E-Paper
Goenka takes IPL carnival to Lucknow, CVC to Ahmedabad
The Indian Premier League (IPL) got its two new teams on Monday for an unprecedented and staggering total of ₹12,715 crore, 318% over the base prize ( ₹2,000 crore per team) set when bids were invited
The Indian Premier League (IPL) got its two new teams on Monday for an unprecedented and staggering total of ₹12,715 crore, 318% over the base prize ( ₹2,000 crore per team) set when bids were invited.
The RP Sanjeev Goenka Group (RPSG) made the highest bid of ₹7,090 crore and chose Lucknow to be their home base. Singapore private equity firm Irelia Company Pte Ltd, whose parent company is CVC Capital Partners, was the other successful bidder, with a bid of ₹5,625 crore. It chose Ahmedabad as its home city.
Both teams will make their IPL debuts in 2022.
While RPSG previously ran the IPL team Rising Pune Supergiant — the team had a two-year contract for 2016-17 to fill in for two suspended teams — CVC Capital owned Formula One before selling it in 2016, and has major investments in European rugby as well as Spain’s top tier football league, La Liga.
The winners were announced after a seven-hour bidding process held at a luxury hotel across the Burj Khalifa in Dubai on Monday. Twenty interested parties had collected bid documents, of which nine submitted eligible bids.
The RPSG and CVC bids were ahead of Adani Sportsline Pvt. Ltd, Amrut Lila Pvt. Ltd, Hindustan Media Ventures Ltd (a subsidiary of HT Media Ltd, which publishes Hindustan Times), Avashya Corporation Ltd, Championship Cricket LLC, Capri Global, and Torrent Sports. All nine bidders fulfilled the eligibility criteria of having an average turnover of ₹3,000 crore and net worth over ₹2,500 crore.
“We had promised that IPL will be bigger and better from the 15th season and with Lucknow and Ahmedabad, we will take the league to different parts of India,” BCCI secretary Jay Shah said.
To get a sense of how big a lift in value these numbers are, Rajasthan Royals, the most valuable team before these new bids, are known to be worth ₹1,850 crore after adding new investors — US-based RedBird Capital Partners — three months ago. Sunrisers Hyderabad had paid ₹850 crore to join the IPL for five years, back in 2012.
The auction had an added attraction — the Glazer group, the US-based owners of English Premiership giants Manchester United and NFL side Tempa Bay Buccaneers, also made a bid through their company Championship Cricket.
It was seen as an opportunity to give the cash-rich cricket league a global appeal and a window to the American market. But the Glazers’ bid fell short.
“The ITT process included two interested bidders from outside of India, which strongly emphasises the global appeal of the IPL as a sports property. The IPL is proving to be a wonderful instrument in globalising the game of cricket,” BCCI president Sourav Ganguly said.
There was a sense of amazement around the numbers in the bidding room when the winners were announced. But one of the winning bidders said nothing ceases to amaze in IPL.
“If you look at the other numbers on the table, they were all upwards of ₹4,000 crore. We look at it as an opportunity to own a very successful cricket property in a market like India for perpetuity,” an official from one of the two winning bidders said on condition of anonymity.
While the RPSG group will be making the Atal Bihari Vajpayee Ekana stadium in Lucknow their home base, CVC Capital will play their home matches at the Narendra Modi stadium in Ahmedabad.
One of the disadvantages for the RPSG when they owned the Pune franchise in 2016-17 was having to build their team only from the suspended players of Rajasthan Royals and Chennai Super Kings. This time, the two new teams have been promised a couple of bonus player picks, and then the mega auction pool to choose from.
The mega auction will be held ahead of IPL’s 2022 season, but it is not known what the structure of the auction will be. In the previous mega auction, each team was allowed to hold on to five of their players. With the addition of two new teams, it is expected that the original teams will not get the luxury of keeping those many players.
The tenders for the next round of IPL media rights are expected to be announced soon and officials are expecting that the successful expansion will only boost that process.
“We are expecting anything around ₹35,000 crore for the next five years from media rights,” a BCCI official said, asking not to be named.
The 2018-2022 IPL media rights were bought by Star India for ₹16,347.5 crore.
Fifty per cent of the media rights value gets distributed among the franchises. If the BCCI’s estimates are met, this could mean an impressive ₹350 crore a year from media rights alone for each team. This would significantly benefit the existing teams who no longer have to pay a franchise fee, having spent more than 10 years in the business. This is the exact mathematics that the winning bidders have factored in — of staying in for the long term.
More teams will also translate into more matches. While next year’s IPL will be a 74-match tournament instead of the usual 60, BCCI will look to bargain for a greater window in the cricket calendar to make it a 94-match league where matches can be played on a home-and-away basis. Currently, the additional matches resulting from the two new teams add up to over ₹800 crore of extra revenue for the BCCI.
