22 Jul 2016 21:35 IST

Cricket and the economics of property rights

If ‘Presidentship’ of a cricket association is an asset, losing it constitutes destruction of ownership rights

It is early days yet. But it looks as though it is curtains for the heads of at least two of the three cricket associations (Saurashtra, Baroda and Gujarat cricket associations) in the State of Gujarat. This follows a Supreme Court endorsement of a key recommendation by the Court appointed expert committee headed by Justice RM Lodha, which went into the affairs of the Board of Control for Cricket in India (BCCI). The Committee recommended, and the Supreme Court has now endorsed, that there shall be only one member association per State.

Gujarat is represented by the cricket associations of Saurashtra, Baroda and the rest of Gujarat. Now there are historical reasons (largely owing to how Britain administered pre-Independence India) why Gujarat ended up holding three votes where as large a State as Tamil Nadu with even better cricket infrastructure than even the combined infrastructure of all the three in Gujarat, had to rest content with just one vote.

No matter, the situation is that the three associations in Gujarat have to be merged into one if the Lodha Committee report is implemented by the BCCI. Well, they have to as they really have no choice in the matter. The Supreme Court, after all, is right because it is the last word on a subject. Although, if you ask the BCCI, they might say that the Supreme Court is the last word although that doesn’t necessarily make it right.

Stripped of ownership rights

All the same, since there can only be one President of the composite Gujarat Cricket Association and represent the State in the BCCI for the administration of cricket in India as against all the three, as is the case now, two of them if not all three face the prospect no longer being able to influence the course of events of cricket in the country. Thus of the three — namely, Amit Shah (Gujarat Cricket Association), Jitendra Patel (Baroda Cricket Association) and Lal Rathod (Saurashtra Cricket Association) — two have to make way for the third or possibly even all three must make way for a completely new person to represent the State of Gujarat in the BCCI.

Their predicament is shared by similar individuals in Maharashtra where, historically, cricket had been administered by associations representing the regions of Mumbai, Vidarbha and the Rest of Maharashtra, with Mumbai alone having two associations in the form of the Mumbai Cricket Association and the Cricket Club of India. The presidents of the respective associations will have to come to some understanding on this issue.

The consequence of the latest judicial fiat is that some within the existing management structure of the BCCI run the risk of being stripped of their ownership rights in a piece of property. How is the ‘Presidentship’ of a cricket association an asset and how does the prospect of losing it constitute the destruction of ownership rights in that asset? Well, at a superficial level there is some prestige and influence, not to mention the opportunity of being in the limelight of the media that they now stand denuded of.

Intangible value

It is difficult to ascribe a money value to these things but that doesn’t make them any the less valuable to the owner of that privilege or consider, for that matter, that somebody might not be averse to exchanging it for monetary consideration. But at a more tangible level, each one of these associations is part of a 30-member strong body that is the BCCI. In other words, each one of these associations, in the persona of a President, enjoyed a one-thirtieth voice (ownership right) in the running of the game of cricket in India. But the new stipulation of ‘one-State, one-vote’ effectively takes away a substantial chunk of the ownership right that some enjoyed in the management of the country’s cricket affairs.

To many it may appear that the right to manage cricketing affairs is a burden rather than a privilege that springs from ownership of a property. But a proper analysis of the notion of property and the bundle of embedded rights therein, would clearly show that there exists a property and the Supreme Court’s endorsement has the effect of taking it away.

One issue that needs to be clearly understood is this: property need not consist of only tangible pieces of assets. If that were so, there would have been no concept of value implicit in a piece of creative writing (copyright) or an intellectual insight implicit in the manufacture of a drug having commercial value (patent) or a form of artistic design in merchandising a product (trademark). Each one of these is an intangible asset and eminently capable of generating material benefits, financial or otherwise.

What is ownership?

That brings us to an examination of the next question — namely, whether the right to exclusively manage the cricketing affairs of a particular region and the right to manage such affairs in association with others, that of cricket in India. Ownership of a piece of property implies the existence of certain attributes. Economic literature identifies five important ones. These are:

The right of ‘possession’ over that property. The mere fact of owning an asset gives the owner some satisfaction that a person who doesn’t possess it does not enjoy. In the instant case, office bearers in the affected associations derived some satisfaction in being able to manage cricket in their respective regions while everyone else was kept out.

The right of ‘control’ consists of the owner being able to decide to what use a property can be put. If it is a house, the owner gets to decide whether he will let it out and, within the act of letting it out, choosing between options as residential or commercial use and so on. In the instant case, the cricket management right confers on the owner the freedom to decide on one among the multifarious means by which cricket can be promoted in the country.

The right of ‘exclusion’. This consists of denying everybody else the right to enjoy the benefits flowing from such an ownership. As the President of Saurashtra Cricket Association you excluded everyone else from exercising the right to control the cricketing affairs in the country.

Then there is, of course, the right of ‘enjoyment’. For example, one derives some satisfaction in merely possessing a house but experiences added joy in living in it. So it is with cricket administration; you can derive pleasure by merely being part of the set-up but also extract additional joy in exercising authority over such matters as the right to choose a panel of cricketers who will then select players to represent the Indian cricket team.

Ownership of a property also confers on the owner the right of disposition. In theory, a cricket association consists of members who are essentially a body of cricketers playing club cricket within the geographical jurisdictions of that association. But it is not uncommon to find office-bearers owning a majority of these cricket clubs and thus ending up, effectively, owning the association. In some cases, there is not even the pretense of having members of cricket clubs but merely individuals who act at the behest of a key official. This key official can bestow the privilege of who gets to be President from time to time. In short, the person enjoys the right of disposition of property.

Thus, an office or position of authority in cricket administration fulfills all the requirements of a property with a bundle of rights. That logically leads us to pose the question of whether the rights flowing from such a property are private or public in character. This distinction is important because, while public properties are subject to a host of restrictions in the name of common good, private property is subject to far fewer restrictions, unless a clear case can be made for imposing restrictions on property rights.

Public, rather than private, property

A good case in point is the latest order of the National Green Tribunal (NGT) on vintage diesel vehicles. Broadly speaking, a person’s right to own a diesel vehicle or the right to determine how it will be used should be deemed sacrosanct. But that right may be restricted, or even substantially destroyed, by stipulating that these vehicles shall not ply on the roads on account of their potential to cause injury to public health. But, in general, a society that does not recognise the sanctity of private property rights ends up undermining its potential for economic growth for a variety of reasons. Not the least of this is the tendency among the members of a society to engage in violence to seize control of the property in the absence of State enforced sanctity to possession of private property.

The Supreme Court has taken the view that the right to administer cricket in India is not a private property but rather a public one because cricket is practically a religion among its millions of followers. But is that sufficient ground to alter what has been regarded all along as private property?

What if tomorrow somebody were to get up and say that Tata Steel is an iconic name in the world of Indian business or that it is was symbolic of the assertion of national aspirations in commerce and industry in the face of dominance enjoyed by British commercial interests. Should that set the stage for tampering with the private property rights of shareholders of Tata Steel? What does that do to entrepreneurship and capital formation in the economy?

That is the question that the Supreme Court’s verdict in the BCCI case has raised. If it is wrong, despite being the last word, there are adverse consequences for the economy. For the simple reason that it would have tampered with the sanctity of private property rights that office-bearers have enjoyed in cricket administration all these years.

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