Similarities between IPL Crisis and financial crisis

Watching this entire IPL crisis unfold, In was just thinking about the financial crisis. I could think of some similarities. Here they go:

• In each case, things looked great before the crisis. IPL was seen as a great cricket event leading to ultimate globalisation of cricket. Cricketers from all around the world came to India and played for Indian teams. Indian fans cheered for their teams irrespective of nationality. Same was the case with great financial firms. They were seen as leaders of the financial globalization which was leading to substanital gains in world economy.
• IPL drew talent from all around the world and same was the case with finance. The cricketers started earning salaries never seen before. Just as we saw in finance, salaries of cricketers who came to IPL grew sharply.
• IPL owners were already big businessmen/celebrities. The organisers too became celebrities in their own right featuring as powerful sports administrators in the world. They started featuring in top magazines lists. Same was the case with so many finance executives. Together they were called as alchemists.
• Behind the scene, things were getting murky. Some people raised concerns over IPL as was the case with great finance. However they were all ignored as the guys running the show just sidelined them. David Wessel recently interviewed Raghu Rajan. Rajan was one of the few who looked at great finan ce with a concern. But was ignored by Greenspan and others. Wessel draws an important lesson:

One lesson from the crisis: When nine of 10 experts say everything is fine, the press should devote more than 10% of its coverage to those who say it isn’t fine. I should have paid more attention to Mr. Rajan, who famously ruined a 2005 Federal Reserve celebration of Alan Greenspan’s career by suggesting that big banks might be steering the world economy off the cliff. (“I felt like an early Christian who had wandered into a convention of half-starved lions,” he says.)

Same was the case with IPL. Few people did raise concerns but were ignored. As all was well till then.

• And then suddenly all hell broke loose. Just like sub-prime loans was a trigger for far bigger crisis to come, the Sunanda Pushkar episode also provided a trigger for a bigger crisis to come.  Like the financial forms collapsed like a pack of cards, same was the case with IPL. One event led to another and questions started brewing asked from all possible angles
• At the time of financial crisis, there was a joke about financial firms balance sheet which was just too apt. It said in the fin firms balance sheet, nothing was right on the left side and nothing was left on the right side. Meaning both assets and liabilities of the firm were dicey. Same is the issue coming with ownership of IPL teams. The questions are being raised over taxation, valuation of teams, earnings, etc. Like it was difficult to understand the ownership and balance sheets of the fin firms same was the case with IPL teams as well. The alchemy was all in the air.
• In both cases, role of people running the show has come under severe q-mark. The top execs of the fin firms are facing many senate hearings answering tough questions. A financial crisis inquiry commission is also set up. IPL was governed by a council which had eminent people as well but none raised questions
• In both cases, role of governments has come under shadow. In the financial crisis, role of political economy and how financial firms have become oligopolies, pay maximum for elections etc has come to the fore. Some like John Taylor blame the government for the crisis. In IPL too, role of Indian government has come under shadow. Allegations are flying think and fast  over role of politicians in the IPL crisis. Whether certain politicians helped certain teams bid, or were silent bidders is the talk of the nation

What else? I will keep adding to the list as and when I get more ideas. Let me know your views as well.

I also recall my earlier post comparing Sydney Cricket Test Match between India-Australia and sub-prime crisis as well. You know what. Having read stuff on financial crisis and with other economists comparing it with meteorology, fire, etc. I get a feeling most crisis (financial and others) have some similar underpinnings. The other day I was seeing this documentary on three ships build along with Titanic. All three collapsed but the broad theme was similar as we see in this financial (or IPL) crisis.