The Economics of PSL
Dr. Vaqar Ahmed
Pakistan Super League (PSL) which began in the UAE four years ago, finally came to Pakistan with all the matches of the fifth edition now happening locally. This is an astounding achievement for which the government and the people of Pakistan deserve all the credit. The state institutions have proven that Pakistan is open and safe to host international tournaments.
The league is being actively promoted by international players and commentators participating here including Darren Sammy and Dennis Freedman. This has sent a favorable message to the foreign community and gives Pakistan a positive image. We saw Mr. Freedman roaming around Pakistani cities and streets — not seen as secure for even locals until very recently. He posted on Twitter how he loved the local food and culture.
Such endorsements go well beyond just the promotion of sports tourism in the country. They have a long term impact on the sentiments of those wishing to travel, invest, and do business in Pakistan and engage with Pakistanis on a people to people basis. Many in the Pakistani diaspora say the PSL taking place in Pakistani cities has created a pull for their second and third generations living abroad, and a desire to visit their motherland and experience traditions.
The success of PSL will no doubt also set the stage for Pakistan hosting tournaments at a much bigger level and possibly soon co-hosting the World Cup with other countries in the region – just the way it used to happen in the past.
We will be myopic in our view if we limit the economics of PSL to only the favorable marketing it attracts. The economy-wide impact is much bigger. It is heartening to see that a government body – Pakistan Cricket Board (PCB) is generating revenue not just for its own organization but for the government and the local economy. There is plenty of organizational learning here and PCB has certainly grown as an organization in all its departments.
The same is true for the business houses who have invested in PSL. The experience which they have amassed will enable them to participate and invest in foreign sports ventures which in turn brings the royalties back to Pakistan. There are Pakistani media houses who had never covered sports events in the history of their channels and in fact most couldn’t afford to fly the crew and equipment abroad. Such media outfits now have an added genre to their accomplishment.
PSL and revival of sports tourism in Pakistan has benefited the local industries linked to cricket including sports equipment, food and beverages, ground preparation and necessary infrastructure construction, packaging, insurance, transportation, hotels, restaurants, airlines, advertising and marketing, and local area businesses.
Temporary job opportunities were created in most of these local industries and services coupled with the possibilities of permanent jobs for skilled staff. For example, the success of a single cricketer is linked to the doctors, coaches, dieticians, masseurs, and other professions involved. The Pakistani players who are now being observed by foreign sports analysts with interest are poised to also gain in terms of endorsements from abroad. The gains achieved in cricket are translating into spillover effects for other sports. We have just seen Pakistan host the Kabaddi World Cup in which players from several nations participated.
It is worth mentioning that playing events in which the rich and poor are likely to participate together also provides opportunities for redistribution of incomes in society. It is the daily wage workers, shopkeepers, cab drivers, and many others who end up enjoying a seasonal rise in their earnings. There is an infusion of foreign currency into the local economy which benefits money exchange and financial businesses.
Monetary contribution in terms of ticket sales, employment generated by the league and clubs while contributing to the gross value added to the economy will indeed lend current and future tax and non-tax revenue gains for both federal and provincial governments. Already, one can observe the sales of franchises or branches of foreign food and retail brands go up during PSL season.
While all the above mentioned is very welcoming, we should also mention the discomfort faced by some in the process which needs to be taken care of in the future. For example, better coordination between police and security authorities could have led to fewer road blockages and closures.
Some schools, offices and local markets had to face shutdowns while the matches were underway. We also see that blocking the top of the line hotels for foreign players meant that there was an overall lack of supply for other businesses wishing to host their meetings. There is a genuine dearth of decent hotels with adequate security facilities for which policy incentives are required.