How to game the IPL auction system

If you have the money, the current model can be hugely exploited...

All the recent chat in the IPL has focused on the Hardik Pandya trade from Gujarat Titans to Mumbai Indians, with the all-rounder moving in an all-cash trade where MI take his salary off GT’s books and pay GT an undisclosed fee for losing their captain and star player. From reports, GT receive half whatever this undisclosed fee is, and Hardik receives the other half.

However, from a player recruitment perspective, GT seemingly cannot reinvest whatever they have received from this transfer fee. Teams don’t have the ability to add the transfer fee to their auction budget. This is a very important point to make, because the transfer fee - unlike in football - cannot be reinvested to improve the squad further. In football, for example, Tottenham sold Harry Kane in the summer for around £100m, but have the ability to reinvest this in their squad. A football team can, should they wish, cash in on an asset with a view to improving a number of other roles in their squad. A team can’t do that right now in cricket.

While it’s impossible to be certain on whether this is the first example of such a trading situation in the IPL, I’m pretty sure that it’s the first time that an IPL team has been confirmed by the media as paying an undisclosed fee for a player, and there are serious implications for the auction model following this. It is my view that the auction system can be seriously gamed given the additional knowledge of how a trading system could work following Mumbai’s Hardik purchase.

At this juncture, it’s vital to make the point that Mumbai have done nothing wrong whatsoever with their purchase of Hardik. The rules are there and they’ve acted within them, and have created a situation whereby they’ve been able to strengthen their squad while weakening that of a rivals squad. However, it is my view that both Gujurat Titans and Royal Challengers Bangalore (who subsequently facilitated the trade with their purchase of Cameron Green from Mumbai to free up their budget for Hardik) need to urgently pick up a quick lesson in game theory. I perceive their decision-making in this situation to be far from optimal, at least from the perspective of maximising their chances of on-pitch success.

Yesterday on X/Twitter, I asked if anyone could work out the relationship between the following players:-

Nobody was able to quite get the exact answer, although a few managed to get pretty close. Credit to a few here:-

Credit to Justsearching43 who got the closest to the right answer. If I had a prize to award, they would be getting it!

The thing these players have in common is that they would generate a far higher sale price in the open market in auction (particularly in a mini-auction) than they have currently been retained for. Their current retention price is almost certainly hugely lower than an open market value expectation would be.

This is one of the major issues with the major auction/mini auction cycle. Unless a player wants to leave their current franchise, they’re mostly stuck with the same salary which they are bought for. Jitesh Sharma, for example, was bought by PBKS in the mega auction for 20 lakh (around £20,000) and was retained at the same price, despite now having broken into the India T20 team - with the scarcity of domestic keepers who are ultra-attacking with the bat, as Jitesh is, he’d be expected to go for a price potentially 30x or greater in excess of his current retention price in the open market.

Some may argue that, using this example, Jitesh just has to wait for the mega auction to cash in, but that’s not a point of view which is universally correct. There have been many examples of relatively low-paid players who, as a commodity, have peaked during the middle of an auction cycle, and whose stock then fell ahead of the mega auction. Then, they didn’t get the pay day that they would have likely received during the cycle when their performances were at their best. Someone like Shreyas Gopal springs to mind here.

Now it’s time to tie this situation in with the Hardik Pandya to Mumbai Indians trade, and I’ll explain in a little more detail how I think the current auction system can be gamed.

Let’s imagine a hypothetical IPL team owned by one of the richest people in the world (not far from the truth with owners of some franchises), who understood this concept better than the management of rival teams.

They then identify some or all of the 14 players I listed who all have the same undervalued dynamic in common as players that they want as part of their squad. All cost between 20 lakh (around £20,000) and 2 Crore (around £200,000) when they were last purchased at auction, and this is their current retention price.

These prices are tiny proportions of an IPL franchise’s auction purse, so they represent great value as a trading proposition. So, I ask the following question…

What is stopping an extremely wealthy owner from gaming the system by offering a high transfer fee for those players in the example, with the fee split between current franchise of the player, and the player themselves. Then, the wealthy owner can recruit them for their franchise at a bargain ‘salary’ which barely affects their auction purse.

Essentially, in this scenario, a team could build a roster comprising of undervalued players/future superstars, and then have a huge budget for various world-class marquee players as well.

It will be fascinating to see whether this space develops, and if any team is smart enough to recognise this huge market opportunity. As long as the rules permit such an opportunity, a team could rapidly build a squad far superior to their rivals, weakening them in the process. Whether the rules continue to allow them to do so is obviously a complete unknown.

I must admit that I did think twice before posting this content, but given that I’m not with a current team having left PBKS in 2022, and previous negotiations for a deal with a franchise for the upcoming season not yet coming to any conclusion ahead of the imminent auction, I thought I’d post it as an example of the type of out-of-the-box thinking which I can bring to any organisation.

Anyone keen to discuss future opportunities and how I can help their organisations can get in touch via sportsanalyticsadvantage@gmail.com.