Pricing of Cricketers: The Experience of Two IPL Auctions

Abstract

There have been two major auctions of the Indian Premier League (IPL) of cricket. Since 2008, three IPL tournaments have also taken place. We first estimate hedonic price equations for the auction of 2011. We find that runs scored in the shorter formats of the game, wickets taken in Test cricket, age of the player, and nationality of the player are important determinants. We investigate whether our equations suffer from a sample selection bias employing Heckman selection methods. Hedonic price equations for the auction of 2008 are also estimated using the specification used for the 2011 auction. This helps us examine if the valuation of players has undergone a change between the two auctions. By and large, the process of valuing players has remained unchanged. Finally, we examine if the availability of information on performance in IPL tournaments makes a difference to player valuations. We find this to be the case.