Unless you work in the industry, there's a good chance you may not have given more than a cursory glance to the recently concluded auction for 5G airwaves where a spectrum worth Rs1,50,173 crores was sold. Back in June, another e-auction - it fetched one-third of the spectrum value - was in motion. It was all over the news. For three days in a row, IPL's astronomical numbers; not runs, wickets and strike rates but its true value – media rights were dissected.
"We do 6-7000 auctions every year. I would think you would not have heard of mjunction before," said Vinaya Varma, managing director at mjunction, the e-commerce platform that conducted IPL's first-ever e-auction. "We do allocation of oil and gas for the government of India of much higher value, 3-4 times in a year. We also conducted the spectrum e-auction sale in 2017 and 2019. Never do such events get the same attention." With the fervour cricket generates, the traction is enormous.
The Jeff Bezos- Mukesh Ambani face-off had been put off after Amazon dropped out of the race. But for Disney Star, Sony, Zee and Ambani's new sports platform at Viacom 18, the auctions were going to determine who would supersede the other to become the exclusive broadcast destination for one of the world's fastest-growing sporting leagues.
Transparency was the buzzword that the Indian cricket board - BCCI had carried to the market. Varma and his team had to ensure there were no glitches. Unlike the 2017 IPL auction where Star won the rights in closed bidding, this was going to be a prolonged electronic process to extract truer value.
The key to living up to the billing lay in the tech and methodology of the e-auction. "Nobody including those at junction knew who was making what bid," said Varma. "The participants were competing against a number, and they only knew the prevailing highest prize. They had to do their own calculations based on their market intelligence as to who their competitor was. The system, the dashboard was designed in such a way that it gave no clue." To make sure the bid stayed in the server till it was opened, a host or technologies like encryption, storage, masking and salting were at play.
"Once the event starts, unlike the popular perception that there is hectic activity, it's the system that has taken over. The bids are encrypted. Even the database operator at mjunction cannot decrypt them," Varma added.
Amongst other things, the key to extracting the right value was the auction categorization. "E-auction works for many categories. Cricket is different to say coal where it is called the Yankee auction. People bid for price as well as quantity where according to the algorithm, the first preference is given to price. If the price is the same, people who are given the same quantity get the preference. If both price and quantity are the same, people who have placed the bids earlier are given preference. In coal, you are auctioning a large quantity and looking at multiple winners. With 1 lakh tonne of coal, you are looking at 50-60 or even 100 buyers."
"With spectrum, we use SMRA – simultaneous multiple-round ascending auction. Multiple rounds take place and the last man standing gets to win," he explained.
E-AUCTION IN CRICKET
Varma confesses he is not much of a cricket fan. But he experienced heightened interest levels right from the time he saw his team doing the explaining during mock auctions. "I saw a different energy in my colleagues when they were giving demonstrations to people like Sourav Ganguly. I never see that when we do it for crude oil or other critical auctions," he said.
M junction had prior experience of e-auctions in cricket having sold the BCCI media rights of 2018. The key differentiator this time was the absence of a consolidated bidding bracket. To retain exclusivity of the more sought-after digital rights, the winner would have to thrash it out in another round of bidding for select marquee matches.
From the auction spread across four categories, Disney Star came out as winners of TV rights. Viacom 18 won digital. Times won rights for select overseas destinations. And the addition of the key auction category of non-exclusive marquee matches ensured the BCCI came out richer. Varma calls the successful conduct of the auction that fetched the BCCI Rs48,390 crores a vindication of the auction methodology. "It established that e-auction is a transparent process that will help an organization, in most cases, achieve the best possible realization of value." He now awaits to see if they will be needed again next year when the BCCI media rights go for sale. "And Yes, I will now try to watch more IPL action."