Deal with Diageo ends Mallya’s sporting interests as well
Stepping down from the chairmanship of United Spirits has also signalled the end of Vijay Mallya’s sporting interests.business Updated: Feb 27, 2016 13:58 IST
With the signing of the deal that terminated Vijay Mallya’s chairmanship in United Spirits earlier this week, the King of Good Times has also kissed goodbye to this two of his most passionate interests in sports – cricket and F1 racing.
The $75 million (Rs 515 crore) golden handshake Mallya signed with UK-based liquor major Diageo effectively terminated his control over Indian Premier League cricket team Royal Challengers Bangalore (RCB) and Sahara Force India F1 racing team.
The end of Mallya’s interest in the two major sporting teams, where he served as the face with all his heart, came as a surreal footnote in his statement to the media where he announced his resignation as chairman of United Spirits Ltd (USL).
He wrote, “On the sporting front, I will now be the Chief Mentor of the Royal Challengers Bangalore. I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a Director as he is equally passionate about RCB.” The statement was silent on Sahara Force India F1.
RCB is controlled by USL (in which Diageo holds controlling interest) and the control over Watson Ltd, the UK based company that owns the F1 team has also shifted to Diageo. The loss of control over Watson was a result of a $135 million loan deal with Standard Chartered Bank for which Diageo stood as a guarantor, which was subsequently defaulted. Shares in Watson and United Breweries where pledged with Diageo to stand as guarantor. In May 2015, the loan from Standard Chartered Bank matured and went into default.
Diageo paid Standard Chartered approximately $141 million under this guarantee, including the $135 million principal amount, as well as payments of default interest and various fees and expenses.
Watson remains liable for all amounts paid pursuant to the guarantee, Diageo said.
The UK based company also said that Sidhartha Mallya will remain on the board of the USL group company which holds the Royal Challengers Bangalore IPL franchise. “Diageo may not seek to remove him from that board for a period of two years, subject to agreed exceptions. Dr Mallya will have the honorary title of Chief Mentor while Sidhartha Mallya remains on that Board. It is also agreed that the members of that board will be able, if they wish, to consult with Dr Mallya.”
Mallya had bought RCB in 2008 for a staggering $111.6 million, the second only to Mumbai Indians that was bought by Mukesh Ambani for$111.9million.
Earlier this month Mallya had bought a piece of interest in Barbados Tridents a Caribbean Premier League (the West Indian equivalent of IPL) franchise for $2 million.
Apart from cricket and F1, Mallya has also invested in football through Mohun Bagan AC and East Bengal FC. Mallya’s controlling interesting in these two regional clubs remains unclear at this stage.
First Published: Feb 27, 2016 12:36 IST