According to sources in CricBuzz, the Board of Control for Cricket in India (BCCI) is planning to finalise the sale of two new franchises before the second leg of IPL 14 begins later this year in the United Arab Emirates.
The news comes after an American investor, Redbird Capital, purchased a 15 percent ownership in the Rajasthan Royals, valuing the team at Rs 1855 crore.
According to Navros Dony, the founder and CEO of Delhi-based Creatiges Communications Pvt. Ltd, the sale has set a new record despite the spreading pandemic.
“It is a reasonable price, and it gives hope to current IPL owners who may have suffered losses as a result of the epidemic, the economic slowdown, a lack of spectators, and so on. I just came across a research that indicated a drop in the value of the IPL brand and its teams. This agreement demonstrates that cricket in India is unstoppable. The game has not only survived but prospered as a result of the pandemic.”
The RedBird-Royals transaction has elevated the stakes for the two new IPL teams that the BCCI will auction next month.
“We have heard that the tender will be released next month; we have been waiting for this for a long time. We won’t be astonished if the starting price is $250 million.” stated the CEO of a company wanting to acquire an IPL team.
If the Rajasthan Royals are around Rs 1855 crore, high-profile franchises such as Chennai Super Kings, Mumbai Indians, and Kolkata Knight Riders might be worth between Rs 2500 and 3000 crore.
Another official, however, believes that Rs 1855 crore is not a large sum given the upcoming new media rights contract.
N Santosh, managing partner of D&P Advisory, said, “We always expected the new teams would be excess of USD 300-400 million.”
“Look, we’re talking about RR, which isn’t one of the top-ranked franchises according to several IPL metrics. It’s only good news for the BCCI if it’s worth USD 250 million,” he continued.
“The BCCI would be looking at a budget of USD 300-400 million in that case. That was something we had been looking forward to for the past six months. With RedBird, that assessment is confirmed. A new team should cost roughly $400 million, based on the current average franchise cost of $300 million (about Rs 3000 crore). If we take into account the fact that Ahmedabad has the world’s largest stadium, there could be a significant price difference between the two new teams — one could be worth USD 400 million and the other USD 350 million.
In terms of the new IPL franchises’ base price, individuals engaged in previous franchise sales believe it will be a non-issue provided the BCCI can ensure that more parties have expressed interest.
They also stated that each team presently receives Rs 150 crore in central revenue, with elite teams earning an additional Rs 100 crore in gate receipts and sponsorships, which will only increase once the new media rights are signed.
”In the first ten years, when certain losses are unavoidable, he can recover roughly Rs 150-200 crore. After ten years, he’ll still be making money,” the person said.
“The key to achieving a decent price is to let the world know that there are more interested parties. If a potential bidder learns that the tender document has been purchased by the biggest corporations, the price will instantly rise. The media is a significant part of building the buzz. The BCCI’s ability to control the sale and create the excitement is crucial, according to the source.