IPL Auctions - Market Dynamics

Introducing a series of articles showcasing examples of market edges derived from data-driven analysis

When planning for an auction, it is vital to understand current expected player performance levels, and the prices at auction which those levels represent.

There are a number of factors, frequently called ‘market dynamics’, which will influence those prices and taking into account as many of these as possible will enable teams to make positive expectation recruitment decisions at auction. This series of articles and threads will look at a number of these market dynamics.

The IPL teams recruitment decisions will be particularly critical ahead of the 2025 season, when there will be a mega auction. While the number of retentions hasn’t been specified yet, it is anticipated that most teams will be largely rebuilt, and will be looking to create at least a medium-term structure with a three-year auction cycle in prospect.

With this in mind, it is vital that IPL teams plan well and construct a squad which maximises on-pitch value for the next auction cycle. As several teams, such as Delhi Capitals and Mumbai Indians have illustrated to some extent, one bad mega auction can lead to a number of difficult seasons subsequently - and this will potentially have an adverse impact on brand value as well.

In theory at least, this means that teams might want to be aware not just about current expected player performance levels, but also about future ones too. For example - will young players get better with experience, and which young players warrant time and investment? Are older players showing signs of decline which can only get worse?

This is rather different compared to the mini auction prior to this year’s tournament, where there is one year left of the cycle and a ‘win now’ mentality becomes a much more viable strategy. Investment in young players who are extremely unlikely to be retained (due to a constrained number of retentions) has less value one year before a mega auction, compared to when at a mega auction.

Despite this, a number of teams at this year’s mini auction did purchase young or unproven players for considerable sums of money - a questionable strategy, particularly if they don’t retain them.

Sameer Rizvi (20) - 8.4Cr to Chennai Super Kings

Kumar Kushagra (19) - 7.2Cr to Delhi Capitals

Robin Minz (21) - 3.6Cr to Gujarat Titans

Furthermore, it’s worth pointing out that no domestic player with zero IPL experience cost more than 3Cr in the 2022 mega auction (Sai Kishore). So, even considering the constrained environment of a mini auction, teams one year ahead of a mega auction can be questioned regarding recruiting in a rather illogical manner - spending large sums on young & inexperienced players they are likely to neither retain or play in an influential role this year - while taking a more economical approach to these type of players in a mega auction, which is a stage in the auction cycle where it actually makes more sense to invest in long-term talent.

Don’t get me wrong, investing in young players can be a very good strategy. It’s actually an unbelievably good strategy in some leagues and formats with certain dynamics. If you’re a small club in county cricket in England, for example, it’s often a great plan because you don’t have an auction/draft environment and there’s a lot of talent blocked at big clubs who will be cost-effective and looking for opportunities.

However, is it a good strategy for an IPL team paying big bucks for young players with zero IPL experience and without an incredible track record in a lower level tournament one year ahead of a mega auction? Not so much.

While Minz was injured, Kushagra has faced just four balls in three matches, scoring one run for DC, while Rizvi has scored 36 runs from 35 balls in seven matches for CSK. At a total cost of 15.6Cr between the two, it’s difficult to argue that the money was well spent.

At this point it is important to note that at no stage am I saying that these players are not going to be good players. Anyone making that assumption that I am thinking that, and therefore writing these players off, is completely wrong. What I am saying is that they were not good purchases by these teams at this price at this stage of their career and at this stage of the auction cycle.

That clarification and additional definition is critical and brings into focus something I mentioned previously - auction dynamics. A young player, for example, should be more valuable to teams in a mega auction, and an older player more valuable to teams one year before a mega auction.

In an efficient market, this should be simple supply and demand economics, with teams rationalizing this and making prudent decisions accordingly. An IPL player, as a commodity, should see their price rise and fall based on performances and the supply and demand dynamics of the particular league at the particular stage of the auction cycle.

However, teams often don’t make rational recruitment decisions, and it’s also far from a given that they even consider these factors when valuing players. In my experience, (and I’m not necessarily talking IPL here) it’s usually someone like myself raising these points as opposed to coaches, general managers or directors of cricket.

Often like commentators, a coach might be very good technically in terms of understanding how to help a player, and in addition be a good organiser, communicator and motivator, but are they game theory experts understanding all market dynamics at play and the fluctuating commodity levels of players? Some will be better than others, but in my experience, it’s not usually their strength.

Understanding player value as a commodity, or the ‘share price’ of a player is an extremely valuable way to understand what they are likely to bring to a team when recruited. As this series of articles and threads continue, I’m going to look at some of the various different market dynamics which can influence that ‘share price’ of a player and decisions of a team in the auction environment, and explain why the value of a player for one team is not the same as the value of the same player for another team.

I’m also going to be looking at strong strategies for teams looking to construct a squad largely from scratch (as they will have to do ahead of the 2025 mega auction), having had experience doing so in the 2022 mega auction with PBKS and in 2019 ahead of the first The Hundred men’s tournament with Birmingham Phoenix.

The next article in this series will look at player age dynamics, and whether IPL teams are overpaying or underpaying for experience or young talent, and the effect this should have in terms of market value for players as they improve or decline.

Anyone interested in discussing how I can help their team with strategic management and data-driven analysis, or contribute to any media work, can get in touch at sportsanalyticsadvantage@gmail.com.