Sharad Mathur

The Lalit Modi Saga: When Competence is Not Enough

Sharad Mathur

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Mid June, an email by British Member of Parliament of South Asian origin, Keith Vaz, was leaked and it hinted at External Affairs Minister Sushma Swaraj’s intervention in getting Lalit Modi his travel documents back. This created uproar in parliament, and the opposition, jumping to capitalise on virtually the first goof up by the Narendra Modi government, demanded immediate resignation of Sushma Swaraj. Echo of this demand was heard even louder in the TV studios. Soon after, more documents emerged that showed Rajasthan’s Chief Minister Vasundhara Raje had agreed to secretly testify in Lalit Modi’s United Kingdom immigration application in 2011. And yet again, Lalit Modi, the former boss of the prized Indian Premier League (IPL), was in the eye of a storm.

How did he respond? By declaring a fully fledged war against his detractors and threatening to make damning disclosures against the previous United Progressive Alliance (UPA) government. And what did he end up doing? He disclosed the fact that Vasundhara Raje took his ailing wife to Portugal for treatment to an English language news channel. Surely, it did not help Raje’s cause. He trended on Twitter in India and UK as he tweeted “I did not start this war. But I am master at the art of war. So now don’t blame me for collateral damage. That’s just what war does.” This is Lalit Modi for you – always a showman.

But, how did he become a pariah from being the Czar of sports entertainment business in India? To answer that, let us first enquire about his success. How did Lalit Modi succeed?

He came from the much influential Modi family and his grandfather Rai Bahadur Gujar Mal Modi was one of the earliest industrialists in India. But, unlike the heirs of some other prominent business families in India, Lalit Modi did not believe in keeping his head down and work to take the family business ahead. He went to the US for his studies and after he came back to India, set up Modi Entertainment Network (MEN). In 1993, at the age of 28, he entered an agreement with Walt Disney and brought Fashion TV to India. In 1994, he got pan-India distributorship of ESPN. In some time, he went on to join his father’s business. About the same time, Modi visualised a mega cricket league on the lines of major sports leagues (like EPL, NFL, NBA, etc.), but the idea fell on deaf years in the traditional set up of Board for Control of Cricket in India (BCCI). And that’s where he decided to get involved in the administration of the most popular sport in India.

In 2004, under the patronage of Inderjit Singh Bindra, he became the vice president of the Punjab Cricket Association, and later in 2005, he became the President of Rajasthan Cricket Association (RCA). Soon after taking over the office, he started bringing in moolah to the cash-starved RCA through advertising and tightening up the management. This was the first demonstration of his business acumen to the cricketing world and it was just the beginning of his success. His reputation as an able sports administrator was rapidly growing, and soon he became the Vice President of BCCI. At BCCI, he continued to demonstrate his competence, and in 2006, he grew the revenues up to $1 billion by selling the telecast rights of matches in India and corporate sponsorships. But, 2007 was to begin a phase in his life that would take him to the pinnacle of his success.

Lalit Modi in happier times. Source - Sports Illustrated

Lalit Modi in happier times. Image Source – Sports Illustrated

It was the launch of the rebel Indian Cricket league (ICL), promoted by Subash Chandra of the Essel Group, that saw BCCI, which was opposing the idea of city based league until now, wanting a league of its own. And, it was the opportune moment for Lalit Modi to revive his old idea of a cricketing league, and it manifested in form of BCCI approved Indian Premier League (IPL) – his ticket to glory. The idea of IPL was revolutionary to say the least. It was first time in the history of cricket when a whole tournament was designed for corporate players to own, brand, and market. As expected, corporate India played ball. Eight franchises paid between $67 million $211.9 million each to own their teams. Top international players were signed by these franchises, and the auction fetched over $723 million. The action began on September 13, 2007, and the opening match recorded staggering TRP of 8.21. By the end of the tournament, BCCI made $1.75 billion by selling broadcast rights, $908 million from the promotions, and $700 million from franchises. Such money was unheard of in Indian sport and Lalit Modi became a superstar for bringing it in. His flamboyant lifestyle was now all over page three and he was the life of grand parties adorned by the most powerful, rich, and glamourous people in India. He was bashful, he was competent, and he was a one man army. And all remains well when you are on the upward swing; nothing succeeds like success. So, what happened that he fell from grace?

Seeds of failure are normally sown at the heights of one’s success, but in Lalit Modi’s case, they were sown all over his growth trajectory. There is a clear pattern in his growth; the tracks of his success are marked with hostility. His contracts with Walt Disney and ESPN fell through in some time amidst acrimony. Before he became the Vice-President of PCA, in 1999, his attempts to take over the Himachal Pradesh Cricket Association (HPCA) were allegedly thwarted by then Chief Minister of Himachal Pradesh, Prem Kumar Dhumal. His ascent in RCA happened after he overthrew powerful Rungta family amidst allegations of misuse of political patronage that he enjoyed under Vasundhara Raje Scindhia, his friend and the newly elected Chief Minister of Rajasthan. And it was not just his business acumen that earned him the post of Vice-President of BCCI; his playing ball with political heavyweight Sharad Pawar to oust the old hand Jagmohan Dalmia was as crucial. And, the coming editions of IPL saw him making many more enemies, who were much more powerful and much less forgiving, while he alienated friends.

In traditional Indian business families, the old are often heard telling the young “Zyada nazar mein mat aana logon ki”, which translates in essence to ‘do not flash your success in people’s faces’. And there is wisdom in these words. The lack of sympathy that the down fall of two flashiest Indian business tycoons, Vijay Mallya and Subrato Roy, evokes in the masses vindicates that. A random scan of social media will show you more cruel jokes at their expense than sympathy for their tragedy. When you flaunt your success in a ‘devil may care’ manner, you are prone to making enemies who will jump at you when your chips are down. Yes, they had skeletons in their closet, but in a country where almost $500 billion are illegally stacked away in foreign tax havens, it is not uncommon to have them in one’s closet. And looking around, it definitely does not look like causing many people a lot of trouble. The manner, in which government agencies went after Vijay Mallya and Subrato Roy, to me, is indicative of their nemesis being placed in high cordons of power. In fact, Subrato Roy had gone on record and said “Former RBI deputy governors Usha Thorat and S Gopinath acted against the group (Sahara) out of personal grudge.”

But does it matter if an individual leaves rancour on his way up, as long as he is delivering out of the chart results? To explore this, let us examine, what matters more when it comes to continual success? The competence, which often gets expressed in form of achievement orientation, business acumen, strategic insight, risk appetite, and of course wonderful results? Or warmth – the ability to relate with people, being open to other points of views, understanding of their concerns, working around egos, and being trusted? Amy J.C. Cuddy, Matthew Kohut, and John Neffinger in their HBR article, citing years of research from sociology and psychology, suggest that warmth trumps competence. And in Lalit Modi’s case too, despite of his proven competence, his lack of warmth caused his downfall.

In 2009, concerns were raised as the venues for IPL matches were on the hit list of terrorists. However, then Home Minister P Chidambaram expressed his inability to provide security cover for IPL matches as the dates of IPL were clashing with those of the Lok Sabha Elections. High on success and resolute to not change the dates of IPL, according to a Forbes story, Lalit Modi got into a spat with Chidambaram. As expected, he was asked to leave by a no-nonsense Chidambaram and won him his most potent foe. But, a resourceful Lalit Modi moved the second edition of IPL to South Africa in a few weeks time and it proved to be a bigger success than its first edition. The cumulative viewership grew from 102.5 million in 2008 to 123.5 million in 2009 and the tournament injected over $100 million in the South African Economy.

After the success of the second edition of IPL, it was time to grow it further by adding two new teams to the roster, and allegations were already being leveled against Lalit Modi of impropriety. He had put in controversial criteria for the bidding of these two teams which required bidders to have a net worth of over $1 billion and a bank guarantee of $100 million. Since only two potential bidders – Adanis and Videocon – could now qualify and submit their bids, other prospective bidders promptly lodged their protest with BCCI. Soon, Lalit Modi had to remove the stipulation and fresh auctions were conducted in which the Pune team was taken by Sahara India Parivar led by Subrato Roy for $370 million, and the Kochi team by a consortium of investors, Rendezvous Sports World (RSW) Group for $333 million. The amount of money BCCI made by auctioning these two teams was virtually similar to what it had earned by auctioning all the teams in the first edition of IPL. But, it was also the first time the authority of Lalit Modi was curtailed, and Lalit Modi was not the one who would take it lying down.

IPL gained favour of the cricket crazy nation quickly.

IPL gained favour of the cricket crazy nation quickly.

Former diplomat and then a union minister in the central government Shashi Tharoor was instrumental in bringing together RSW Group to buy the Kochi IPL team. Although he maintained that he does not have any monetary interest in the Kochi franchise and was doing it out of his love for the sport, Lalit Modi let the storm out of the bottle. He publicly declared the shareholding patterns of the Kochi team, which also disclosed that Sunanda Pushkar, then girlfriend of Shashi Tharoor owned 5% sweat equity in the Kochi team. In the resultant ruckus Sunanda Pushkar had to forgo her sweat equity and Shashi Tharoor had to resign as a minister. But that was not one of the wisest things Lalit Modi could’ve done especially when many of his own near and dear ones were holding stakes in IPL teams – his brother-in-law Suresh Killachand held stake in Rajasthan Royals, his relative Mohit Burman was a co-owner of Kings 11 Punjab, and his childhood friend Jay Mehta was a co-owner of Kolkata Knight Riders.

The Kochi team management promptly demanded that BCCI force Lalit Modi to disclose the shareholding pattern for other franchises, retract his statement, and apologise. It was indeed flouting of the IPL code of conduct by Lalit Modi, but he still refused to pay heed to these demands. Instead, he allegedly threatened the Kochi team of sabotage if they do not give up the ownership of the team. Eventually he was sacked from the position of IPL Chairman with the allegations of him bypassing the IPL governing council, not following proper procedures, bid rigging, nepotism, accepting kickbacks on broadcast deal, betting, and money laundering. A three-member committee was set up to investigate the charges, which along with BCCI veteran Chirayu Ameen consisted of Jyotiraditya Scindhia and Arun Jaitley – both leading politicians. The committee eventually found him guilty on eight charges. And the roof started falling on Lalit Modi’s head as probes were also ordered by the income tax department and enforcement directorate, the economic intelligence agency of India. Soon, Lalit Modi moved to London citing threat to his life and the Indian authorities revoked his passport; thus, compounding his worries. “Former ministers P Chidambaram, Shashi Tharoor and Salman Khurshid tried to scuttle my client’s chances to stay in London,” his lawyer, in a recent statement claimed. The claim might be true, it might be false, or it might be a half truth for all we know. But the bottom-line is that, once the face of Indian sports entertainment business in India, Lalit Modi had become a pariah. And it was not only the enemies he had earned, but also the friends he had alienated. The BCCI office-bearers were also not very comfortable with his flashy alpha like behaviour and saw the Kochi fiasco as an opportune moment to clip his wings. And they are not to be blamed. In his testimony, former Indian captain and a member of IPL’s regulatory council, Ravi Shastri told the Enforcement Directorate that Lalit Modi’s decisions were approved in governing council meetings with ‘hardly any discussion’.

Late Mansur Ali Khan Pataudi, former Indian Captain and also a member of the government council of IPL, summed the reason for Lalit Modi’s derailment brilliantly “His style puts off people”.

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