One Year Later - Part 1

In the past I blogged about my experience of selling my old house, shortlisting a new one, getting a home loan and finally buying the dream house where I stay currently. Thanks for all the feedback regarding my earlier posts. Now that I am settled in the new house I thought it might be a good idea to write a bit about the experience of living in a big housing society. These are a few simple issues which are relevant to most new / 2-3 year projects which have been completed in Mumbai.

Quality of construction:
No matter what the reputation of the builder, you will NEVER get world class construction. Although my builder is a smaller guy, I spoke to friends who bough houses in complexes constructed by Rahejas, Hiranandanis and Runwals, and all of them had the same issues. In the age of increasing interest rates and high costs of conducting business most builders cut a few corners here and there. Most try to do it in a manner which is not very visible. One year down the line you will have peeling paint in your house, a few leakages here and there, nothing serious which threatens the building structure but lots of small issues which will need to be addressed in the long, if not short term.
Most builders will send maintainence people to attend to your complaints (at least till the time the society is formed), but these people will just do a cover up job which will mask your problem and not actually solve it. The aim of the builder here is to procrastinate as much as possible and avoid buyers till the time the society is registered and he hands over the day to day functioning of the building to them.
Nothing much you can really do here, if you are still looking at houses and close to shortlisting one, please insist that the builder fixes all the visible flaws BEFORE you get possession of the house. If you have already bought the house the your best bet is to highlight these flaws to the builder AND the provisional / managing  committee of the building society, you will need to do a lot of follow up to actually get some work done.
Parking:
The thumb rule here is that most builder force you to buy 1 parking at least for a 2bhk house and 2 for 3.5/4 bhk houses. If you want more than one parking while buying a 2bhk house, the builder will discourage you by saying that you can buy it later or that some open parking is available. Here lies the catch, the builder has limited parking spaces for sale and by hoarding this precious commodity he is trying to maximize returns for himself. When you actually approach him later on for that additional space, he will quite a price 1.5-2 times the original rate.
Another common problem you will face is that the open parking (which is supposed to be free to all residents / visitors) is sometimes much smaller that what was actually committed, because the builder hardly earns any money from this he is not really interested is providing this facility. A scarier version of this problem is when your builder runs out of covered / basement parkings and starts selling open parking spaces. Technically this is illegal according to BMC, but rarely is any action taken against builders. The only option here is that you and your managing committee take this issue up with the builder aggressively and threaten legal action. I don't predict a very high success rate with this action but it worth taking a chance.
Society Formation / Managing Committee:
Am sure most of your will agree that the most entertaining part of living in a large building complex is the society meetings. Usually when people start coming to stay in the building/s the residents form a provisional committee amongst themselves to coordinate with the builders office on various issues and to pass on information to other residents.
Most of the times, the initial committee will find itself at loggerheads with the builder. This is mainly because the builder takes advance maintainence for 12 / 18 / 24 months from you at a particular rate but the actual maintainence cost is much lesser. Secondly in most cases this advance maintainence money is supposed to include property tax for the first year at least. When the committee brings this to the builders notice, he will come up with some opaque explaination which usually does not make any sense. Then the builder will question the validity of the committee and ask if they enjoy the full confidence of the members of the society. I saw the same script being repeated at 3 different building complexes.
Most common area where the builder cons you are:
 - Not paying maintainence for unsold flats
 - Not paying  / negotiating the property tax with BMC and leaving the residents with a high bill in the end.
 - Claiming that the money for maintainence is over and trying to pass on all responsibility to the society.
 - Not paying any maintainence / tax for the flat in the building which he uses as a sales / admin office.

In the end there is nothing really which you can do to force the builders hand if he has decided to screw you. Your only recourse is complaining aggressively to your society and maybe taking legal action which will drag on for ages. The bigger builders will be slightly more careful here because they have other upcoming projects, so they would not want negative feedback from present ones to affect them. However that does not mean that they will be completely honest and fulfill all their promises. It is in the DNA of a a builder in Mumbai to take buyers for a ride and he will do so. This is simply because the laws and the administration in Maharashtra are completely skewed in favour of the builder's lobby.
Let this not discourage you, if you keep your eyes and ears open and fight for your rights you will end up with a decent deal.
Hope this advice helps. Feedback most welcome.

My Take on the IPL Auction and a dream for a better tomorrow.

The recent auction of players for IPL 4 gained a lot of media coverage. Some segments were happy that players are getting paid as much as their counterparts in other global sports, some were unhappy at this commoditizing of players while some emotional fans were upset at injustice meted out to their favorite players when they were not bid for by any of the franchises. Most criticism however is not fair unless one can provide a better alternative; I shall humbly try to do the same in the next few paragraphs.

Let us go back to how IPL began. It was envisaged on the lines of EPL with franchisees owning teams and getting a share of advertising and television revenues from the board. However that was where the similarities ended, IPL had a series of auctions to sell city based franchises and players to maximize revenues. They went about signing opaque (sometimes bordering on shady) advertising and television deals. Finally in a so called attempt to create a level playing field they capped the budget available to recruit players and capped the salaries of domestic players. In between there was a lot of tinkering with the player retention rules and many changes were made to favour certain teams.

A lot has been written in the media about brand IPL and its value. The concept of value was mainly based on the money received for television rights and the amount for which minority stakes were sold in some teams. No one really knows exactly how much money does a franchise makes in a year or what is its profitability. EPL has been around for a long time and has evolved as a brand, the main thing which creates value for a franchise there is the performance of a squad and its fan base. The big teams have created revenue streams for themselves (apart from revenue share and ticket sales) over the years in areas like themed restaurants, merchandise and appearance money for international tours.

Now lets look at the IPL model, we started with 8 franchises who won their team licenses for a period of 10 years by bidding (BCCI’s patented formula to maximize revenues). 2 more teams were added with even higher valuations. Since the term for which a franchise holds a team license is relatively small, for most businessmen it was a difficult proposition to make money, hence some chose to divest some shareholding to strategic investors who in turn invested big bucks hoping for an exit when teams would be allowed to go public. However the stake sale rules and future exit options remain a grey area for the teams currently, so lets assume a team owner is stuck with his / her investment for the next 10 years (7 now).

My model to allocate players for various franchises is based on 3 basic tenets:
- Free and Fair remuneration to for players in line with their capability and popularity.
- Freedom for teams to structure their squad without any ad-hoc / random rules about spending caps and transfers.
- Level playing field for all teams and players.

It is basically a mix of rules used in EPL and Pro-Cycling. Following some rules used in EPL / various European Football Leagues will ensure that the price discovery mechanism and recruitment of players is fair. A fair bit can also be learnt from rules in Pro-Cycling which ensure that teams adhere to moral and ethical criteria also apart from financial criteria to retain their franchise licenses.

Let me explain this in detail, my proposed model for player recruitment is as follows:

- No auction, teams to contact players individually and make offers for a 1, 2 or a 3 year contract. A list of all players available to play for IPL (part time or full time) to be made available by BCCI.
Why should a player be forced to play for any franchise? Even if it pays him the maximum amount of money. The first principle of this model is to treat the players with respect and give them choices, and not dictate terms to them. It’s a player’s prerogative that which team he wants to play for, if he is able to negotiate a good offer with that team fine, else he can consider the offers made by other teams and select the one which suits him the best. Do you think a Sachin Tendulkar will agree to play for a Kochi or a Rajasthan team even if he is paid double the amount Mumbai is paying him currently? Brand Sachin has a strong association with Mumbai and am sure both Sachin and the owners of the Mumbai team understand that, so no matter what the money am sure he will continue playing for the Mumbai Indians.

At the end of every season, a list of players whose contracts are expiring plus new players who wish to be a part of IPL will be circulated to all franchises and they can accordingly renew / renegotiate contracts with existing players and offer new contracts to others.

The absence of auctions will also ensure that no party (read N Srinivasan) can rig the auction to suit his or her dubious motives. It obviously will upset BCCI and Set Max because the advertising revenue will come down. A lot of seniors and young players will be spared the humiliation of no one bidding for them.

- No upper cap on team salary purses, teams can pay as much as they want. Exit clauses to be included in player contracts, so in case a player wishes to change teams mid-way through his contract another team can buy him out for an agreed transfer fee (similar to rules in European Football Leagues)
Most people will argue that this rule is not fair and will heavily favour teams which are flush with funds like Mumbai. I say no, simply because at the end of the day Cricket remains an investment for Mr Ambani. He might pay a huge sum of money to the entire Indian cricket team and make them agree to play for Mumbai, but will he recover his investment? It takes a crazy cricket fan or an egoistic fool to keep pumping money into a team to buy the top players and not get the expected returns.

The BCCI started by making us believe that IPL will be great for players and will popularize cricket in the country. It is great – but only for a bunch of top players. The domestic players who performed very well got their dues, but as far as earning money is concerned, only the ones with an India cap are eligible to appear in the auction and discover their market worth. The rest have to follow the diktat of the BCCI and get paid peanuts. The number of places in the national cricket team will always be finite, and most of these places will be occupied by existing players, so essentially we have a bunch of talented domestic youngsters vying for 3-4 open spots in the team and most of them will only warm the benches. Some might get a few endorsements due to the fact that their performances on field have made them known faces on television, but a vast majority will still not get paid what they are worth.

Taking a leaf out of pro-cycling, the teams should provide a financial guarantee to prove that they have more than enough funds to cover player salaries and administrative expenses to avoid situations like Punjab and Rajasthan where players were not paid their dues on time. Any instance of a player not being paid on time should be penalized and repeated offences should carry an even stricter penalty like cancellation of team license.

The stipulation about minimum number of under 19 players and players from the catchment area can take care of the balance of the team and ensure that it is not loaded with international superstars.

- In order to maintain the regional flavor of the tournament and to help build team fan base around the city / state, a minimum number of players (between 6-8 preferably) to be stipulated which have to be hired from their catchment area. However these domestic / capped players to be paid as per the terms they negotiate with the team.
Am sure most of you will agree with this argument. I still can’t understand why should a Venugopal Rao be paid Rs 3 crore and a Manish Pandey be paid only Rs 20 lakhs. Would this situation arise if players are allowed to negotiate their own terms? My guess is as good as yours.

- Present rule of having 3-4 (am not sure) under 19 players from the catchment area players for each team should stay, but once again the franchises are free to negotiate terms with the players
- A minimum base salary to be stipulated for any player who wishes to play in the IPL (domestic or international), say $15000 - $20000, this ensures that players are not exploited.


Most franchises made big noises about helping develop cricket in India by setting up training camps and youth academies. Am not sure how much has been done on this front (maybe the media finds this kind of reporting boring), but it would do a lot of good if BCCI makes some of these activities mandatory to retain the franchise. Similarly an anti-doping clause and one preventing mis-reporting of player ages also needs to be drafted in somewhere to ensure that clean, fair cricket is played. Somewhere down the line the BCCI needs to take a call if its objective is to maximize revenue from Cricket in India or to promote the game. If a Guthka baron is ready to pay $100M to own a team which he will use as a vehicle to promote his brand of mineral water in a form of surrogate advertising and an ex Cricketer is ready to pay $75M to own a team and plans to set up a youth academy along with the franchise I am sure the BCCI will opt for the former, they might even debar the ex Cricketer and stop his pension to ensure that he does not have the guts to bid against a corporate entity which will help BCCI earn lots of money.

Well that’s my take on the IPL auction and the franchise system. I still believe that IPL is a good concept and has definitely done a lot of good for Indian Cricket. A lot more can still be achieved if the scumbags who control BCCI see reason and stop monetizing the game at the expense of talent.

Your feedback will certainly be appreciated.