  That is not the case here.

• 2:24:29Ben Gilbert?

  Yeah, what does the first season look like?

• 2:24:31David Rosenthal?

  I would say explosive right away is an understatement.

• 2:24:37David Rosenthal?

  As you might expect, given the incredible architecture of it and Lolita's force of will personality. This thing is a sensation, is all of the predictions that they made, the business plan, the soap opera, the every night, that this is going to be the biggest thing ever to happen to media in India. It's true and it's true right away.

• 2:25:03Ben Gilbert?

  Hmm. This never happens, never. The Rolex Daytona flop at first. The Birkin bag not heralded as anything special for like 20 years.

• 2:25:16David Rosenthal?

  I think it happened in part because it had to happen. Lolita was running such a high wire act with all of these year one deals like, hey, I promise you this is going to work like we all think in year one. And if it doesn't, I'll shut it all down.

• 2:25:28Ben Gilbert?

  Oh, right. And acquired as subject to heavy survivorship bias. So we don't cover the ones that-

• 2:25:33David Rosenthal?

  No, this was like a one shot opportunity.

• 2:25:36Ben Gilbert?

  There have been many other high wire act, one shot opportunities that we're just not talking about. The one that immediately comes to mind is Activision Blizzard selling the Overwatch League bids. I mean, that just didn't work right away and then proceeded to continue not working.

• 2:25:49David Rosenthal?

  Yes. To use a cricket analogy here, this would be like you are a batter facing the last ball of the game and your team is down by five runs and you need to hit a six to win. IPL hits a six.

• 2:26:04Ben Gilbert?

  But you've bet your entire life savings and reputation on the fact that a six is getting hit.

• 2:26:08David Rosenthal?

  If it hasn't been obvious enough from what we've been implying throughout the episode, the underworld of India and the mafia is definitely involved in all of this. And that is going to come up in a minute. So it might not be an exaggeration to say lives are being bet on this to some extent. So April 18th, 2008, first game, first match happens. The Royal Challengers Bangalore as the visiting team versus the home Kolkata Knight Riders, owned of course by the one and only Shah Rukh Khan. He's there. He's leading the parade into the stadium, doing the big opening event, broadcast around the country, every TV is watching.

• 2:26:51David Rosenthal?

  And in the game, one of the star players for the Knight Riders, the home Knight Riders, Brendan McCollum, interestingly here, international player, obviously not an Indian, but bought at auction by the Knight Riders. Hits 158 in that first game for the Kolkata Knight Riders to win. That number probably means nothing to many of you who are not cricket fans yet. I say yeah, because you might become one after listening to all this. And the people of you who do know cricket are like, oh yeah, that was one of the greatest moments of all time. To hit 158, which means be responsible for 158 runs in a T20 game where your entire team is only facing 120 balls, pitches, opportunities to score, and you personally score 158 runs

• 2:27:35David Rosenthal?

  on the balls that you face, that is an epic performance.

• 2:27:38Ben Gilbert?

  Wow. What is your sense of how organic it was that this was an incredible spectacle right out of the gate? I mean, it's hard to fake hitting sixes. There's a lot of rigging that would need to happen.

• 2:27:52David Rosenthal?

  There's a lot that would need to go into that. From the IPL's perspective, this could not be a better storyline. So the whole season basically goes amazingly. The average TV share viewership for the entire season is 4.9% of all active televisions in India are watching IPL, like on average.

• 2:28:17Ben Gilbert?

  In the first season?

• 2:28:18David Rosenthal?

  First season, yes. A lot of TVs. There is no single soap opera between 8 and 11 p.m. that is getting that kind of viewer share in India. It works. The final match, the championship match, is won in the last ball by the underdog Rajasthan Royals, the cheapos, in dramatic fashion. That final gets 10% viewership share of all TVs in India are tuned in to that final match. So it goes really, really, really well.

• 2:28:48Ben Gilbert?

  Oh, and we should say, one other element of this, there's a prize pool that we didn't talk about. So just to add one more great game design mechanic, the winner of the whole thing gets, I think, a $3 million grand prize in that first year.

• 2:29:02David Rosenthal?

  5% of the central media rights deal. And then that prize pool is shared among the teams that make the playoffs with the winner obviously getting the most.

• 2:29:09Ben Gilbert?

  Which is great, because that actually is one thing that is kind of a bummer about other sports leagues is you're not monetarily compensated for...

• 2:29:18Ben Gilbert?

  Winning it all. I mean, of all the playoff games, the Super Bowl, all that, you get to win by having a franchise that people love more and it sort of helps the durability of your franchise, but you don't financially win that year from that the way that you would if there was a prize pool of millions of dollars like how there is in the IPL.

• 2:29:35David Rosenthal?

  Yes, this is the great irony of the NFL that we learned after doing our episode and we talked about when we reprised it on the Armchair Expert podcast, which was super fun with Dax and Monica. Winning the Super Bowl is actually like a net negative economic event for an NFL team. Now, in the long term, of course, it's

• 2:29:52Ben Gilbert?

  Super positive.

• 2:29:53David Rosenthal?

  It's super positive, but for the actual fiscal year that you're operating when you win the Super Bowl, it's massively net negative.

• 2:30:00Ben Gilbert?

  And as we all know from the Dallas Cowboys, you don't need to win Super Bowls to make a lot of money.

• 2:30:05David Rosenthal?

  That's right. Jerry Jones, baby. Just to tie the bow on that, the reason why winning the Super Bowl costs you money is you gotta go play those games. Usually in the playoffs, best case scenario, if you've got the number one seed, you're playing home games all the way through, so you're not losing money. But usually you're playing some away games and then the Super Bowl is a de facto away game for everybody. But either way, you're not getting the same share of tickets and luxury suites that you usually would. And then the kicker on top of that, all that is, if you win, then the city makes you pay for the parade yourself. So, anyway. But in all seriousness, back to the point in the IPL, this is so well architected.

• 2:30:44Ben Gilbert?

  Yeah, they're solving every little pain point of other sports leagues.

• 2:30:47David Rosenthal?

  Super interesting. On the whole thesis, underlying the whole thing of like, can we get non-male viewers? Can we get women to watch this thing? Resoundingly, yes. In the first season, viewership was about 30 to 35% women. So, not 50/50, although today it is truly 50/50.

• 2:31:07Ben Gilbert?

  Yep.

• 2:31:07David Rosenthal?

  But that's up from zero. No women were watching international cricket before. I mean, no, I'm sure there were some. So, 30 to 35% is a huge win. Like I said, today it's 50/50. Not only does this mean that brand sponsors of commercials during the broadcast can be both general interest brands and brands focused at women, in 2019, the Kings 11 franchise, they actually, as one of their shirt sponsor logos, bring on a beauty brand.

• 2:31:39Ben Gilbert?

  Really?

• 2:31:40David Rosenthal?

  So this is the first women's focused brand advertising directly as a sponsor and as a jersey sponsor of a male sports team anywhere in the world.

• 2:31:51Ben Gilbert?

  Fascinating.

• 2:31:52David Rosenthal?

  And I think that's continued and probably a bunch more have come from it. There's a great passage in Minoj Badali, the principal owner of the Royals book, where he talks about this. He says, "The sight of Chris Gayle, monster hitter," Chris Gayle's one of the West Indies player, one of the legendary big, huge think like Barry Bonds of cricket, essentially. "The sight of Chris Gayle, monster hitter, sporting a woman's beauty brand across his right pectoral is quite something to behold. This is the definition of disruptive advertising, or, as one ad executive put it, a hardcore female brand on an alpha male chest. Sales of Lotus Herbal's SPF moisturizer were up 20% the year that they decided to sponsor the team."

• 2:32:34Ben Gilbert?

  Wow.

• 2:32:34David Rosenthal?

  It is a hugely important development. Absolutely. They totally unlocked a new market.

• 2:32:40Ben Gilbert?

  Wow. Okay, so that's the first season. Everything goes to plan and just kind of continues exponentially and perfectly up from there, right?

• 2:32:46David Rosenthal?

  Yes, monotonically. Up and to the right, straight line from there to today. No. Year one, incredible. Today, even more incredible times 20. In the interim, a whole lot of zigs and zags because the very next year, the whole thing almost blows up. All right, listeners, now is a great time to talk about one of our favorite companies, Statsig.

• 2:33:13Ben Gilbert?

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• 2:33:24David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is Just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 2:33:44Ben Gilbert?

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• 2:33:56David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 2:34:07Ben Gilbert?

  OK, so how does the IPL almost all fall apart in years two and three?

• 2:34:12David Rosenthal?

  Well, before it all almost falls apart in year two, in the off season after year one, Lolit, the BCCI, all the teams, all the owners, they're all riding high. This was an enormous success beyond anyone's wildest dreams. So I foreshadowed a little bit ago in the TV rights deal with World Sports Group and Sony that Lolit had given him his word as a gentleman that if this whole thing doesn't work, I'll rip up the deal and I'll, won't carry IPL forward. You won't be on the hook for the 940 million for the next nine years.

• 2:34:50Ben Gilbert?

  Yep.

• 2:34:51David Rosenthal?

  Well, this thing was such a success that all of a sudden 940 million for the next nine years is looking like a hell of a steal.

• 2:34:59Ben Gilbert?

  Which they should benefit from for signing a long-term deal.

• 2:35:02David Rosenthal?

  That's what you would think. Lolit rips up the deal.

• 2:35:06Ben Gilbert?

  Oof.

• 2:35:07David Rosenthal?

  Specifically, he engineers an excuse and says that Sony had been allowing Reliance's telecom division to advertise during their commercial breaks and that that violated Vodafone's exclusivity over everything IPL because Vodafone was a central corporate IPL telecom sponsor.

• 2:35:29David Rosenthal?

  He also alleges that he has evidence that Sony had been, at least in certain markets, cutting away from the game early to squeeze in extra commercials and not showing all the balls that were balled in an over. Who knows if that's true or not? I don't know.

• 2:35:46Ben Gilbert?

  Could be. Is that the kind of thing that means you tear up the contract? Or do you call them and say, hey, we know you're doing this. Please don't do that anymore?

• 2:35:52David Rosenthal?

  I suspect that had the IPL not been such a huge success, and Lollit were not looking to tear up the contract, he would not have caught these discrepancies, shall we say?

• 2:36:03Ben Gilbert?

  Yes.

• 2:36:04David Rosenthal?

  And of course, it's not till the end of the season that he points all this out. On the back of this, he strong arms Sony and World Sports Group into renegotiating a new deal that is going to be direct with Sony. They throw World Sports Group a bit of a bone. I think maybe they let them keep the international rights, but Sony is now going to directly do a 10-year deal with the IPL for $2.4 billion. So $240 million a year, quite a bit more than the $60 million that they had paid for year one.

• 2:36:38Ben Gilbert?

  So that's 4X the actual cash out per year, and it's 2.4X what the theoretical value of the contract was going to be on an annual basis.

• 2:36:49David Rosenthal?

  Yep. And really just tells you everything you need to know about how much of a success this is here, because Sony is willing to say, okay, fine, I'll let you rip up the contract and I'll pay you roughly 4X.

• 2:37:02Ben Gilbert?

  Right. Ultimately, they kept the same broadcast partner, but started charging them four times as much. And the broadcast partner was like, yeah, that's still fine. Clearly, it meant that there was a lot left on the table that Sony was benefiting from in year one because of how big of a success it was.

• 2:37:16David Rosenthal?

  As Lollit would point out, I made a lot of money for everyone.

• 2:37:20Ben Gilbert?

  Yep.

• 2:37:21David Rosenthal?

  So things start off well, I guess you would call that well, from IPL's perspective during the offseason. But then, as we're getting closer to the season launching in 2009, General elections are happening in India and elections are contentious. There are security issues and the government and various state police organizations start coming to the BCCI and the IPL and saying, hey, I'm not sure that we can promise security at the matches this season. And so they go back and forth. They're like, oh, are we going to move some of the matches in some of the states? And can some of the states provide security and not others? Ultimately, they decide, shoot, we can't hold this thing in India at all.

• 2:38:03Ben Gilbert?

  They go full NBA bubble, right? It's like the Disney bubble from COVID.

• 2:38:08David Rosenthal?

  Yes. So on very short notice, I think like a month notice, they airlift the entire tournament out of India and move it to South Africa. And then they reset up all the teams in South Africa. And they're the same team, same ownership, same player, but they just assign like, oh, Mumbai, you're now in Cape Town or you know, wherever. Reassign teams to all the cities and they restart the IPL and they play it in South Africa. Amazingly, it goes pretty well. And this actually becomes a great thing for the IPL because it's still very popular in India. It's broadcast back in India.

• 2:38:46Ben Gilbert?

  Yep.

• 2:38:47David Rosenthal?

  Local revenue for the teams and the stadium gate receipts and sponsorships for the local teams was never that much in India, still isn't that much to this day. So you're actually not sacrificing much revenue by doing this.

• 2:38:59Ben Gilbert?

  I think by our calculations, we tried to estimate a P and L for any given team. We're looking at something today like 66 million coming from a central pool and only like four-ish million coming from tickets. This is a TV product.

• 2:39:13David Rosenthal?

  Yes. And satellite signals work just fine from South Africa to India.

• 2:39:18Ben Gilbert?

  Maybe even better because it's close to the polls.

• 2:39:20David Rosenthal?

  Yeah, maybe. This really accelerates IPL becoming a global phenomenon among the cricket-playing and cricket-watching countries of the world. The fact that you can airlift the tournament out of India, put it in another cricket-playing country, have it be just as successful, have everybody be happy, you're only growing the game by doing this.

• 2:39:41Ben Gilbert?

  Yep.

• 2:39:42David Rosenthal?

  On the back of that, heading into season three, they decide, all right, time to expand. We're going to add two teams to the league. We're going to do a two-team franchise auction in the same model as the first one, except now we expect the prices are going to be much higher.

• 2:39:58Ben Gilbert?

  And I will say, only two teams does show some restraint. The NFL's 32 teams, the NBA, I mean, I could imagine a scenario where they think, hmm, let's double it. We're really feeling ourselves, let's at least do six, eight teams.

• 2:40:12David Rosenthal?

  Yep. They do only do two, that does show some restraint. The two franchises that they auction off are Pune and Kochi, and those go for $333 million and $370 million.

• 2:40:28Ben Gilbert?

  A little bit higher than 90.

• 2:40:29David Rosenthal?

  Now, central revenue is higher from the new broadcast deal that got renegotiated, renegotiated, quote unquote, with Sony, but they are on the hook for paying $33 million a year and $37 million a year.

• 2:40:45Ben Gilbert?

  Yeah, so if you believe that the team value should go up exactly commensurate with the annualized value of the TV contract, then this is the correct price. They just had a big payment that they owed the BCCI right out of the chute in year one.

• 2:41:00David Rosenthal?

  Yep. So unfortunately, these two new teams don't make it. The Kochi franchise goes bankrupt after their first season in the league, withdraws from the league. The Pune franchise makes it two seasons and then also withdraws from the league citing financial difficulties. And this is the first time really where the music stops playing for Lalit. And despite his incredible entrepreneurial success, he has made a lot of enemies along the way.

• 2:41:32Ben Gilbert?

  Yeah, and everything was up and to the right. Everyone was making money together to this point. You know, there were some collateral damage from these other people who had lost auctions or people who lost out on the media rights.

• 2:41:45David Rosenthal?

  But nobody had ever actually lost money yet.

• 2:41:47Ben Gilbert?

  Right.

• 2:41:47David Rosenthal?

  And now, for the first time, people are losing money. And this is when the knives come out for Modi.

• 2:41:53Ben Gilbert?

  Right. And so he's got all these enemies that were sort of dispersed, but never had any sort of real ability to come after him.

• 2:42:00David Rosenthal?

  Yep. This is their moment. So after the 2010 season, the BCCI suspends Modi from the BCCI board on 22 charges, including bypassing the governing council when making decisions, not following proper processes, bid rigging in auctions.

• 2:42:22Ben Gilbert?

  That's a big one. Who's going to get teams?

• 2:42:25David Rosenthal?

  Yeah. Pretty hard to say that didn't happen. Awarding contracts to his friends, accepting kickbacks on the broadcast deals.

• 2:42:34Ben Gilbert?

  Oof.

• 2:42:35David Rosenthal?

  And then the big ones. First, secretly engineering for members of his family and close associates to have initial ownership stakes in three of the original eight IPL teams. Now, another BCCI board member, Anshinabhasin, who I think by this time had become the chair of the board and was Lalit's sort of main nemesis on the BCCI board. He directly owned the Chennai Super Kings through Indian cement. So like, hey, pot calling the kettle black here.

• 2:43:05Ben Gilbert?

  Right.

• 2:43:06David Rosenthal?

  And then the last two are big ones that he's accused of. Betting on the league and money laundering. So I referred a minute ago to sort of the underworld of India being involved here. Gambling in India is illegal. Rit large back then and still to this day, it is illegal to gamble, full stop, in India. However, as you might expect, much like the movie Casablanca, you would be shocked, shocked to find gambling going on in this institution. There is a lot of money gambled on cricket in India broadly and on IPL specifically after it gets going.

• 2:43:43Ben Gilbert?

  In many cases through foreign bookmakers.

• 2:43:45David Rosenthal?

  Yeah, so much so, the statistic is that just trackable bets placed through, Ben, like you said, foreign bookmakers in countries where gambling is legal on IPL matches, I believe is something on the order of like $750 million per match.

• 2:44:02Ben Gilbert?

  It's big business.

• 2:44:04David Rosenthal?

  Huge. And that's just what is trackable legally in foreign countries. Clearly, there is also a big domestic bookmaking market happening here, too. It's just happening by the underworld, the mafia.

• 2:44:16Ben Gilbert?

  Yep.

• 2:44:17David Rosenthal?

  So the accusations are that Modi is participating in this and actively betting on games. Obviously, these are really serious accusations. The courts in India, the legal system gets involved, the police get involved. As this is all going down, Modi ends up leaving India and relocating to London, where he still lives to this day, and he has not set foot back in India since 2010, when this all goes down.

• 2:44:44Ben Gilbert?

  And in 2013, the BCCI bars him from India cricket for life. I mean, this thing that he like willed into existence, that he created billions of dollars of value for all these other people, he has been barred from.

• 2:44:57David Rosenthal?

  Yes. Modi, of course, denies all of this and defends himself vehemently to this day. You might ask, why did he leave the country then when all this went down? He actually recently said on a podcast, and has said this publicly in several news outlets, that the Indian mafia had placed a hit on him and were looking to take his life, as he put it, because he refused to allow match fixing to happen in the IPL. And obviously, the mafia wanted match fixing to happen. They're facilitating all this illegal betting that's happening. And who wouldn't be great if we could also fix the matches? Dark stuff.

• 2:45:31Ben Gilbert?

  Again, the stories you hear are so divergent that it's impossible to know. There's no reconciling. There's no truth that is converged upon.

• 2:45:40David Rosenthal?

  You know, as we started off the episode with, he's a colorful character. I think what really happened here and the major point is, hey, everything was working great as long as the music was playing and Lalat never lost money for any of his partners. And then that happened and then the knives came out.

• 2:45:56Speaker 02

  Yep.

• 2:45:56David Rosenthal?

  And it's interesting, quite interesting, all these very serious allegations that get brought up against Modi and then he ultimately, the BCCI decides that he did do them and bans him for life in 2013. Because the chairperson of the BCCI at this point in time and Lalat's great rival, who's one of the forces behind ousting him, is Anshinabhasin, the owner of the Chennai Super Kings via his family's business, Indian Cementz. Well, that very same season in 2013, the Indian police run a sting operation and bust

• 2:46:36David Rosenthal?

  members of two teams in the IPL, the Rajasthan Royals and the Chennai Super Kings owned by Anshinabhasin for spot fixing matches.

• 2:46:49Speaker 02

  Oof. That'll kill a league quickly if you don't get that in check.

• 2:46:53David Rosenthal?

  Yeah, I mean, already like all the controversy from Lalat kicking out the founder, the driving force behind all of it, that's not good. The two expansion teams folding. Now you've got a police bust of actual spot fixing happen. Now, not match fixing. Match fixing would be throwing the whole match. That would be a big operation. You'd basically need whole teams involved. Spot fixing, this is saying like, there's a betting line on what's going to happen in each over, like each set of six balls. And so saying like, oh, I'm going to pay this bowler on this team to bowl poorly in this over so that the batter he's facing will perform better or vice versa on the batter.

• 2:47:31Speaker 02

  Right. What's the real harm? It doesn't affect the outcome of the game.

• 2:47:35David Rosenthal?

  Exactly. Arguably, but massive trust destroying amongst the fanbase. Horrible for the league, especially horrible when it's the BCCI chairperson's team that is doing it. At first, N. Srinivasan denies everything, refuses to step down from the BCCI. This ultimately does become the best thing to happen to the IPL. I think if this hadn't happened and there'd just been the forcing out of Modi, things might really have gone sideways here. Because they got so much worse, this forces the government of India to step in.

• 2:48:14David Rosenthal?

  So the Indian Supreme Court steps in, they basically take over the BCCI. They spend two years investigating and restructuring everything. And then in 2015, they announce all their verdicts, they force N. Srinivasan to step down from the BCCI, they restructure the BCCI, they suspend the two teams that had been spot fixing, the Royals and the Chennai Super Kings for two seasons. Those teams are replaced for two seasons by temporary franchises based in Pune and Rajakot. And then the court institutes a whole new clean slate set of reforms and governance. And I've been referring a couple of times to Manoj Badali and the book he wrote in New

• 2:48:59David Rosenthal?

  Innings about his experience owning and running the Rajasthan Royals, the other team that was suspended for two seasons.

• 2:49:06Ben Gilbert?

  Hmm. Does he write about this in the book?

• 2:49:08David Rosenthal?

  Totally writes about this. This is his quote on, he says, "This was a critical moment in the IPL's evolution and also in India's evolution. The IPL was fast becoming a microcosm of the challenges of doing business in India writ large. For years, foreign direct investment into India had been slow. Historic concerns had included political stability, concerns about corruption, and the risk of retrospective legislation." And so the Supreme Court here stepping in and basically saying, "We're going to backstop and fix all of this. The IPL is by far the most visible industry where India is the global leader with the global most important business brand entity in the world.

• 2:49:52David Rosenthal?

  We can't be seen as like, this is a whole sham run by the mafia. We're going to clean it all up."

• 2:49:58Ben Gilbert?

  And they basically did. I mean, from here on out, it's a professional organization.

• 2:50:03David Rosenthal?

  Totally. So another quote from our good friend of the show here, Ed Cowan, who is a investor at TDM Growth. We did a great ACQ 2 episode with them a couple of years ago. Ed was the perfect person for us to talk to during this episode because not only is he a good friend of the show, he is a former Australian professional cricket player.

• 2:50:23Ben Gilbert?

  Who was coming up right around the time the IPL was started.

• 2:50:27David Rosenthal?

  Was actively playing right through all of this happening. And Ed did the Business Breakdowns episode about the IPL, which has been an amazing resource for us. And we'll link to the show notes. It was a great, great episode. And then we talked to him afterwards. So here's Ed's quote about this. "In many ways, the IPL was a bit of a bellwether for foreign investment at scale. And the government realized that it was in their best interest to promote a vision that proper governance really was at the forefront of the new, modern India. And it was important for people to be able to invest in India. And in many respects, the current structure where we have Redbird or CVC, big institutional investors in the IPL, which we will get to in just a sec, that wouldn't have been possible without the new governance structures that were put in place circa 2015 by the Supreme Court."

• 2:51:12David Rosenthal?

  I mean, this whole thing almost went down the tubes. Like, it was this close. And the Supreme Court saved it.

• 2:51:18Ben Gilbert?

  You had something on the order of, at the time, $4 or $5 billion of enterprise value across all the teams that almost went to zero.

• 2:51:25David Rosenthal?

  Yep. But the more important thing, though, is, yes, there's the value and money aspect of it, but it's India's reputation. There are other industries where India is a global leader, but they tend to be more back office type industries, like outsourcing, like Infosys, Wipro, et cetera. You look at the biggest companies in India by market cap, and they are all either global outsourcing companies, back office type companies, or purely domestically focused companies. So like Tata, Reliance, et cetera. These are huge, huge conglomerates. But especially at that point in time, they're not particularly active as global leaders outside of India. The IPL has kind of, against all odds, become like India's national champion here.

• 2:52:07Ben Gilbert?

  That's such a great point.

• 2:52:08David Rosenthal?

  That's kind of a crazy statement to make, but it's true.

• 2:52:12Ben Gilbert?

  Wow, yeah.

• 2:52:13David Rosenthal?

  So, again. Horrible moment for the league, for the owners, for Modi, for Srinivasan. But frankly, kind of necessary to clean this all up and make it ironclad enough that global private equity firms and global media companies in the ensuing years continue to come in and invest in this league.

• 2:52:33Ben Gilbert?

  All right. So catch us up then through the 2010s. There's another media rights deal, right?

• 2:52:39David Rosenthal?

  Yep. So 2017, after the dust has settled on all this, the original meteorite deal is finally up, or the renegotiated, quote unquote, original meteorite deal.

• 2:52:50Ben Gilbert?

  The 10-year Sony redone deal.

• 2:52:52David Rosenthal?

  Yes, it's finally up and Modi is no longer in the driver's seat here. So who comes in and does the deal? Rupert Brodak, star.

• 2:53:04Ben Gilbert?

  Banana.

• 2:53:05David Rosenthal?

  Rupert finally, finally, after, what are we now, 10, 11 years in, 12 years in, comes back to Indian cricket and does a $2.5 billion five-year deal. So twice the value of the renegotiated Sony deal.

• 2:53:24Ben Gilbert?

  So $500 million a year media rights.

• 2:53:27David Rosenthal?

  Yep. The renegotiated Sony deal was 2.4 billion over 10 or 9.

• 2:53:33Ben Gilbert?

  So we've gone from 60 slash 100 to 250 to now to 500 a year.

• 2:53:39David Rosenthal?

  Yep. So that happens in the first half of 2017 and then the other shoe drops, December 2017, Disney acquires all of 21st Century Fox for, I think, about $70 billion, inclusive of Star and all the operations in India and this contract. Now, obviously, that deal was about way more than just this contract, but this was an important piece of it.

• 2:54:03Ben Gilbert?

  It's so funny that it ends up being 15 years later, 20 years later. I mean, recall all the way back, there was the India subsidiaries of Fox and Disney merged and got the cricket deal pre-IPL. And now you have Disney and Fox globally merging.

• 2:54:23David Rosenthal?

  And IPL was a big part of this because there's something else that happens in India the year before in 2016, which is Reliance launches Reliance Gio.

• 2:54:35Ben Gilbert?

  Yes.

• 2:54:36David Rosenthal?

  Now, I remember when this was happening. Facebook invested $5.7 billion for a 10% stake in this new subsidiary of Reliance. What is Reliance Geo? It is a smartphone data provider. It's a telecom wireless data service for smartphones in India. And Mukesh Ambani and Reliance Geo basically slashed the price of data plans to effectively zero in India. So before Reliance Geo launched in 2016, smartphone ownership in India was de minimis. 30 million handsets was the active install base.

• 2:55:15Ben Gilbert?

  Wow. Out of 1.4 billion people.

• 2:55:18David Rosenthal?

  Yeah, so it's only just the upper class.

• 2:55:21Ben Gilbert?

  And 2016, that's nine years after the iPhone came out and like five or six years after it became the de facto standard computing platform in the US.

• 2:55:29David Rosenthal?

  Yeah, and there's already cheap Android everywhere. This is like the version of India not getting television until the 90s. We're talking 2016 here, and smartphone penetration is still basically zero. And the reason was because data plans were still really expensive.

• 2:55:41Ben Gilbert?

  Mm hmm.

• 2:55:41David Rosenthal?

  Vodafone, the other carriers, they were pricing data in India at the same level as data in the US. So it was just totally inaccessible to the population.

• 2:55:52Ben Gilbert?

  Crazy.

• 2:55:53David Rosenthal?

  Reliance Geo comes in, 30 million handsets when they launched in 2016. Fast forward six years to 2022, 800 million installed base of handsets. So this is the other thing that completely turbocharges IPL and is why IPL and IPL rights become so important for Disney. Because smartphone adoption, mobile adoption is happening in India. What is Disney and Bob Iger's number one strategic priority during this period?

• 2:56:24Ben Gilbert?

  Globalization.

• 2:56:26David Rosenthal?

  Well, not just globalization, that's always a priority, but- Disney Plus.

• 2:56:29Ben Gilbert?

  Oh, right.

• 2:56:30David Rosenthal?

  And what are you going to count in Disney Plus? I mean, Netflix counts their subscribers all over the world as Netflix subscribers.

• 2:56:36Ben Gilbert?

  Iger has those three big principles in his book. The first was around the best IP in the world. The second was around going global. And the third was about technology leadership and owning our distribution platforms.

• 2:56:49David Rosenthal?

  Hundred percent. And so Disney Plus is the major strategic priority. You've now got Star that has the digital and terrestrial TV rights to IPL, which is the biggest driver of media consumption in the country by far, not even close. Disney's trying to grow and juice Disney Plus subscribers. What is the very best thing you could do? Get IPL rights and stream them on Disney Plus. Boom, there you go.

• 2:57:16Ben Gilbert?

  So 500 million a year for five years, starting in 2017. That goes up until there's a new deal that comes online in 2022.

• 2:57:27David Rosenthal?

  Yep. Before that, though, the other piece of this Star deal, new deal for IPL, was because A, it was a much bigger investment and Star and Rupert were dying to get back into Indian cricket. And now you've got this mobile streaming opportunity happening, especially once Disney acquires the company. They invest a lot more in production values for these IPL broadcasts. All the stuff that you see in North American or European sports broadcasts, they do. They mic up the players, they put mics on the wickets, they add graphics packages.

• 2:58:03Ben Gilbert?

  There's way more cameras. There's like little cameras all over the place on the field. The, I don't know if it's called an umpire or referee, but someone wearing a hat has a little camera on the top of their hat.

• 2:58:12David Rosenthal?

  Yep, exactly. Remember, the broadcasters before this, for all of Lolit's entrepreneurial success and talent, he was getting broadcasters that weren't experienced in sports to come do this. This was Nimbus's first sports entree. This was Sony's first sports entree in India. You have Star, Fox, News Corp, Disney coming in now and taking over. Like, there's gonna be a whole new level of professionalism coming in. They also start marketing the matches differently. So like, there's always been the incredible soap opera story to IPL, and that's the appeal to at least half the country.

• 2:58:51Ben Gilbert?

  Oh, come on. These storylines are so appealing to men, too. Just look at college football. Look at the NFL. It's the storylines. It's these dramas. It's the soap operas that captivate us.

• 2:59:00David Rosenthal?

  Any NFL football fan who pretends that it's not a soap opera is lying to themselves.

• 2:59:04Ben Gilbert?

  Oh, the ESPN alerts during the offseason of who's signing where and yeah.

• 2:59:09David Rosenthal?

  Totally. So Star starts marketing matches differently. They have like rivalry week. They basically take the playbook from all the best practices of Fox and ESPN all throughout the world and bring them here to the IPL. The other thing they do is the dynamics of language in India are super interesting. So English is the lingua franca of the country, but it is almost everyone's second language.

• 2:59:37Ben Gilbert?

  Hmm.

• 2:59:38David Rosenthal?

  There are a whole set of big languages that are primary, different languages spoken by different regions in the country.

• 2:59:47Ben Gilbert?

  And Hindi is the biggest of those, right?

• 2:59:48David Rosenthal?

  Hindi is the biggest, yeah. So the official languages of India are both Hindi and English. And can't just be Hindi because then you're leaving out a huge portion of the population that doesn't speak Hindi. So this is amazing for all the dynamics here at play in these international companies and foreign direct investment. But not everybody speaks English and it's the second language. So remember, the whole genius of the IPL is that there's only one game going on at a given point in time. So Star takes the feed from whatever the live game is. They set up a central studio in Mumbai with eight different floors and eight different anchor desks who have commentators commentating in the eight biggest Indian languages that are then rebroadcast

• 3:00:32David Rosenthal?

  out to those regions in the primary local language.

• 3:00:35Ben Gilbert?

  And this one game at a time thing is so genius, too, because the way that they make the whole thing work with this player auction, the players are kind of moving around a lot. So you're a fan of a team, but your favorite player might go somewhere else. And so if you're a fan of a player, you're kind of fans of multiple teams. So what ends up happening is You end up becoming a fan of the league. You have a team you like. You have players you like, but since the players are kind of everywhere, you just like IPL, period.

• 3:01:04David Rosenthal?

  Yes, there is definitely some affinity to your, you know, if you live in Mumbai, you probably have affinity for the Mumbai Indians, but you probably have more affinity to Virat Kohli or MS Dhoni or et cetera. You're not going to miss those games.

• 3:01:19Ben Gilbert?

  Yes.

• 3:01:20David Rosenthal?

  And you may not speak that primary language there. In fact, you probably don't.

• 3:01:24Ben Gilbert?

  Yep.

• 3:01:25David Rosenthal?

  So all of this works incredibly well. You've got the major tailwind of reliance geo. You've got the professionalization. You've got the local languages. The 2019 IPL final match is broadcast on 17 channels across the country in different languages plus digital over the top. The final viewership numbers, best estimates are in 300 to 400 million unique viewers that are watching the 2019 IPL final. And just for context on that, the most recent 2025 Super Bowl was the biggest Super Bowl ever. And I think de facto, that makes it the biggest broadcast TV event in US history.

• 3:02:08David Rosenthal?

  Ben, do you remember what the viewership numbers were on this? 2025 Super Bowl comped against the 2019 IPL final.

• 3:02:17Ben Gilbert?

  You told me this recently, 120, 130, something like that?

• 3:02:22David Rosenthal?

  Yep, 138 million.

• 3:02:24Ben Gilbert?

  Wow.

• 3:02:24David Rosenthal?

  Viewers for the biggest US TV event in history. Back in 2019, there were already 300, 400 million people, over twice that, watching the IPL final.

• 3:02:36Ben Gilbert?

  And it would only grow from there. In 2022, the IPL regular season uniques across the season were 361 million. 2023, that would grow to 505 million.

• 3:02:49David Rosenthal?

  Woo.

• 3:02:50Ben Gilbert?

  And then last year, it was reported that on streaming alone, 620 million people watched it.

• 3:02:57David Rosenthal?

  I mean, so you're talking about close to half the country is watching the regular season.

• 3:03:03Ben Gilbert?

  Yes.

• 3:03:04Speaker 02

  Yes.

• 3:03:05David Rosenthal?

  This thing is so big.

• 3:03:08Speaker 02

  On streaming, so presumably, once you put TV in there, too.

• 3:03:11David Rosenthal?

  Yep. That was the big bet and the payoff of the Reliance GO entering the data market in 2016 and smartphone adoption just exploding in India.

• 3:03:22Speaker 02

  Right.

• 3:03:22David Rosenthal?

  So then 2021 IPL does expand successfully this time. There are two new teams sold at auction. The Gujarat Titans, which are acquired by the big British private equity firm, CVC, for $750 million.

• 3:03:39Speaker 02

  That's the new high watermark. Before that, I think it was, what, 300 million?

• 3:03:43David Rosenthal?

  Well, it's the new high watermark for a minute because the other team, the Lucknow Supergiants, are bought by a domestic investor group for 950 million. So just a hair under a billion.

• 3:03:54Speaker 02

  10x off the original purchase price of the teams in 2008.

• 3:03:57David Rosenthal?

  Now, the payment terms are paid in equal ratable installments over 10 years. And then this time, those payments are redistributed to the other existing eight teams in the league.

• 3:04:09Speaker 02

  Oh, really?

• 3:04:11David Rosenthal?

  Because the new teams coming in are diluting the central meteorite values.

• 3:04:14Speaker 02

  In full or 50% of it?

• 3:04:17David Rosenthal?

  That's a good question. I don't know if it's 50% BCCI, 50% of the teams. Either way, the BCCI is still taking their 50% cut. However, post the Supreme Court reforms is a much more buttoned up organization.

• 3:04:30Speaker 02

  Makes sense.

• 3:04:31David Rosenthal?

  Also, in 2021, Redbird, which is a US, New York City based, sports focused private equity firm, they invest in the Rajasthan Royals. So we've come so far here that the Rajasthan Royals, the cheapo franchise in the beginning, had the original foreign direct investment from the UK. Then were part of the spot fixing scandal, gets suspended for two years. Now you've got one of, if not the biggest, sports private equity firm in the world. I think Redbird is like a $10 billion assets under management firm, coming in and investing in that franchise in the IPL.

• 3:05:07Speaker 02

  Yep, global stage.

• 3:05:08David Rosenthal?

  And really to speak still, like, the Supreme Court cleaning things up in 2015 was absolutely huge for the IPL.

• 3:05:15Speaker 02

  Yep.

• 3:05:16David Rosenthal?

  So all that takes us to summer of 2022, after the IPL season.

• 3:05:22David Rosenthal?

  The Star deal is up.

• 3:05:24Ben Gilbert?

  Time for a new rights deal.

• 3:05:26David Rosenthal?

  Time for a new rights deal. And the BCCI signs not one, but two deals. Separate deals for terrestrial television and digital streaming.

• 3:05:37Ben Gilbert?

  They break it into a two by two matrix. They say there's international and there's domestic. And then there's streaming and there's TV.

• 3:05:44David Rosenthal?

  The international deals are small.

• 3:05:46Ben Gilbert?

  Now, who wants to bid on which one?

• 3:05:48David Rosenthal?

  So the big ones, the domestic deals. Star re-ups on the TV deal for just over $3 billion for five years.

• 3:05:57Ben Gilbert?

  Yes, for the five years, Disney Star re-ups their deal, but they just get the TV rights.

• 3:06:03David Rosenthal?

  Right.

• 3:06:04Ben Gilbert?

  And it is just on the Indian subcontinent for 3.1 ish billion.

• 3:06:09David Rosenthal?

  So that's only 500 million more than the two and a half that they did the previous time in 2017, but that was both TV and streaming. This is 3 billion just for terrestrial TV.

• 3:06:22Ben Gilbert?

  Yes. Now, the other side of this, the digital rights, the streaming is Viacom 18 for another 3.1 ish billion.

• 3:06:32David Rosenthal?

  Yeah, actually slightly more than the TV deals.

• 3:06:36Ben Gilbert?

  Ah, do you know who Viacom 18 is?

• 3:06:39David Rosenthal?

  Oh, boy, do I ever know who Viacom 18 is. This is a huge part of the story. Viacom 18 is a joint venture between Paramount and Reliance.

• 3:06:50Ben Gilbert?

  Yep. So locally, that ends up being broadcast on what they call Geo Cinema, which is their streaming service.

• 3:06:56David Rosenthal?

  Yep. When you say broadcast, digital, over the top, Geo Cinema on smartphone apps.

• 3:07:01Ben Gilbert?

  Now, we're just talking about the Indian subcontinent here. It's quite interesting that they're about the same price, the streaming and the TV. The streaming is small but growing way faster. And the TV is very large but flat. And it's really interesting. I think Disney wanted to also go for the streaming rights. But I think the assumptions you have to make about the growth and monetization potential of streaming are a pretty big leap to say, yeah, they're worth the same as TV now, which has a lot of hungry advertising customers standing there with cash now saying, I want to advertise on this product, whereas you're really betting on the next four or five years on streaming to materialize. But who better to bet on that materializing than Reliance Geo?

• 3:07:46David Rosenthal?

  This is enormous. Disney. It was a real, real problem that they lost the digital rights in the bidding here. Remember, Disney Plus is the cornerstone of Disney's strategy at this point in time under Iger. Iger has come back.

• 3:08:05Ben Gilbert?

  That's right. 2022 was the return of Bob.

• 3:08:07David Rosenthal?

  He architected this before he left. He's now come back from retirement and Disney Plus has gone from the most incredible, greatest strategy, greatest thing from sliced bread to this total albatross hanging around the company's neck. And now they lose IPL digital streaming rights. So the next quarter, when Disney reports earnings, remember Disney Plus has been the cornerstone of the company's strategy for the last five, six, seven years. And it had been growing. It had been this great success story, success story through COVID. It's now up to, people are talking about, is this a true competitor to Netflix? Disney's past 150 million global Disney Plus subscribers. This turns the tide. I think it's the first quarter where they have a net subscriber loss. I think of what, like

• 3:08:52David Rosenthal?

  two, three million Disney Plus subscribers that they lose on a net basis?

• 3:08:56Ben Gilbert?

  Something like that. You can very clearly see in this chart, though, it's growing and growing and growing every quarter. And then it starts this five-quarter slide right there in 2022. And the interesting thing is, if you break it out, the Disney Plus core actually does keep growing, but Disney Plus Hotstar takes this huge hit and starts contracting.

• 3:09:16David Rosenthal?

  That's right. They start breaking it out, I think, at this point to be like, oh, no, it's India.

• 3:09:20Ben Gilbert?

  Yes, that's exactly right.

• 3:09:21David Rosenthal?

  Yeah, this is a huge problem for Disney.

• 3:09:24Ben Gilbert?

  So you got this two, $3 billion deals that don't quite add up to 6.2. We haven't talked about the international rights yet. Interestingly enough, Viacom 18 not only acquired the digital rights on the Indian subcontinent, they also acquired both the terrestrial and digital rights internationally.

• 3:09:43Ben Gilbert?

  So part of that $3 billion deal that Viacom 18 did is for the other three quadrants. It's not just the Indian subcontinent digital. It's that and all international.

• 3:09:58David Rosenthal?

  Interesting.

• 3:09:59Ben Gilbert?

  But it's not quite all international. It's international in Australia, New Zealand, the UK, South Africa, the cricket playing countries.

• 3:10:07David Rosenthal?

  Yep.

• 3:10:07Ben Gilbert?

  There's a second little carve out, this piddly little thing. There's a company called Times Internet that paid $26 million for the Middle East and $33 million for the USA. The current five-year rights to watch cricket in the USA are only worth $33 million out of a $6.2 billion package. And I will say, I tried really hard to go watch some full IPL matches. Times Internet's US property Willow TV is terrible. I couldn't find a single match to watch. Presumably during the season, it's easy to watch what's currently live right now.

• 3:10:45Ben Gilbert?

  But trying to watch last year's matches on Willow in the US, 33 million is apparently not paying for a very good website to be able to do that.

• 3:10:53David Rosenthal?

  So the real question basically right now is, what is that going to be the next time the rights come up?

• 3:11:01Ben Gilbert?

  Yes.

• 3:11:02David Rosenthal?

  In January 2024, so a year ago, the presenting sponsorship for the whole league came up again. Tata, of course, big Indian conglomerate, bought it for 60 million a year for five years. So a $300 million deal. That brings us to today. You've got under these new media rights deals that we were just talking about. Call it one and a quarter billion dollars in media rights revenue coming in central to the league.

• 3:11:27Ben Gilbert?

  Yep.

• 3:11:27David Rosenthal?

  Then another, you know, call it 150 to 200 million in total central sponsorships coming into the league, of which Tata is the anchor at 60 million a year. So round that up to, call it all in, a billion five annually coming in central to the league.

• 3:11:43Ben Gilbert?

  Guaranteed revenue.

• 3:11:46David Rosenthal?

  Yep, guaranteed long-term rights deals, asset light, so to speak.

• 3:11:51Ben Gilbert?

  You can now start to understand why the league collectively has been most recently valued at $16 billion and why the most successful teams like the Mumbai Indians are. Around 1.3 billion, average teams about 1 billion in valuation. There's real revenue here to support those numbers now.

• 3:12:11David Rosenthal?

  Absolutely. So this is a TV game. Media rights and central sponsorships are still by far the lion's share of total revenue coming into the league. Local revenue that the franchises are generating, this is ticket sales, luxury boxes such that they exist, suites at the stadiums, we'll get into that in a minute, local sponsorships, et cetera. That's probably 15-ish percent of total revenue in the league. So 85-ish percent revenue on the central media rights and sponsorships, 15-ish percent local.

• 3:12:43Ben Gilbert?

  Yep.

• 3:12:43David Rosenthal?

  Add all that together, you've probably got 1.7, 1.6 billion in total revenue that's flowing into the league annually. Now, here's the kicker. All of this is for a league that currently only plays 74 games in a season that only lasts two months. So one way to benchmark different leagues against another by scale, impact, revenue, value, et cetera, is to adjust for how many matches they play. There's a difference between the IPL that only plays 74 matches and Major League Baseball that plays, what did you say, about 2,000 some odd games?

• 3:13:24Ben Gilbert?

  About 2,500.

• 3:13:25David Rosenthal?

  So if you look at that revenue coming into the league on a per-match basis, IPL is already the second most valuable league in the world, behind the NFL, second most revenue per match in the world.

• 3:13:40Ben Gilbert?

  It's like 16, 17 million per match in media rights that are sold.

• 3:13:45David Rosenthal?

  Yep. So Ben, I think you have like the whole list here that you built out.

• 3:13:48Ben Gilbert?

  Yeah. Well, I read so many articles about this that all seem to contradict each other.

• 3:13:55Ben Gilbert?

  And from our NFL episode, I felt like you and I had a pretty good understanding of all the different ways that the NFL had sliced their revenue. And I just thought that these people are all misreporting this information. So I went and added all the deals together from each league, divided it by the number of games played in each league. The NFL is so far ahead of everything else that it's a little bit farcical to say the IPL is second. If you include the NFL Network, which I think you should, even though some of that is non-game content, the reason people care about NFL Network is that it has red zone. So I included that. So you got ESPN, ABC Disney's deal, Fox's deal, CBS's deal, NBC's deal, Amazon's deal, Google's deal with YouTube, Netflix's deal, Peacock's deal,

• 3:14:40Ben Gilbert?

  and the NFL Network. The NFL does a total of $14 billion a year in media rights revenue across not that many games, 285 total games. So the NFL does somewhere between 45 and 49 million dollars per game in media rights revenue. Now, sure, IPL cricket at 16 is number two because English Premier League is somewhere in the 15, 16 range. But the NFL is three times the next highest.

• 3:15:11David Rosenthal?

  Right. And so then if you look at a total revenue basis, the NFL total annual revenue, everything local, central, added up, is on the order of $20 billion a year. And then, like we just walked through with IPL, right now it's call it, what, 1.6, 1.7 billion dollars a year.

• 3:15:30Ben Gilbert?

  For a 17-year-old league that only has 10 teams.

• 3:15:33David Rosenthal?

  And only plays 74 games a year. All of this incredible. Already, if you look at it on the per-match basis, it's number two to the NFL.

• 3:15:41Ben Gilbert?

  And everyone else is really far behind. We should say English Premier League is the only one that's sort of rivaling IPL cricket. But the NBA is the next closest at 5.3 million, so a third of soccer or cricket. Then you've got La Liga, which is the Spanish soccer league. You've got, what's Germany's league, David?

• 3:15:59David Rosenthal?

  Bundesliga.

• 3:16:00Ben Gilbert?

  And that's also around five. But then MLB is like a million seven per game. The NHL is 800,000 per game. Major League Soccer, 500,000 a game. The quote-unquote "big four" in the US, it's really the NFL and everyone else in terms of media rights revenue per game.

• 3:16:17David Rosenthal?

  Yep.

• 3:16:18Ben Gilbert?

  So the per match thing is an interesting way to look at this from an advertising perspective. It's interesting if you were renting the facility and you're trying to get the most money out of my facility rental for that night, or you know, some sort of classic unit economics like that. But really, if you're a team owner, the interesting thing is not how much revenue or profit is generated per game from meteorites.

• 3:16:43David Rosenthal?

  It's absolute economic impact of this.

• 3:16:46Ben Gilbert?

  Right, and I don't care how many games they play at all. I care how valuable is the franchise that I own and how big of a business can I build around owning the franchise?

• 3:16:56David Rosenthal?

  Totally. It's a 10th the size of the NFL today, by that respect.

• 3:17:00Ben Gilbert?

  Right. Now, the question is, what is the total value of the MLB? If the total value of the IPL is $16 billion, how does that league value compare to other league values? I think that's an interesting way to look at it, but again, nobody owns a league. People own teams. So probably the most interesting way to look at it is, how does a $1 billion valuation for the average IPL team stack up to other leagues around the world? It's not NFL, it's not NBA, but it's kind of amazing that in 16, 17 years, these things are in the billion dollar conversation. Remember the Clippers, when Steve Ballmer bought it, it was only 2 billion. NBA franchises today are like 5, 6, 7 billion dollars, something like that, but it is sort

• 3:17:44Ben Gilbert?

  of quickly entering that conversation and half of the revenue gets taken before you even get to see a dollar.

• 3:17:52David Rosenthal?

  By the BCCI. Yes.

• 3:17:54Ben Gilbert?

  I mean, it's crazy. So maybe put another way, is there a world where these are actually 2 billion dollar teams if the BCCI wasn't taking half of it?

• 3:18:03David Rosenthal?

  Yes, absolutely.

• 3:18:05Ben Gilbert?

  You would have a lot more costs, like player development and stadiums. So anyway, that's sort of the few different ways to slice it. There's the per game, there's what's the league worth, there's what's the individual team's worth. I also wanted to try to figure out on a multiple basis, how reasonable are these valuations? It's a billion dollar valuation on these teams for anyone buying in. Again, on average, I suspect some of them will go for more. What does the actual income statement look like? It's impossible to know for sure because none of this is public and reported. It seems reasonable that they would do 70, 80 million in revenue. That's after the BCCI's take, that's inclusive of the local revenue. So think about a business that's doing 70, 80 million dollar top line.

• 3:18:47Ben Gilbert?

  The salary cap is $17 million and you're not paying any stadium and your only debt service is if you are still paying a franchise fee back to the BCCI, you have almost no costs in this business.

• 3:18:59David Rosenthal?

  Right. So as you're comparing business dynamics here versus other leagues, and particularly the NFL, on the one hand, you've got this albatross, if you will, of the BCCI taking 50% of central revenue.

• 3:19:10Ben Gilbert?

  But you don't have the players taking 50% of your revenue the way the NFL does.

• 3:19:13David Rosenthal?

  And you don't have the capital-heavy nature of the stadiums, which there is risk and opportunity to that, as we'll get into in a minute.

• 3:19:21Ben Gilbert?

  Exactly. So I think the team net income right now is about $50 million on a pre-tax basis, but there's no depreciation in other, I mean, not material, anyway. So you've got a business that is doing $80 million top line and 50-ish million on the EBITDA line. This is a 60, 65% EBITDA margin business. They're growing really quickly. Like, every five years, there's this massive step up in media rights. And because these businesses have crazy operating leverage, it all kind of does fall to that bottom line. And again, the reason for the operating leverage is because the player contracts just don't grow

• 3:20:04Ben Gilbert?

  that fast, but the media rights revenue is going incredibly fast. So there's this ridiculous operating margin that has kind of kicked in this media rights cycle. They used to be break even, and then they were pretty profitable, and now they're really, really profitable.

• 3:20:18David Rosenthal?

  And as revenue keeps going, they're going to get really, really, really profitable.

• 3:20:21Ben Gilbert?

  Right.

• 3:20:22David Rosenthal?

  So right now, at a billion-dollar valuation, that's 20 times EBITDA, you know, pre-tax earnings, whatever you want to call that.

• 3:20:30Ben Gilbert?

  And it's, what, 12x revenue?

• 3:20:32David Rosenthal?

  That's a pretty attractive valuation as an investor.

• 3:20:35Ben Gilbert?

  Right. Well, whatever they are, they're market-valued.

• 3:20:38David Rosenthal?

  Right.

• 3:20:39Ben Gilbert?

  There is a competitive market, both to buy and sell equity in these teams right now. We aren't saying that something's high or low. It just, it's interesting to see what the market values it at.

• 3:20:49David Rosenthal?

  And there is a reasonable financial valuation here, unlike many of the other leagues, where the teams trade primarily on asset values instead of as P&L, you know, scarcity value.

• 3:21:01Ben Gilbert?

  Right. So David, we're sort of arriving here in analysis, and to start, there's sort of an idea that you planted.

• 3:21:08David Rosenthal?

  Yes. So I proposed to you a couple of days ago that we bring back a version of the Bull and Bear case that we used to do here at Acquired, and In this case, I think we should do Bull, Bear and Mega Bull case. Cause I think there is a Mega Bull case here. And the question specifically we should address in this should be, is there a reasonable path that the IPL could 10x in revenue economic impact over the next set of time and be equal to, or perhaps even in Mega Bull case, greater than the NFL in terms of economic value and revenue generated to be the number one or tied as the number one sports league in the world?

• 3:21:53Ben Gilbert?

  And the reason I think this is particularly interesting conversation coming out of the valuation conversation we just had is the number one thing that matters in valuing any asset is what assumptions you are making about its future. And so you can't say that something is expensive or inexpensive unless you talk about what your inputs are to guide that future. So the most important input in the IPL team P and L right now, there's sort of three big levers, as I see it. One is, are the media rights deals going to keep growing at the rate that they have been growing? Which on the media rights, our good friend, Arvind Navarathnam at Worldly Partners, has actually done the math to look into this.

• 3:22:34Ben Gilbert?

  And as always, we will link to his excellent report in the show notes. Since 2008 to 2023, the media rights have grown at an 18% compound annual growth rate from that $100 million a year mark, going with the 100 million, not the 60 million.

• 3:22:50David Rosenthal?

  The headline $100 million a year mark.

• 3:22:53Ben Gilbert?

  To the 1.2 billion that we have today.

• 3:22:55David Rosenthal?

  Lolit math.

• 3:22:56Ben Gilbert?

  Yes. And so then the question is, will it keep at that 18% growth rate? The second big lever is, is the BCCI permanently going to be taking 50% of the revenue? It seems like they will, but I think it's worth examining what could cause that to change.

• 3:23:14David Rosenthal?

  That's a big swing, one way or the other.

• 3:23:15Ben Gilbert?

  And then the third one is, is there any natural force that will cause the salary cap or the player cut of revenue to grow as fast as the top line? Or is it going to keep getting smaller and smaller and smaller on a percentage basis? Or even stay the same if it was just sticking around at this 12, 13, 14% of total team revenue?

• 3:23:39David Rosenthal?

  Yep. From a team owner basis, that's fine.

• 3:23:43Ben Gilbert?

  Right. I think this is intrinsically linked with the BCCI conversation because it's almost like in the IPL, not only do you not have a player union, first of all, let's just say there's no equivalent of the NFLPA, the MLBPA, there's no players' union to bargain.

• 3:24:01David Rosenthal?

  Do you know that there actually is a players' union?

• 3:24:03Ben Gilbert?

  Yes.

• 3:24:03David Rosenthal?

  Do you know what the players' union is?

• 3:24:05Ben Gilbert?

  Yes. It was put into place by the Supreme Court ruling and the players' union is only retired players.

• 3:24:10David Rosenthal?

  Yes, it is the union of retired players. It's the pensioners from the BCCI.

• 3:24:15Ben Gilbert?

  Unbelievable.

• 3:24:16David Rosenthal?

  No current players are allowed to be involved. Amazing.

• 3:24:18Ben Gilbert?

  So not only is there no ability to bargain, and clearly it's in no players' direct interest to walk away because it's life-changing money, it's fame, it's like your childhood dream, you're going to play in the IPL. There's the element that you can't go play outside of India, or else then you can't play on the national team. So that's a big hammer or stick. But there's actually a third and a fourth thing. Your income is determined by the BCCI, who determines your income if you play for the national team or other Indian leagues.

• 3:24:50David Rosenthal?

  Or indirectly the IPL. Yep. Yeah, because the BCCI sets the salary cap or the auction purse size.

• 3:24:55Ben Gilbert?

  Right. And then there's the fourth thing, which is, okay, cool, there's these other leagues popping up. There's South Africa, there's the US. The IPL team owners are starting to own or have partnerships with the other T20 leagues that are popping up. And so it's very easy for them to be like, uh, you guys shouldn't allow players' union and we won't allow players' union. Okay, great. You guys shouldn't pay higher salaries, we also won't pay higher salaries. Okay, great. And this sort of happens at the international governing body level anyway.

• 3:25:31David Rosenthal?

  The effective state of play right now, they are all effectively serfs to the BCCI and the IPL.

• 3:25:39Ben Gilbert?

  Which is crazy. This whole thing is effectively 50% owned by a quasi-governmental regulator.

• 3:25:46David Rosenthal?

  Amazing.

• 3:25:47Ben Gilbert?

  So I just lay those things out there because I think those are sort of the big levers as you consider valuation of what's going to change.

• 3:25:54David Rosenthal?

  Okay, I love it. That is the right backdrop investor mindset to think through evaluating these cases. First,

• 3:26:01David Rosenthal?

  Bull case is just simply media rights expansion, which is just simply demographics. If nothing else happens, except that India and the Indian middle class keeps growing like it has been and is projected to, both in absolute size of the Indian middle class and relative wealth of the Indian middle class relative to other countries in the world, that alone is probably the biggest lever here.

• 3:26:29Ben Gilbert?

  And to put some numbers to that, remember we were talking about the advertising market was just $2 billion, I think was that 2007?

• 3:26:36David Rosenthal?

  Yep.

• 3:26:37Ben Gilbert?

  Somewhere around there that we were talking about that. That is expected to be $20 billion this year, growing 6% to 7% per year. It's interesting, in 17 years, it's 10x from 2 billion to 20 billion. Like you were pointing out all the way, you know, a couple hours ago, the thing that matters for the valuation of these teams, and you keep following it back for the revenue for these teams, is the media rights and what do the media rights need? They need to be able to advertise to consumers. What do you need for advertising to consumers? You need consumers to be able to-

• 3:27:09David Rosenthal?

  Buy things, have disposable income.

• 3:27:12Ben Gilbert?

  Right. Make the cost of acquisition actually make sense for the advertisers on these media rights. And so far, the growth of the purchasing power of consumers in India totally supports the increased media rights purchases and thus the valuations. And if they keep growing at 6%, 7%, then it should continue to support 6% to 7% growth in the media rights per year. Does it support the 16% growth that we had seen historically? No. So the media rights packages probably will grow slower and they probably should grow at the rate of the Indian advertising market, at least in your case that you're scoping this to right now, which is the Indian bull case.

• 3:27:54David Rosenthal?

  Yep. So if that current growth rate in the domestic Indian ad market of, call it 6%, 7% per year, sustains over the next 20 years, that I believe compounded over 20 years is about a 10x growth. If that happens with no slowdown, great, there's 10x right there.

• 3:28:14Ben Gilbert?

  So that gets your media rights to 12 billion 20 years from now.

• 3:28:19David Rosenthal?

  To NFL size. And obviously, there'll be growth in the NFL too. But here's why I think demographics is actually the single most important thing. The NFL has- Basically already saturated its TAM. The

• 3:28:33Ben Gilbert?

  Yes.

• 3:28:33David Rosenthal?

  Total addressable market of people who care about American football is at most 500 million people. It is all of the US. It is arguably Canada. You could throw that in there, although to a lesser degree, I think than the US.

• 3:28:51Ben Gilbert?

  Yep.

• 3:28:52David Rosenthal?

  And then maybe you find some pockets of other people around the world, but there's not a lot. You got to stretch to get to 500 million.

• 3:28:58Ben Gilbert?

  And this is the NFL's big initiative. They are trying to figure out how to make people outside the US care. But I think that's right.

• 3:29:04David Rosenthal?

  And they have been trying for a long time and they have not thus far been succeeding to any meaningful degree.

• 3:29:10Ben Gilbert?

  Right, so they would need to expand the number of people who care, or they would need to expand the monetization potential per person who watches.

• 3:29:19David Rosenthal?

  Sure, like Americans are getting wealthier, have gotten wealthier every year for a long time. Certainly, the NFL will grow. I just don't think it will grow that much. So I think there's a plausible argument to make on demographics alone that the Indian ad market will support 10x IPL media rights revenues, which gets it into the ballpark of the NFL today.

• 3:29:44Ben Gilbert?

  Well, let's put it another way. The US advertising market total today is $450 billion. We are already an absolute behemoth. India, over the time of the IPL, went from 2 to 20. There's a lot of growth left.

• 3:29:59David Rosenthal?

  Right, there's a lot of room left to run.

• 3:30:01Ben Gilbert?

  That is the case for just how does it become NFL scale? If it just keeps matching the growth of the advertising TAM in India.

• 3:30:08David Rosenthal?

  As I was thinking about this before recording, I was using more kind of population numbers and there's estimates that the middle class is supposed to double over the coming 10, 20 years in India.

• 3:30:20Ben Gilbert?

  The middle class in India grew 6.3% annualized between 1995 and 2021. So that just matches every other stat that we're talking about. GDP per capita is growing 10% per year. So if GDP per capita grows at 10% per year, do you think advertising continues to grow at 6.5%? Sure, I think advertising tends to index GDP.

• 3:30:42David Rosenthal?

  Yep, okay. Biggest lever, number one. I sort of haircut that in my analysis, so let's say it's 5x. I think you then basically immediately double that, multiply by another 2X and get to 10X total, simply by IPL expanding. I think it is almost a foregone conclusion, no brainer, that the number of matches that IPL plays will expand, likely in multiple ways. Number of teams and lengthening of season. So number one is simply just extending the season and extending the window of the season with the existing teams that they have, playing more matches over a longer period of time. Right now, this is only eight week season.

• 3:31:24David Rosenthal?

  It's the shortest season of any major sports league in the world. And there's reason for that of like, they had to work around the international cricket calendar. The BCCI also controls international cricket for India, so they care about this. But as IPL becomes bigger and bigger and bigger, and all of the international players are playing in the IPL, it's gonna expand the window here. Yep. So that's one, the main window is gonna expand. Two, team expansion. India as a country geographically and certainly population wise can support more than 10 teams in this league. No brainer. At least two more teams are gonna get added in the next X period of time here. The real wild card here is there is talk

• 3:32:07David Rosenthal?

  of a second IPL window, which would be interesting. This is kind of a risk. So like have the first part of the season happen when it currently does, between March and May, and then have the second part of the season, or maybe the playoffs, happen after the international calendar over the summer, and then come back at the end of the year. Weird. Anti-climactic almost. I don't know how you would design the media product. I think this is a wild card. It doesn't sound that compelling to me, but I don't know. IPL has designed incredibly compelling media products. Maybe they could find a way to make this really interesting. Yep. So that's a wild card. I don't think you can bet on that, but I think you definitely can bet on 2X expansion

• 3:32:50David Rosenthal?

  of just simply inventory of games played, which combine that with 5X expansion in the ad market, boom, there's your 10X. It's gonna take you to like roughly the same scale as the NFL. A supporting point on this, which I don't think grows revenue necessarily, but makes it more likely to happen. As we alluded to, the IPL has basically become the national champion of India. Like, the Indian government is highly, highly, highly incentivized to make this continue to be a shining success story for India. And with Reliance so deeply involved now, I mean, Reliance is the largest telecom operator

• 3:33:32David Rosenthal?

  in the country, the largest or one of the largest diversified companies, period. So they're also an advertiser of their products. They own the biggest team. You know, they're deeply involved in the league. Like, the Ambanis and Reliance are not going to let this thing fail. Domestically and internationally on streaming. Yep, exactly. So that now brings us into the most obvious revenue stream expansion opportunity here, which is the stadiums, to come back to that, and local revenue. Right, it's kind of a pittance. Yeah, I think it would be an exaggeration to say that the stadiums are crappy. They're not crappy. You watch IPL games and they're fine.

• 3:34:16David Rosenthal?

  They kind of look like American sports stadiums from the 70s or something like that. It's not dirt fields, but it's also not Chase Center or like the Vikings stadium or any of these new NFL stadiums that are just gleaming multi-billion dollar palaces. And there's good reason for that. Yeah, they make 10x more revenue. And also, because the IPL is so short, right now, it doesn't even make that much sense if you were to flip over to having teams build and own their stadiums or be more deeply involved. They just don't play that many games. They only play seven home games right now. Right. But as you expand the league, expand the number of games, this starts to make more sense.

• 3:34:56David Rosenthal?

  So I think if you can find a way to smartly, without risking the economics of the league...

• 3:35:04David Rosenthal?

  Upgrade the infrastructure and the stadium infrastructure here. Like, there is just so much low hanging fruit. I mean, all the playbook that is run in the NFL, in the NBA, luxury suites, seat licenses, fan experiences, mixed use of the real estate, dining, shopping, cinema, Bollywood, huge opportunities.

• 3:35:24Ben Gilbert?

  You sound like Jerry Jones over there.

• 3:35:26David Rosenthal?

  Just basically send Jerry Jones to India and take care of this. So what's the opportunity there? Like, right now, IPL teams are making 15% of their revenue locally and 85% is central revenue. If you could get to an NFL-type model where it's 40% local, 35, 40% local for the best teams, that's a whole nother significant amount of revenue coming in there.

• 3:35:49Ben Gilbert?

  Yeah, hundreds of millions for the league.

• 3:35:52David Rosenthal?

  I think if you do that, and you have the media rates on par with the NFL, then you bring up the rest of the revenue streams up to on par. Now you're definitely on par with the NFL.

• 3:36:01Ben Gilbert?

  And this is still all domestic?

• 3:36:03David Rosenthal?

  Totally all domestic. So that brings us to, I think, one of the two biggest wild cards here for the IPL, and that's the Saudis and Middle East money.

• 3:36:15Ben Gilbert?

  Hmm.

• 3:36:16David Rosenthal?

  They absolutely want to get involved here.

• 3:36:20Ben Gilbert?

  Yeah, there was a news story in 2023, I think, about them trying to invest in the IPL at like a $30 billion valuation, which is 2X even the highest number I've seen.

• 3:36:31David Rosenthal?

  The most recent IPL super auction that just happened was held in Saudi Arabia.

• 3:36:37Ben Gilbert?

  Really?

• 3:36:38David Rosenthal?

  Not just is it they want this to happen, inroads are being put in place that something will probably happen here. Now, this could go either way. It's sort of like a carrot and a stick, a threat and an opportunity. The threat is that you have a live golf situation, that they say, well, they have basically unlimited money, we can set up a competitive league here.

• 3:36:59Ben Gilbert?

  And, you know, the ICL tried this, but the ICL didn't have Kingdom of Saudi Arabia money.

• 3:37:04David Rosenthal?

  Yes.

• 3:37:05Ben Gilbert?

  It would be very interesting to see, could you actually just go completely around the ICC, the BCCI, the existing cricketing system and say, look, there's so much money that we are actually just going to get all the best players in the world?

• 3:37:18David Rosenthal?

  Yep. I think that is unlikely because of the hammer that the BCCI has of, hey, you Indian players.

• 3:37:26David Rosenthal?

  If you do that, we'll ban you from international competition. And they would also not be able to play domestically in India. They would have to play in the Middle East or South Africa or somewhere else. And so that would also hurt Indian viewership. I think it is unlikely, but I think it's more likely that the Saudis or some other very large sovereign wealth fund.

• 3:37:48Ben Gilbert?

  There's an agreement that they can both come to that keeps everyone happy.

• 3:37:51David Rosenthal?

  Uses this as negotiating leverage. Exactly.

• 3:37:54Ben Gilbert?

  Yeah.

• 3:37:55David Rosenthal?

  And I think interests are really aligned here on my prior point around infrastructure. I think the Saudis want to get involved or sovereign wealth funds generally want to get involved because they see this as a great long-term growth investment. Also, investing in this infrastructure, physical infrastructure in India is probably a great long-term growth investment that an investor like a Public Investment Fund of Saudi Arabia is well set up to make those.

• 3:38:24Ben Gilbert?

  Yep.

• 3:38:24David Rosenthal?

  Infrastructure investments.

• 3:38:25Ben Gilbert?

  Yep.

• 3:38:26David Rosenthal?

  So if that happens, there's certainly plenty of upside on every revenue stream that can come from that. But I think at a minimum, that makes the local stadium real estate revenue streams an almost certainty of happening if the Saudis get involved.

• 3:38:41Ben Gilbert?

  It's interesting. Right. Because what do you do with that money? What do you do with billions of dollars if it's thrust upon just 10 teams?

• 3:38:48David Rosenthal?

  Totally. The Saudis don't just want to invest in the league. They want to invest in the whole ecosystem. They want to invest in the infrastructure projects. They want to invest in the stadiums. They want to invest in the buildings. They want to invest in the retail going in around it.

• 3:39:00Ben Gilbert?

  Yep.

• 3:39:00David Rosenthal?

  All of that.

• 3:39:01Ben Gilbert?

  Hmm.

• 3:39:02David Rosenthal?

  So coming into doing this and starting the research, if you had told me that bull case, I would have said, that's insane. I know the IPL is big. I know India is big. I know it's an exciting, compelling product, but really? In 10 to 20 years, this will be as big as the NFL? But you go around and you talk to people who are in the sports industry and you put this question to them.

• 3:39:24Ben Gilbert?

  And you talk to some executives at teams. You sanity check this with people who have thought about this?

• 3:39:29David Rosenthal?

  Yes. And the response I got was, no, that is not a crazy statement. I could totally believe that happening.

• 3:39:34Ben Gilbert?

  Crazy. Things started 17 years ago.

• 3:39:37David Rosenthal?

  And in theory, by the time it is, call it 30 years old, could be as big as the NFL.

• 3:39:41Ben Gilbert?

  Yep. It's riding this incredible demographics wave, this development of the middle-class wave, and this globalization of sport wave.

• 3:39:53David Rosenthal?

  And I think also just the development of India, period, which plays into demographics too, but there's such an infrastructure opportunity here, too, that makes it really attractive to the Saudis or whomever else.

• 3:40:04Ben Gilbert?

  Right, tangible assets where you could park billions and billions of dollars.

• 3:40:07David Rosenthal?

  Yep. It may end up being that actually Lolita's sort of grand plan of being asset like, debt-free, no stadiums in the beginning, in the long run, was actually just a temporary thing.

• 3:40:20Ben Gilbert?

  Right. But you might have needed that to get it started.

• 3:40:22David Rosenthal?

  Yeah.

• 3:40:23Ben Gilbert?

  Okay, so this is not your extreme bull case?

• 3:40:26David Rosenthal?

  No, that's not the extreme bull case. That's the bull case. Next we'll do the bear case. Okay, so bear case, I think there are basically two big things in the bear case. Number one is just challenges of doing business in India, period. I mean, I think if you talk to anybody who invests in India, this is the number one challenge for everything.

• 3:40:41Ben Gilbert?

  Right, the low-trust environment. They have to change that reputation, and they have been.

• 3:40:44David Rosenthal?

  It definitely has been changing, definitely has been getting better as you talk to folks, almost assuredly will continue to do so. However, in order to support an NFL-sized business, this needs to operate in an NFL-like environment.

• 3:40:59Ben Gilbert?

  Yep.

• 3:40:59David Rosenthal?

  And right now, I think we're basically there. Institutional money is now coming in, foreign direct investment is coming into the IPL, and it's coming into India writ large in a big way. So like, I think we're there, but if there's any backsliding, that's going to be a real big problem.

• 3:41:14Ben Gilbert?

  Yep.

• 3:41:15David Rosenthal?

  Okay, that's the biggest one kind of writ large. And I think the specific one to IPL, we haven't talked about this yet, in November 2024, Viacom 18 slash Reliance and Star Disney merged in an eight and a half billion dollar deal.

• 3:41:34Ben Gilbert?

  Oh, I actually didn't realize that, really.

• 3:41:36David Rosenthal?

  Oh, yeah.

• 3:41:37Ben Gilbert?

  Oh, so they lost their competitive environment.

• 3:41:39David Rosenthal?

  So basically, we are now down to one viable at-scale bidder for all the domestic media rights, terrestrial and streaming, which who knows how that is gonna play out. Lolita was a genius at finding and engineering the creation of alternative bidders.

• 3:42:00David Rosenthal?

  On the other hand, this is now at such a big scale. Could you really engineer a competitive bid?

• 3:42:06Ben Gilbert?

  Next bidding cycle is going to be a billion and a half to $2 billion of media rights a year. Who else can do that?

• 3:42:12David Rosenthal?

  Google and Facebook are extremely credible bidders here.

• 3:42:15Ben Gilbert?

  And in fact, Google did at one point have a deal in 2010. YouTube did a media rights deal with the IPL.

• 3:42:22David Rosenthal?

  And in 2017, Facebook bid on the digital rights and lost. Now you might say, well, is that for real? Google and Facebook, you could say they're credible bidders for any media rights anywhere in the world? True, but they also particularly care about India. India is YouTube's largest country by user base.

• 3:42:40Ben Gilbert?

  That's so crazy.

• 3:42:42David Rosenthal?

  It's not wild. India is number one, US is number two for YouTube. So yeah, Google cares a lot. And then Facebook and Meta probably care even more because India is, I believe, the largest user base for WhatsApp.

• 3:42:58Ben Gilbert?

  Huh.

• 3:42:58David Rosenthal?

  And also Instagram. India is the largest populations of users on Instagram.

• 3:43:05Ben Gilbert?

  Interesting.

• 3:43:06David Rosenthal?

  So they both care a lot and they have a lot of money.

• 3:43:09Ben Gilbert?

  I didn't know they emerged. Yeah, you do not want your two legitimate competitive bidders to merge.

• 3:43:14David Rosenthal?

  Yep. Basically, I think you have to get Google and Meta bidding.

• 3:43:19Ben Gilbert?

  Sometime in the next five years, a competitive bidding environment will emerge. That's the nice thing about these deals being that long.

• 3:43:26David Rosenthal?

  Well, the size of the prize is just so big that if people thought the auction price might drop low enough that you could, you know, really make a guaranteed win here, other bidders would emerge.

• 3:43:38Ben Gilbert?

  Right. It's funny, the bear case that I was thinking of is sort of a valuation based bear case. Viacom 18 paid $3.1 billion for

• 3:43:50Ben Gilbert?

  The digital rights. There's a lot of sensitivity in that model to how fast streaming grows and how fast streaming monetization grows. The TV rights that Star owns, fine, very predictable. But it's not like you're buying equity in something and if it happens in year eight instead of year six, that's fine. They really need all this growth and monetization to happen in years two, three, four, five, or else like if it happens two years later than they thought, really bad news and they're underwater for that $3.2 billion.

• 3:44:24David Rosenthal?

  Which again, if they're the only bidder in the next auction, means that price is coming down.

• 3:44:28Ben Gilbert?

  Right. So I mean, all of the revenue and all the valuation is really based on these media rights and these media rights, at least as paid in this last auction, are really sensitive to that future happening real fast.

• 3:44:41David Rosenthal?

  So that brings me to the mega bowl case.

• 3:44:49David Rosenthal?

  Here's the mega bowl case. This thing goes global beyond the traditional cricket playing countries and the US, maybe China, other countries around the world who historically have not cared about cricket, get really into the IPL. There's some interesting stuff to talk about here.

• 3:45:09Ben Gilbert?

  So how likely do you think it is that people in America actually start tuning into the IPL? Because India is 12, 13 hours off. It's really hard.

• 3:45:18David Rosenthal?

  Yeah, this is the biggest challenge.

• 3:45:20Ben Gilbert?

  In England, it's actually great. It's only five hours off. So there's this nice, like you could do it as sort of a day night game on the weekend. The US, you're like tuning in at eight in the morning if you want to watch something that's happening in India.

• 3:45:34David Rosenthal?

  8pm in India is, I believe, 7:30 AM on the west coast of the United States. That is the single biggest challenge.

• 3:45:42Ben Gilbert?

  So this is the argument for a domestic cricket market, Major League Cricket. For listeners out there, I'd spend a good amount of time with Soma Soma Sengar, who is the former Microsoft exec now at Madrona, who is a co-owner with Satya Nadella of the Seattle Major League Cricket team. It's very interesting getting his perspective on developing Major League Cricket in the US because I think the whole bet with Major League Cricket is we got to build cricket fandom domestically in a grassroots way with players here slowly over time. This is not going to be this big explosion out of the chute. And frankly, Americans are just not going to start caring about IPL cricket.

• 3:46:25Ben Gilbert?

  They need to start caring about US-based cricket.

• 3:46:28David Rosenthal?

  Yep. Okay. Whole bunch to talk about. So the biggest swing on this is going to be a single event that is going to happen in 2028.

• 3:46:39Ben Gilbert?

  Oh, the Olympics.

• 3:46:40David Rosenthal?

  Which is the Los Angeles Olympics, which T20 cricket is going to be in the LA Olympics.

• 3:46:48Ben Gilbert?

  First time since 1900 that cricket is in the Olympics.

• 3:46:51David Rosenthal?

  Yeah, first time in 100-plus years that cricket is back in the Olympics. Essentially, it is cricket for the first time in the modern Olympics here in LA, in America, in a big way. And a lot of vested interests are going to be riding on this Olympics here.

• 3:47:09Ben Gilbert?

  Yep.

• 3:47:09David Rosenthal?

  So time zones are definitely the biggest challenge here. But if you put that aside, cricket is actually, I think, totally poised to take off in the US for a couple of reasons. One, most importantly, baseball is stagnating. We've alluded to it a little bit on this episode, but Major League Baseball has serious problems.

• 3:47:28Ben Gilbert?

  Hey, man, pitch clock. It really changed the game experience.

• 3:47:32David Rosenthal?

  I actually think managing Major League Baseball is really challenging right now, and they're arguably doing a pretty good job of maintaining value capture over the long run while there's just like a whole bunch of factors fighting against them.

• 3:47:47Ben Gilbert?

  You just think it's like an inevitable decline, and they're doing a nice job managing the pace of that decline?

• 3:47:52David Rosenthal?

  The issue is that because teams can have their own media deals locked into long-term contracts, and then because there's no effective salary cap, competitive parity, every wealthy team is going to be wholly and intransigently against any major structural change to the sport.

• 3:48:10Ben Gilbert?

  Yeah.

• 3:48:11David Rosenthal?

  And the structural changes that need to happen are at multiple levels. There's the way the business is organized. There's the product itself. They've done a good job with the pitch clock. I think that's actually good, but like the biggest problem is 162 games. Baseball was built for an era when the revenue model of sports was the tickets at the gate. It was not built for the TV era and certainly not built for this era. And they've done also a really nice job with MLB.TV and their owned and operated streaming product. BAMTech is a huge success for MLB. But again, you're basically just... Extending out the current state of play as long as possible. Interest in the game and particularly interest in the game among young people is we're entering

• 3:48:55David Rosenthal?

  a scenario that could end up looking like cricket in England before it got so bad that they had to introduce T20.

• 3:49:02Ben Gilbert?

  Oh, that's interesting.

• 3:49:03David Rosenthal?

  So then, at the same time, cricket has already gone through this cycle and come out the other end with T20 and the IPL. So they have the right product and the right business model coming out the end of it. That's one. Two, there is a pretty significant Indian diaspora population here in America. I mean, it's not huge, huge in terms of all of America, but it's several million people. And actually, right now, like, Indian Americans are kind of at their pinnacle in terms of influence on the country. So you've got CEOs, like you mentioned, Satya Nadella, Sundar Pichai.

• 3:49:38Ben Gilbert?

  Shantanu at Adobe.

• 3:49:39David Rosenthal?

  Yep, just percentage of market cap in America.

• 3:49:43Ben Gilbert?

  Neil Mohan at YouTube.

• 3:49:44David Rosenthal?

  Absolutely. Like, Indian American CEOs control a ton of it. And as we've talked about in every episode on this show, basically, the influence of tech on culture is becoming hugely outsized. So, okay, that's one, is the business community and the influence there. Two is actually entertainment in Hollywood. You actually have Indian Americans who are becoming stars and A-list stars in Hollywood. Bigger, though, three is politics. I mean, just look at this last election cycle. You've got Kamala Harris, you've got JD Vance's wife, Usha, who's the second lady of the US now, Nikki Haley, she's Indian American. There actually are quite a lot of Indian American politicians now. So, anyway, all that to say, relative to their size as a minority within America, Indian

• 3:50:29David Rosenthal?

  Americans have quite a lot of influence on the country.

• 3:50:33Ben Gilbert?

  Is the Indian American diaspora really that small?

• 3:50:35David Rosenthal?

  Yep, it's about 5 million people.

• 3:50:37Ben Gilbert?

  Wow, I would have expected it to be bigger. And you said there's 20 million cricket fans in the US currently?

• 3:50:42David Rosenthal?

  Yep.

• 3:50:43Ben Gilbert?

  Huh, interesting.

• 3:50:45David Rosenthal?

  So that's two. Point three is just that, like, the IPL is actually genuinely a really compelling product.

• 3:50:52Ben Gilbert?

  Right. This feels like the biggest reason to me. If it's super entertaining and it's well engineered to be entertaining, it will continue to spread.

• 3:51:01David Rosenthal?

  So time zone's definitely the biggest challenge. Could you imagine a future, especially if sovereign wealth money gets involved in the IPL where they borrow the NFL playbook and they start staging matches here in the US? Absolutely. That's like number one biggest mega bowl case is Americans actually start to care about cricket. And not just Americans, but other markets around the world outside traditional cricket playing nations. Related to that, number two is IP.

• 3:51:32Ben Gilbert?

  It is the great irony, as you talk about the sort of Indian expansion of influence around the world, that it was British imperialism that brought cricket to India, but it may be cricket that expands India's influence on the world.

• 3:51:47David Rosenthal?

  Totally. Cricket imperialism, I guess?

• 3:51:50Ben Gilbert?

  Yeah.

• 3:51:51David Rosenthal?

  Indian imperialism, which is sort of happening with the leagues that they're setting up around the world.

• 3:51:56Ben Gilbert?

  Totally. I think four of the six major league cricket teams in the US have IPL ownership. I think all of the South African teams have IPL team affiliation or ownership. It kind of feels like the big bash league in Australia is the only T20 league around the world that doesn't have any sort of ties to the IPL.

• 3:52:17David Rosenthal?

  Yep. And I think that's just simply because it was set up around the same time, or maybe even slightly earlier than the IPL. But yeah, I think that's the other path that IPL could come to the US. Like, one is the NFL playbook of you adjust match times, you stage some matches here, you try and drum up interest in the main teams in India. The other path, and maybe you marry this with the second window idea, is because the season's short, you keep the season short in India, and then you have the same players with effectively the same organizations come over here in the fall, or at a different time of the year, and stage another tournament here with US-based city teams.

• 3:52:53Ben Gilbert?

  Or wildcard, you do an American League, National League thing, and then you have the American teams and the Indian teams play each other in the playoffs.

• 3:53:01David Rosenthal?

  Yep. And maybe this all ends up coming together through the Olympics and the World Cup and all that, and it's a more grassroots over time development. The ground is fertile for cricket in America right now, especially because baseball is declining.

• 3:53:14Ben Gilbert?

  Totally. There's a vacuum.

• 3:53:16David Rosenthal?

  Yep. Okay, so then the next, another kind of big mega bowl thing is IP. And IP Basically boils down to two things with one kind of in the middle. There's non-game media and streaming. So this is F1 Drive to Survive or Full Swing Golf, you know, stuff like that. Documentaries professionally produced and social media around the league. So there actually was a Netflix cricket documentary that came out in 2019 called Cricket Fever.

• 3:53:48Ben Gilbert?

  Yeah, you mentioned it. I couldn't find it.

• 3:53:49David Rosenthal?

  I watched it back in 2019. It's not on Netflix anymore, which sucks. It's super compelling. So this documentary Cricket Fever was part of what turned me on to IPL itself being a big thing. I'd always sort of been interested in cricket because of my British DNA. But I didn't know IPL was so big until I watched this documentary. For some reason, it's not on Netflix right now. Actually, I think I know the reason, which is it's basically flawed. The problem with the existing documentary Cricket Fever is it only follows the Mumbai Indians. It doesn't follow the whole league.

• 3:54:21Ben Gilbert?

  Hmm.

• 3:54:22David Rosenthal?

  But I think if you were to, and I'm sure people are in development on this. If you were to produce a Drive to Survive, full league narrative, full production value, Netflix, ongoing, annual season special about the IPL, it would crush globally. Like absolutely crush. I mean, the whole league is architected as a soap opera. And then you make a soap opera about the soap opera. Like, it's gonna be so good.

• 3:54:49Ben Gilbert?

  Yeah, to validate this point, I used to think Bollywood stars were the biggest stars in India. Shah Rukh Khan has 48 million Instagram followers.

• 3:55:00David Rosenthal?

  Oh, that's a pittance.

• 3:55:02Ben Gilbert?

  Virat Kohli, the top cricketer in the world, has 270 million. And he's approximately tied with Taylor Swift.

• 3:55:10David Rosenthal?

  Yeah.

• 3:55:11Ben Gilbert?

  I mean, the cricketers are the stars in India. And actually, it's kind of weird. If you scroll through Virat Kohli's Instagram, all 33 of the last 33 posts are sponsored. It's him with a product. I can't figure out if it's just the Indian tolerance for commercial placement is much higher than the American audience's tolerance for it. Or if Virat just lost the personal creds himself and his business manager is the only one posting the account or what the deal is. But- You've got a 270 million follower account only posting paid posts.

• 3:55:45David Rosenthal?

  Wow, that's wild. I mean, that just speaks to the demand to follow him.

• 3:55:50Ben Gilbert?

  Yeah, his influence is insane. Interestingly, during the season, the way the IPL rights work, the team actually owns the IP of the players during the season and can monetize them.

• 3:56:01David Rosenthal?

  Oh.

• 3:56:02Ben Gilbert?

  You'll get multiple commercials in a row with star players on that team during the match.

• 3:56:08David Rosenthal?

  That's amazing. Anyway, that's one side of the IP and then the other side is gambling. So again, mega, mega, mega bowl case gambling becomes legal in India, like game over. If there's $750 million.

• 3:56:22Ben Gilbert?

  There already is a good amount of fantasy. Now, it's technically a game of skill, but.

• 3:56:26David Rosenthal?

  There is the equivalent of DraftKings for the IPL in India. It's a company called Dream11. There are 11 players on a side in cricket, so it's Dream11. And it operates just like DraftKings, but it is classified by the government as a game of skill, not a game of luck. So that's how they get away with it. Dream11 has 200 million users and is valued at $8 billion. And Redbird, the big sports private equity firm in New York, that's an investor in the Rajasthan Royals. They're also a big investor in Dream11.

• 3:56:55Ben Gilbert?

  Interesting.

• 3:56:56David Rosenthal?

  That said, it's still kind of in this gray area right now. I don't know what the likelihood of this is, but if true gambling were to become legal in India, given that $750 million of betting is already happening on foreign bookmaking markets per match, that's a huge revenue unlock there.

• 3:57:17Ben Gilbert?

  Yep.

• 3:57:18David Rosenthal?

  So all that to say, I don't know, how likely is either the US getting interested or other non-cricket playing countries around the world getting interested and/or IP and gambling? I could totally see some of that happening.

• 3:57:33Ben Gilbert?

  We may have some hand in this. You know, the week after this episode comes out is the start of IPL season. We'll have to see if all of our US listeners are cricket curious.

• 3:57:42David Rosenthal?

  It's like we timed this.

• 3:57:45Ben Gilbert?

  All right. Should we do a power playbook and then our quintessence?

• 3:57:50David Rosenthal?

  Yes, let's do it.

• 3:57:51Ben Gilbert?

  So power is a section that we always do that takes Hamilton Helmer's framework of what enables a business to achieve persistent differential returns on a sustainable basis. We kind of apply it to the business we're studying. To apply this to the IPL, the question is, who are the IPL's competitors? And I think because they are so N of one at this point, you kind of have to think about it as their potential competitors or potential competitors in the past that they have since vanquished. The biggest one, the reason that the IPL gets to be so much more profitable than any other league in the world or potential league is clearly a cornered resource and it's the players.

• 3:58:31David Rosenthal?

  Yep. Hundred percent. That's the big one.

• 3:58:34Ben Gilbert?

  And so David, the question I have for you is, why does the IPL have a cornered resource on players? Because while there are a lot of good Indian cricket players, all the best cricket players in the world are not Indian. And conversely, it's not like the only people who watch cricket are in India. I think like 35% of the people who watch cricket in the world live in India.

• 3:58:58David Rosenthal?

  Yeah, cricket is actually the second biggest sport in the world with two and a half billion fans behind soccer.

• 3:59:03Ben Gilbert?

  Right. So there's a lot of fans elsewhere. So plausibly.

• 3:59:06David Rosenthal?

  Could have set up a league elsewhere.

• 3:59:07Ben Gilbert?

  Yeah.

• 3:59:08David Rosenthal?

  Totally great question. I think the issue is just that India is such by far the center of gravity, by which I mean, you know, the other billion cricket fans in the world are too dispersed among other countries. So like, if you're going to set up a rival league, you got to set it up somewhere. So where are you going to choose?

• 3:59:27Ben Gilbert?

  Hmm.

• 3:59:27David Rosenthal?

  You're going to do Australia? You're going to do Pakistan? Are you going to do the UK? Are you going to do the West Indies? And there are rival leagues in all of those countries. But the percentage of mind share that you're going to be able to get. Of the global cricket audience caring about your league and the cornered resource that you would then have of your domestic cricket board of those players in that league, you're not going to be able to restrict enough talent density of players relative to a fan base in any other single country in the world.

• 3:59:57Ben Gilbert?

  So it's almost a tipping point thing where whoever was the biggest, even if they weren't the biggest by a lot, was able to basically have a pretty large group of people who cared the most about their domestic players and therefore start this flywheel of we are able to attract people from other areas to come and play here. And if you get someone from like the West Indies, you get all the small countries, then suddenly you build from like 35% to maybe 45 or 50%. And then these blocks of 10 and 15% are kind of dominos that fall into you because now you've, as the biggest player aggregated all the small ones. And now you start the flywheel and you can add in additional constraints on top, like Indian players aren't allowed to play elsewhere. Well, okay, that just kind of creates lock-in.

• 4:00:43David Rosenthal?

  Totally. That's the biggest thing.

• 4:00:45Ben Gilbert?

  And then you build the IP around those teams, the viewership, the media rights, and it becomes really hard to dislodge it.

• 4:00:52David Rosenthal?

  The West Indies Cricket Board could say, Chris Gale, you can't play in the IPL. And at one point in time, they did try to say that.

• 4:01:00Ben Gilbert?

  Huh. But they don't have enough leverage. It doesn't matter.

• 4:01:02David Rosenthal?

  Right. The Indian market would say like, okay, fine. We don't need Chris Gale. Like, we'll still watch without him. And then because they had so much leverage and there was so much money, I think if I remember right, when discussions were being bandied about, about this happening, Chris was like, I'm just going to go play in the IPL and no longer play international cricket for the West Indies. Like, what are you going to pay me that's going to come close to this?

• 4:01:23Ben Gilbert?

  So this is the argument for a potential live golf.

• 4:01:26David Rosenthal?

  Yes.

• 4:01:26Ben Gilbert?

  Type situation is that everyone would react in that way if the prize was big enough. What's the phrase? If you're going to go, go so big, you never have to go again. You better get enough cash in just a few years of playing in some new league that it doesn't matter if you ever need to do anything else again.

• 4:01:40David Rosenthal?

  Yes, exactly.

• 4:01:41Ben Gilbert?

  But to your point, counter positioning, initially in the takeoff phase, T20 had counter positioning versus ODI.

• 4:01:48David Rosenthal?

  Yeah, but that wasn't an IPL or a BCCI innovation. They just borrowed it.

• 4:01:52Ben Gilbert?

  Right. In a way, the media rights deal is a scale economies thing.

• 4:01:56David Rosenthal?

  Oh, yeah. Production value. And then if and when they do get into local revenue streams and stadiums, that absolutely becomes scale economies. But the production value associated with the broadcast of IPL are now, you know, again, are they like? Quite at NFL Monday Night Football levels yet? Maybe. I don't know. They're pretty close. Like, you're not going to do that anywhere else.

• 4:02:18Ben Gilbert?

  Yep. So one question I have for you that I was thinking of after Power is a good time to do this. Why can't other leagues make big money like this during the other 10 months of the year? The world's not paying attention to IPL. You would think you could get all the best players in the world to go play in matches that you could sell the media rights for, for a lot of money.

• 4:02:35David Rosenthal?

  Right. That's a good question. I mean, international cricket and Test cricket is still a thing and the Indian national team playing is still a big deal.

• 4:02:42Ben Gilbert?

  But not $1.2 billion of media rights per year big.

• 4:02:47David Rosenthal?

  Right, exactly. I think it's kind of the same reason as the cornered resource and the players of if a rival, true rival league in another country were to try to do this, you just can't attract the critical mass of advertising dollars to make it worth it, given that so much of the market is in India. That said, I do think this is a version of the Mega Bowl opportunity of like the IPL either itself directly or through its surrogate leagues that it has investment in like Major League Cricket or The Hundred in England. They say, yeah, we're gonna do this and we're gonna send our players.

• 4:03:22Ben Gilbert?

  I was leading the witness here. You brought up The Hundred. For listeners who've never heard of it, which is probably most listeners, there is a new fourth version of cricket after T20 that instead of 120 balls is just 100 balls bowled per game. There's an English league called The Hundred and they have managed to attract some super superstar investors and raised, I think, a billion dollars or close to it.

• 4:03:46David Rosenthal?

  Yep.

• 4:03:47Ben Gilbert?

  At obviously a valuation significantly larger than that for these teams in The Hundred. The Hundred is a four-year-old cricket league based in England. Now, you have a lot of reason to believe because sort of a native sport there that it can be successful. And there should be some cross pollination with India because they're only five hours apart. So there's time zone stuff that could work. But I think The Hundred will be the first challenge to can you create something IPL-like in another country during another time slot?

• 4:04:15David Rosenthal?

  Yep. Except it's not really a challenge because a whole bunch of the IPL franchises are invested in Hundred franchises. So it's sort of like half a challenge, half a further exploration of does IPL use the other leagues to effectively build their own other windows?

• 4:04:32Ben Gilbert?

  Hmm. We'll have to see. Okay, so Playbook, you texted me an interesting question saying for Playbook, why don't we just ask the question, could the MLB or NBA be disrupted like this? Did you have a thought on that?

• 4:04:44David Rosenthal?

  When I texted you the question, I obviously was leading the witness and would have said absolutely 100%. I now think it's a little more gray.

• 4:04:55Ben Gilbert?

  And when you said like this, did you mean what the IPL did to traditional cricket?

• 4:05:00David Rosenthal?

  Yes, the combination of T20, of a new format of the game and a new league that is run with a different business model.

• 4:05:08Ben Gilbert?

  Right, so could someone do that to baseball? And I think reflecting on your comment earlier, you think baseball may not be in bad enough shape in order to warrant this yet.

• 4:05:17David Rosenthal?

  Well, now, after totally uncovering the IPL story, I think there were enough unique and of one dynamics about cricket, the BCCI, T20 coming in and just sort of the state of the primordial soup when IPL was formed, that do make it difficult to replicate directly, probably the biggest of which being the BCCI's overarching control of the sport within India and the coordinated resource of the players and being able to ban them from playing in other leagues. That obviously doesn't exist in the US.

• 4:05:53David Rosenthal?

  I think what is a total analogy is MLB and there's some potential risk of early signs of the NBA too, are going in a direction that long-term will not be good.

• 4:06:12Ben Gilbert?

  I don't know why I would watch one of the first three periods of an NBA game or the first three quarters of the season.

• 4:06:17David Rosenthal?

  The first 95% of the season.

• 4:06:20Ben Gilbert?

  I grew up a Cavs fan, they're the best team in the league and I haven't watched a game yet. There's a huge problem there.

• 4:06:26David Rosenthal?

  Huge, huge problem in the NBA. Now, the NBA is in a better position than MLB because they have a soft salary cap, so not as good as the NFL, but better than no salary cap in the MLB. And they have now moved to mostly a centralized revenue-sharing media rights deal.

• 4:06:44Ben Gilbert?

  Yeah. So next, they need to shrink the number of games and then they need to make sure the stars are playing whenever anybody's going to watch a game and they gotta make every game count and they gotta make every quarter count and then it'll be a great sport.

• 4:06:57David Rosenthal?

  Problem is, those are hard things to do because it's in direct opposition to the media rights.

• 4:07:02Ben Gilbert?

  Every minute less of basketball that is played is many dollars lost.

• 4:07:07David Rosenthal?

  Yep. So, you know, armchair quarterback, armchair GM right now, you know, I think I would diagnose the NBA as fine and in some sense, doing better than ever, but some early red flags that in the long run, if they don't manage the game well.

• 4:07:22Ben Gilbert?

  Worst case, they have 30 more years of success. It's not an immediate problem. It's a problem for two commissioners from now.

• 4:07:28David Rosenthal?

  Yep. MLB, I don't know that it's a this commissioner problem, but like they're farther along the decline curve.

• 4:07:35Ben Gilbert?

  Yep.

• 4:07:36David Rosenthal?

  The rubber is gonna hit the road for MLB once enough generational shift happens that there's just no longer enough supply of players and fans. But all that said, there is one thing really, really going for MLB, which is international. Baseball is an international game and it would be devastating to the sport if American interest continues to decline, both in terms of players and fans, but it's still very, very strong and vibrant in Japan and South Korea.

• 4:08:08Ben Gilbert?

  Yeah, but that doesn't help the MLB.

• 4:08:10David Rosenthal?

  Well, it helps them on the player front and it does help them on the audience front too. I mean, man, Shohei is a very valuable commodity, both in terms of playing on the field and the market that he generates in Japan.

• 4:08:23Ben Gilbert?

  Yep.

• 4:08:23David Rosenthal?

  Anyway, all that to say, baseball is the obvious, and I think you have the first example with the Savannah Bananas. I don't think the Savannah Bananas are going to become the IPL per se.

• 4:08:35Ben Gilbert?

  We gotta do an ACQ too on Savannah Bananas.

• 4:08:37David Rosenthal?

  Oh, we gotta. So for, folks don't know, we alluded to it earlier, but it is a totally zany, incredibly fun, like everything that is sort of a problem for baseball, the Savannah Bananas have fixed.

• 4:08:51Speaker 02

  Except that it is not an actual sport.

• 4:08:53Ben Gilbert?

  Right. It's a pure entertainment product right now.

• 4:08:55Speaker 02

  Yep. But the fact that it exists at all should be very alarming to MLB.

• 4:08:59Ben Gilbert?

  Yep, agree. Okay, I've got three playbook themes in addition to everything we already covered on the history. One, assets can get more valuable with the right owners. Shahrukh Khan deciding to own that team made it much more valuable. This is almost obvious. Like, we started the show and it was called Acquired and we talked about when you could buy something and the right buyer would make it more valuable. But think about if passive money had bought the Kolkata Knight Riders versus Shahrukh Khan buying it. It's

• 4:09:30Speaker 02

  Existential.

• 4:09:31Ben Gilbert?

  I know that, sure, he was made whole right away through the deals, the $5 million we talked about earlier, but he was in the black on brand value for that thing as soon as he bought it because his association is worth so many millions of dollars and him putting his face on it and doing the anthem video and all that great stuff. It's just a smack you in the face reminder of assets need to find the right owner to maximize their value. And sometimes it's just a gigantic multiplier versus passive dollars.

• 4:10:03Speaker 02

  Yep.

• 4:10:04Ben Gilbert?

  My second one is from Arvind at Worldly Partners. "Sports teams are an amazing asset to own." In the write-up that he did that I read to prep for this episode, he highlighted that the big four sports leagues in the US, the MLB, NFL, NBA, and NHL, have outperformed the stock market meaningfully. And over a period of 1961 to 2024, it's 13% annualized versus 10% annualized. And I know it doesn't sound like a lot when I bill it that way.

• 4:10:32Speaker 02

  But that's a long time period.

• 4:10:33Ben Gilbert?

  But the stock market has 550xed during that period, while an index of sports teams is a 2,300x. That's massive. And on top of that, the stock market has these big drawdowns. That doesn't really happen in an index of sports teams. They've also historically been very uncorrelated with the stock market. So these are very scarce assets that sure are nice to own if you can get one. I was thinking a lot about it, like, should everyone have been an automatic yes in the 2008 auction? Probably.

• 4:11:06David Rosenthal?

  I mean, I think everybody who was invited to bid was.

• 4:11:09Ben Gilbert?

  Yes. There are these examples of failed sports leagues, the USFL, the XFL, the Overwatch League. So you're not guaranteed that you're getting into one of these great leagues. But man, once they start to become the dominant league for a sport that people really care about, it's one of the best assets you could own durably.

• 4:11:29David Rosenthal?

  Totally. This is another bull case, at least valuation wise, on IPL franchises that someone made to me in the research. India far punches above its weight relative to its GDP when it comes to billionaires. There are a lot of billionaires in India, so there are a lot of potential buyers of sports franchises in India. And there are only 10 viable major sports franchises, the 10 IPL teams. And let's say they expand to 12, or 14, or 16, you know, whatever. There's going to be more demand for those assets relative to the supply.

• 4:12:03Ben Gilbert?

  Yeah, absolutely. My last one is probably the important question of the episode. You couldn't have the IPL without Lalit Modi, period. So how path dependent was this? Could you have something of this scale and success without taking the good with the bad of everything Lalit accomplished?

• 4:12:29David Rosenthal?

  No way. You needed Lalit Modi.

• 4:12:31Ben Gilbert?

  But did you need every business practice? Would it have been possible for him to create something so valuable and to align so many interests without having allegedly had stakes in three teams? Capitalism is great because when you have an incentive to succeed, you succeed. And if everybody is pushed to succeed, you create value in the world. There's kind of this question of if he was hired into a regulatory bureaucratic organization, could you have created something so valuable without dealing some cards to yourself?

• 4:13:08David Rosenthal?

  I don't think so. The only example I can think of from our sort of acquired canon here is Visa and D. Hawk of a founder of something of this magnitude.

• 4:13:19David Rosenthal?

  That did it without really realizing any equity for himself. I mean, I guess Morris Chang and TSMC too, although Morris over time did get quite a significant stake in TSMC through equity grants and D, I think, got paid quite a bit at Visa too. So it's not to say like it couldn't happen, but I think it's pretty rare. And that BCCI structure was really a blocker for the incentives here. So it's like you almost needed a Lolita to come along and be like, do this on behalf of the BCCI while wetting my beak, so to speak, on the side too.

• 4:13:55Ben Gilbert?

  Right. Yeah, they're a partner with me in creating this.

• 4:13:58David Rosenthal?

  Yeah.

• 4:13:59Ben Gilbert?

  You really do need these crazy D Hawk type above reproach people to walk into a low trust environment, a low trust ecosystem and need to do these deals to create something from nothing without crossing any lines. And it's a rare bird.

• 4:14:18David Rosenthal?

  Yep.

• 4:14:19Ben Gilbert?

  All right, let's land the plane. I have two points to my quintessence. One is Ed Cowan put it best, if you were to design a sports league to maximize the bottom line, this is how you would do it. My second one is this is the product, and I mean that in a mathematical sense, multiply these things together. The Indian middle class emergence, TV penetration and smartphone explosion. The TV penetration went from 40% to 74% during the IPL's run. Internet usage went from under 5% to over 60% today. The population, the literal number of people increased by 230 million.

• 4:15:01Ben Gilbert?

  That is the adult population of the US stacked onto the existing population since the IPL was created is just this perfect storm of tailwinds for this to exist.

• 4:15:13David Rosenthal?

  Yep, 100%. All right. I've got a quintessence for IPL and then I have two related broader takeaways associated with it. My quintessence for the IPL is that they, and by they, I mean specifically Lolita Modi and IMG, designed the thus far most perfect sports entertainment product that mankind has ever known. Previous to the IPL, that was the NFL, but they actually managed to improve the sports entertainment product.

• 4:15:54David Rosenthal?

  If you are designing a sports entertainment product for the modern media landscape, the NFL, because of its history, it actually started in the previous pre-television world and certainly pre-streaming world.

• 4:16:09Ben Gilbert?

  Hmm.

• 4:16:10David Rosenthal?

  It's kind of an accident that the NFL was able to massage the product enough. And Pete Rozell made enough great decisions to make it so compelling as it is now. But it's only 75% of the way there. The IPL, though, from whole cloth, was designed as a major league in the post-television and anticipating streaming and social media world. And so this architecting of the one game every night, every match matters. I mean, it's Monday Night Football every single night.

• 4:16:42Ben Gilbert?

  For two whole months.

• 4:16:43David Rosenthal?

  And then explicitly bringing in the Bollywood, the Taylor Swift element. Like, we've seen what Taylor Swift did for the NFL.

• 4:16:50Ben Gilbert?

  Accidentally on a one-off basis.

• 4:16:52David Rosenthal?

  Right, and this was architected from day one. The fact that viewership of the IPL is truly 50/50, gender equal.

• 4:17:03Ben Gilbert?

  Yeah.

• 4:17:03David Rosenthal?

  There's no other men's sports league like that in the entire world.

• 4:17:07Ben Gilbert?

  It is astonishing that they managed to make something that, for your argument, it's the perfect entertainment product, that is not physical, like the NFL is. I always assumed the brutality was actually part, required to be that entertaining.

• 4:17:23David Rosenthal?

  No, and in fact, thinking about it through this lens, it totally holds the NFL back. Whereas the IPL, like, was architected from day one of, we need to sell shampoos and beauty products here.

• 4:17:32Ben Gilbert?

  Right, and the brutality definitely holds the NFL back from its future. It's so core to the sport, but also a hindrance to it.

• 4:17:40David Rosenthal?

  Totally, concussions, et cetera. Okay, so that is my quintessence on the IPL. And then my two takeaways are, this is an amazing case study of- Sports truly are, we talked about this in the NFL episode, the most important media property in the world today. Because they are the only property left where there is true uncertainty. And this true appointment live viewing has to happen. There's nothing else left.

• 4:18:09Ben Gilbert?

  Yeah, it's that and award shows. The Oscars, you don't know who's gonna win.

• 4:18:13David Rosenthal?

  Yeah, the Oscars, sure, but that's one time a year.

• 4:18:15Ben Gilbert?

  Right, yeah.

• 4:18:16David Rosenthal?

  But the fact that they were able, and this comes back to IPL being the perfectly designed sports entertainment product. Sports are king in live content in the modern world.

• 4:18:27Ben Gilbert?

  Fun fact, Bollywood studios are now very, very, very reticent to release movies during the IPL season because they don't want to go head to head. And this two month period is effectively their summer. It's when kids are out of school. And so Bollywood is no longer releasing their blockbusters during the best time to release blockbusters because they don't want to compete with IPL. That says it all.

• 4:18:55David Rosenthal?

  Right, the best Bollywood product is the IPL games right now. Amazing. And then my second takeaway is that even I, before doing this, had no idea. You may listen to this and think my bull case, and certainly my mega bull case, is crazy. I actually don't think they're crazy. There is a possible future here where this thing is as big or bigger than the NFL.

• 4:19:20Ben Gilbert?

  I hope acquired keeps going for another couple of decades. So you and I can test this thesis.

• 4:19:25David Rosenthal?

  And we can see, yeah.

• 4:19:26Ben Gilbert?

  Ah, awesome. I'm so pumped we did this episode.

• 4:19:29David Rosenthal?

  Me too, this was so fun. Of course, as a cricket fan, I'm biased, but.

• 4:19:33Ben Gilbert?

  You're gonna have to let us know what you think in the Slack. How off his rocker is David? Carvouts?

• 4:19:38David Rosenthal?

  Carvouts, let's do it.

• 4:19:40Ben Gilbert?

  First one I have is Severance, season two. By the time this airs, I think Severance will have just ended. But season two is just exceptional. This is a work of art. It's brilliant cinematography, brilliant story. The whole thing is incredibly high taste. And I coincidentally also just rewatched Lost, which I will say was a mistake. Lost didn't go anywhere. It was a great journey and then there was no reward. And it turns out that the writers didn't have a cohesive plan. I feel like Severance, I'm in good hands. Maybe I'm over trusting right now, but I feel like I have some guesses. I can see where it's going. And I've been afraid of mystery box style shows since Lost disappointed me. And I think Severance is going to give me a warm, nice embrace. So thanks to Ben Stiller and the crew there.

• 4:20:25David Rosenthal?

  That's why sports are king. True uncertainty. You can't count on scripted television anymore.

• 4:20:31Ben Gilbert?

  It's true.

• 4:20:32David Rosenthal?

  Maybe Severance will bring it back.

• 4:20:33Ben Gilbert?

  Yeah, Severance is so great.

• 4:20:35David Rosenthal?

  My carve out is an oldie, but definitely goodie. At least as far as acquired is concerned, because actually I think as much as anything, it was our original inspiration for doing the show. And that is Strategery and Ben Thompson.

• 4:20:49Ben Gilbert?

  Yeah, he's been killing it recently.

• 4:20:51David Rosenthal?

  Obviously I've been a fan for a decade, but like he is just killing it. Both Strategery itself, but I'm also loving Sharp Tech, the show that he does with Andrew Sharp, bi-weekly show as part of the Strategery Plus bundle. I just think he's doing some of, if not his best work of his career right now, which is saying a lot. This is the man who invented aggregation theory and I'm just loving the work he's doing.

• 4:21:15Ben Gilbert?

  In his second decade. Yeah, I agree. It's his best work yet in the AI era.

• 4:21:19David Rosenthal?

  I would say he was an inspiration to us when we started acquired. And he continues to be an inspiration to us as we get ready to enter our second decade here.

• 4:21:28Ben Gilbert?

  Yep.

• 4:21:29David Rosenthal?

  Okay, that's carve out number one. And then I got parenting carve out number two. We went on a family trip to Dallas recently. And for the first time, when traveling as just our own family of four here, rented a minivan. I have rented a minivan in the past when traveling with, you know, multiple families and groups, but we bit the bullet, rented one for a trip. And I gotta say, like, it was freaking amazing. I'm not going to buy a minivan. I'm not going to drive one on a day to day basis here in the city in San Francisco. But my God, traveling as a family of four, the thing is a beast. And the sliding doors and loading up the cargo.

• 4:22:06Ben Gilbert?

  You gotta get Priscilla's Porsche minivan.

• 4:22:09David Rosenthal?

  That is exactly what I need. I need the Priscilla minivan.

• 4:22:15David Rosenthal?

  That is my carve out.

• 4:22:16Ben Gilbert?

  Awesome. All right. Next time I'm down.

• 4:22:18David Rosenthal?

  I'll send her a WhatsApp.

• 4:22:19Ben Gilbert?

  Let's rent a minivan and we'll go for a ride.

• 4:22:22David Rosenthal?

  Yeah.

• 4:22:23Ben Gilbert?

  All right. On that note, special thank you to all of the cricket fans that we talked to and people who helped, who are in and around the game. A few that we want to thank in particular on air are Soma Soma Sagar, one of the owners, along with Satya Nadella of the Major League Cricket team in the US, the Seattle Orcas. He is of course, a partner at Madrona Venture Group here in Seattle and a former Microsoft exec who helped us on those episodes too. Arvind Navarathnam at Worldly Partners for his great write-up, linked in the show notes. Ed Cowan. David, you want to say a few words about Ed?

• 4:22:55David Rosenthal?

  Yes. Ed is a great friend of the show and former professional Test international Australian cricket player himself and did the great, great business breakdowns episode on the IPL that we'll link to. Next to Finn Bradshaw. Finn is the head of digital for the ICC and was super generous to talk to me. He's based in Dubai and stayed up very late at night to chat with me about how the ICC works and the PCCI and all the dynamics there.

• 4:23:26Ben Gilbert?

  This is so fun. I actually had no idea who you talked to, other than Ed.

• 4:23:29David Rosenthal?

  Yeah. Finn was great. And extra thank you there to the management team at the Golden State Warriors who connected me with Finn. And then finally, thank you to Parag Marate, the president of the 49ers. Parag is awesome. His day job is literally president of the 49ers.

• 4:23:47Ben Gilbert?

  Some relevant experience.

• 4:23:48David Rosenthal?

  His evening job is chairman of the Leeds Football Club, the soccer team in England that the 49ers are the majority owners of.

• 4:23:58Ben Gilbert?

  Huh.

• 4:23:58David Rosenthal?

  And then for a long time, his night job was basically leading, setting up Major League Cricket in the US. Parag was awesome on so many dynamics, but especially sanity checking and talking through this crazy bowl and mega bowl case for IPL.

• 4:24:14Ben Gilbert?

  It's awesome. All right. Well, if you liked this episode, go check out our other episodes on the NBA or the NFL. If you want more acquired, check out ACQ2, recent episode with Bill McDermott, the CEO of ServiceNow. And after you finish this episode, come talk about it at acquired.fm/slash/Slack. With that, listeners, we'll see you next time.

• 4:24:33David Rosenthal?

  We'll see you next time.

• 4:24:38Speaker 03

  Is it you, is it you, is it you? Who got the truth now? Huh?