ODI World Cup is for sport, not economy

From the perspective of governance of cricket in India, BCCI has many tough questions to answer. Especially on revenues and expenditures, which remain a black box. The board’s influence at this point extends all the way into ICC too. Close to 40 percent of the revenue made by ICC will also land in BCCI's pocket. To get a sense of what that revenue looks like, the board will make Rs 1,900 crore per year between 2024 - 2027 from ICC.

If BCCI was a company, its peers in revenue would perhaps be Bata, the shoe company in India. But because it's an institution with privileges, it pays fewer taxes compared to a company. There are no shareholders to keep it accountable either. BCCI also has monopoly over governance of cricket, and does not believe in being transparent and accountable, as found out by the Lodha Committee who studied its functioning on a Supreme Court order.

Cricket scholar Ramachandra Guha points out in his book, “BCCI’s finances are shrouded in secrecy”. On speculating BCCI’s revenue, his book informs that, “those who have attempted such estimates claim that the board’s annual revenues are in the region of US$ 250 million (Rs 2,080 crore)”.

Any large number attributed to the gains made from cricket, to be sure, is not the country’s gain. It is the board’s gain alone.

Economy is about investments, not just spending

A Bank of Baroda estimate puts gain to the economy from hosting the world cup this year at Rs 18,000 crore - 22,000 crore. Unfortunately, an expansion of the economy cannot be arrived at by adding numbers of gains made to certain groups, this way. At this point, many reports are headlining this number. It is at best a simplistic arithmetic. The economy is a forest, and the world cup may just be one tree in it. It’ll be strange to say the forest has grown thanks to one tree.

An economy doesn’t grow just by expenditure. It grows when the level of productive trade and exchange between firms and people increase. And that happens when savings in the economy rise. Savings start a virtuous cycle when the finance sector is able to pass them to a firm to turn it into investment, and with enterprise, the economy makes gains on profits and employment. The Rs 18,000 crore estimate is spending, not investment. And this spending is a pittance from the perspective of the economy. A figure that captures the need of the economy is Rs 111 lakh crore – the money that government of India estimates is required to build infrastructure between 2020-2025. A boost to the economy will come from whatever progress India is able to make on this large sum of money.

Unfortunately, so far, even spending has been low. The Narendra Modi stadium in Ahmedabad was near empty for what is usually the crowd puller opening game. Chennai too had fewer crowds to cheer India on in its opening match. Arun Jaitley stadium in New Delhi also had far fewer people attending to see India play Afghanistan.

Firms, and some groups attached to the business of cricket, may still gain, even if little. But this gain to the economy cannot be estimated without considering costs.

There are costs, large and unseen

The world cup will cost the economy in many unseen ways. One of them is security and rule of law. One of the largest concerns for any cricket team, and when gatherings congregate, is security. It's often state-operated police forces that are called to provide this security. With festivities on for the entire time duration, to manage security, police, and keep rule of law, is going to be more challenging. This cost is almost never internalized, because it's easy to push it to the taxpayer. Reports suggest that the government of Maharashtra brought down the cost to BCCI for policing a match from Rs 70 lakh to Rs 10 lakh. And whatever is charged is likely to remain unrecovered even when Police is involved. Mumbai Cricket Association – a member of the BCCI club – owes Mumbai Police Rs 15 crore since 2011. Police force in India is far fewer than required, and of what exists, is appropriated for the tournament. This cost does not even include the time and cost of traffic management and VIP security given to individuals.

Judges of the world cup’s greatness must be cricket fans. Followers in every sense, viewers, players, broadcasters, among others. But to bring good economics behind it needs understanding of the long and indirect consequences, and estimation of costs, visible and hidden, considered for all groups, industries and taxpayers, just to start with.