Next week might determine whether the Reddys' decision to invest in cricket was correct. As a last resort, the crisis-hit Deccan Chronicle Holdings Limited (DCHL) issued a tender notice on Thursday to invite buyers for their Indian Premier League (IPL) team.
If the Deccan Chargers do not close a deal with a buyer by September 13, the Board of Control for Cricket in India (BCCI) could step in to decide the future course of action. It could be to float a tender to find a replacement for the beleaguered franchise or terminate the Chargers and float a fresh tender.
If the team still remains unsold, it will mean the Chargers' five-year investment goes down the drain, another big loss for the struggling owners, who are neck-deep in debt.
The prospects are dim, though. As it happens with a disputed property, there are hardly any interested parties. In fact, DCHL, in their search for a potential buyer, had appointed an investment banking institution in June, but there were no takers.
Still a Good buy?
For the Chargers, it's a case of convincing the buyer that despite the liabilities, it is still a good buy, which may indeed be the case. With few takers, the bidding amount will be comparatively lower than the market price.
As the BCCI has the right to have a new team, with a new name and new city, a fresh bid will attract serious competition. Even after considering that the IPL brand has taken a hit and the bid amount may not be as high as what Sahara paid for the Pune Warriors, it will certainly be higher for the ownership of a team with a clean slate.
If the Chargers can't be sold, the franchise owners and the banks they mortgaged the team to seem doomed. The banks because if the team is scrapped, they lose their money too as their agreement doesn't hold against the BCCI, the original owner.
The Board has given the IPL teams to the franchises on certain conditions. It has the right to take them back when conditions are not adhered to. It doesn't owe the bank because the agreement ends with the franchise.
A Board insider told HT that the Board has the power to cancel the deal, but wants to help a franchise, who has till now been a good partner.
“They have been our partners and we don't want to desert them when they are facing troubled times. Supporting the franchise in troubled times is also a way of sending a message to the other franchises that you have the Board's backing,” said the source. “If they can pay their annual instalment and meet the players' payments, the BCCI is fine.”
From the banks’ point of view, the only way to recover the money is if the team survives. They stand to lose it if the team is scrapped.