RTM with additional features
The first option is to have a rule requiring the team to exercise RTM to top the highest bid at the auction by the incremental bid in that slab. For example, if the highest bid for a player is Rs 10 crore, then the team exercising RTM will have to pay a certain percentage over this amount. Depending on the industry and nature of the contract, top-ups over the winning bid is usually in the region of 5-25 per cent.
The second option is to fix the maximum number of retentions. In earlier auctions, the rules permitted payment of Rs 16, 12, 8 and 6 crore to the first, second, third and fourth choice players, respectively.
Suppose for arguments sake, now eight players can be retained and IPL rules do not specify a retention price slab but allow the team to negotiate with the players. Thus each team would have the right of first offer (RoFO) to the player – which the player can accept or decline. The offer price is recorded by the IPL authorities but not disclosed if the player declines. If the player accepts, he is retained; else, he goes to the auction.
Here, the player takes the risk of being unsold or sold at a lower price. If the highest bid received by the player is lower than the amount offered by his original team, then the original team has the option to match this price and retain him. Under this scenario, the player is aware of the principle of ‘no risk, no gain’.
All these transactions have to respect the overarching guideline for all teams – to not exceed the total budget and to fulfill the minimum and maximum number of players any team needs to have on its roster.
If there was no ambiguity over these rules, a staggering 2,500-odd research articles would not have been written on RoFR since 2020. That’s why Ashwin’s concern cannot be dismissed. And why those designing government auctions should stay tuned to the IPL debate.
(Views are personal)
S Chandrasekhar
Professor, Indira Gandhi Institute of Development Research
Shivangi Chandel
Associate Professor, O P Jindal Global University
