An Analyst’s Perspective
‘While all the selling seems to be based on China and the price of oil, I really don’t know what the long-term implications for our stock market is. So I follow the number one rule of investing. When you don’t know what to do. Do nothing.’ - Mark Cuban
The American entrepreneur Mark Cuban wrote this in 2016, but he might as well have written it during these times. For the price of oil to have dropped into negative territory was shocking, but unsurprising. Put simply, production exceeded demand, which was different to the 2008 financial crisis where investors were willing to pay certain central banks to keep their money safe.
For me as an analyst, every format of cricket can be seen as an asset class. Many people have made their mind up about ‘investing’ their attention in international cricket, but they can also embrace formats other than those they started with. I see people coming into the long-form game through One Day Internationals, T20 Internationals or local T20 Tournaments. The domestic game is the lifeblood of international cricket, for without it there is no clear way of strengthening the national squad.
Eighteen counties play in the County Championship, The Royal London One Day Cup and the Vitality Blast. The Hundred, the new tournament for 2020, has been postponed until next year. It is English cricket's equivalent of Brexit, although unlike Brexit, The Hundred is hardly being discussed globally apart from amongst writers, bloggers, podcasters and those directly involved.
The Hundred is new and untested - hence a risky format - whose playing conditions are foreign, yet are supposed to be familiar. It has been claimed that it was created after extensive research on how to take the game to the next level and attract a new fan base. To date, this research has not been released, although there are rumours the ECB will do so. As an analyst I will not form an opinion until I see the research or the game myself.
Also, as an analyst I see The Hundred as the ‘Smart Beta’ of the cricket world. After the 2008 crisis, there was a dramatic inflow of money into Exchange Traded Funds which led to claims that investment portfolios had become too risky. The solution was an automated system which traded financial instruments based on predetermined parameters. However, in truth this only ended up increasing risk by decreasing the overall diversity of the portfolio.
This analogy leads to the first problem that The Hundred creates. There is currently a clear structure in domestic cricket. The County Championship has two divisions, and the One Day Cup and T20 Blast have regional divisions. Some changes could be made and have already been recommended, if not yet implemented. With The Hundred players have to prioritise between international, domestic and franchise cricket. The IPL is used as a benchmark for T20 leagues, but India does not play any other cricket during the IPL window, and the stars of Indian cricket play only in the IPL. This is in complete contrast to The Hundred, where there is no guarantee that you will see the local ‘icons’ as they may be playing Tests or One Day Internationals, diluting the quality of The Hundred. The overlap with the One Day Cup could also mean that the best English white-ball players will have little match practice before an international series.
The second problem is the sponsorship of the format. Given the aim is to make The Hundred global and to license various aspects to other countries, there is no serious money put into it. In the IPL, the franchises are owned by celebrities and corporations. In 2018, KP Snacks had a net profit of £13.8m; while Vivo bought the rights to IPL for about $330 million. On 9 March 2020, Mukesh Ambani, who owns Mumbai Indians, lost $5.6 billion in a single day.
KP Snacks has committed to The Hundred but what will happen if their profits fall in the future? The numbers involved and the possible alternative ways in which the money could have been spent is staggering. This has been dealt with comprehensively by Andy Nash in the House of Commons Digital, Culture, Media and Sports Committee hearing on the ‘Future of English Cricket’, and in the second issue of County Cricket Matters.
As an analyst, there are several ways by which I will measure the success of The Hundred. Firstly, whether it will develop new players and act as an additional feeder to the domestic scene. Secondly whether the international team ends up winning more tournaments because of The Hundred. Finally, it will be the number of followers of all formats of the game together, or whether one will cannibalise another. The only cannibalisation that has occurred so far is that players are beginning to choose between red and white-ball cricket. I can understand this even if I do not agree with it. It is not a bad thing to have specialist white-ball players who develop specific skills needed in the shorter format of the game. It will also help prolong the career of players.
However, I view red-ball cricket as the epitome of cricket. There is nothing more exciting than seeing a battle between ball and bat while the sweet sound of Jerusalem resonates through the stands. I have only followed English domestic cricket for the past few years, but I started playing cricket on the dusty grounds of India and not on lush green grass. It was the magic of Anil Kumble bowling against Pakistan in the ODIs at Sharjah that captivated me. Then came the 2005 Ashes and my love for Test cricket was reignited by Flintoff and Pietersen. I went from following ODIs to Tests, to the IPL and finally English domestic cricket. The numbers are stacked against any meaningful domestic competition happening this season, but the beauty of being an analyst is that we always look to the future.
Prashanth Soans has been a hedge fund & equity analyst for 14 years. His passion for writing led him to blog about alternative cricket analysis on https://coverdriveanalyst.com