In what will be viewed as a watershed event in the business of cricket, two corporate giants – RP Sanjiv Goenka Group (RPSG) and CVC Capital Partners (Irelia Company Pte Ltd) – have offered a stunning sum of money, ranging over USD 1.6 billion, to acquire the two new IPL franchises. On Monday, during a walk-in bidding event in Dubai, RPSG paid INR 7090 crore (USD 940 million roughly) to purchase the Lucknow franchise while CVC, a private equity company, bought the Ahmedabad franchise for INR 5625 crore (USD 750 million approx) (USD 750 million approx). The RPSG proposal was around 250 percent higher than BCCI’s base price of INR 2000 crore (US$270million approx).
The similar figure for CVC was nearly 160 percent . In all, 22 businesses had acquired the offer document but only nine were finally present at the walk-in bid event conducted in Dubai that lasted over six hours on Monday. The proposals, wrapped in a sealed envelope, were unsealed following a rigorous technical examination procedure. The whole process was monitored by the IPL governing council as well as the BCCI senior brass led by board president Sourav Ganguly, secretary Jay Shah, treasurer Arun Dhumal, vice-president Rajeev Shukla and joint-secretary Jayesh George. In a BCCI media statement on Monday Ganguly said it was “heartening” to see two new franchises being added to the IPL roster “at such a high value, and it reiterates the cricketing and financial strength of our cricket ecosystem”. Brijesh Patel, the IPL Governing Council chairman claimed the IPL was “globalising” cricket and its relevance as being one of the “most sought-after” leagues in sport was established via the bids from “various regions of the world and from parties with distinct portfolios”. The new franchises will need to pay out the total sum over a 10-year period. To guarantee that the owners had a sound base, the BCCI has included tough requirements in the bid document. A bidder needs to have a turnover of at least INR 3000 crore per year for a minimum of the past three years.
Measured in terms of net asset value (assets minus obligation) this amount was put at INR 2500 crore every year over the previous three years. In the case of a consortium, the BCCI had imposed a restriction on the number of investors totalling to not more than three. Apart from Ahmedabad and Lucknow, the towns picked by the IPL in the bid document were Cuttack, Dharamsala, Guwahati and Indore. Bidders were able to choose more than one city but would acquire the rights to control just one franchise. Along with Lucknow, RPSG also put in proposals for Ahmedabad and Indore. While it set the same price (INR 7090 crore) for Lucknow and Ahmedabad, it bid INR 4790 crore for Indore. CVC chose Ahmedabad and Lucknow and its proposal for the latter was INR 5166 crore. Significantly, the minimum offer price raised by all nine bidders was over INR 4000 crore. It is reported that the BCCI sought to allot the winner for each city keeping in mind the highest potential bid combination and therefore RPSG got Lucknow and CVC Ahmedabad. If RPSG were assigned Ahmedabad, then the BCCI would have lost almost INR 400 crore on Lucknow. In contrast, in 2008 when the IPL commenced, the BCCI had enabled the bidders to select their location of choice. The winners aside, among the bidders who finally put their head in the ring were Lancer Capital, who own Manchester United football club, Ahmedabad-based Indian infrastructure behemoth Adani Group, Torrent Pharma, Kotak Group, All Cargo Logistics, Capri Global, and Hindustan Media Ventures Limited.
The Adani Group was the third-highest bidder among the final nine, declaring the identical offer price – INR 5100 crore – for both Ahmedabad and Lucknow. This is the second spell in the IPL for RPSG, who formerly operated the Pune-based Rising Pune Supergiant(s) in 2016 and 2017, while Chennai Super Kings and Rajasthan Royals suffered a two-year suspension in the aftermath of the 2013 IPL corruption incident. “It is nice be back in the IPL and I am happy,” RPSG owner Sanjiv Goenka told ESPNcricinfo minutes after clinching the Lucknow franchise. “It is a beginning step. We now have to construct a solid squad and perform.” A known sports fanatic, Goenka put his emotions on the sleeve the last time around, even changing MS Dhoni as captain before of the 2017 season after they had been runners-up in 2016. RPSG, which calls itself a “diversified commercial conglomerate”, also has larger interests in sport. They control Atletico Mohun Bagan in the Indian Super League and have owned clubs in table tennis and boxing previously. CVC, meantime, are a transnational corporation with operations throughout Europe, Asia and the Americas. They were the one of the – if not the – first private equity corporations to invest substantially in sport.
They owned a majority share and managed Formula 1 for almost to a decade until 2016, before selling it to Liberty Media, the current owners of Formula 1. Recently they took a minority ownership in La Liga, the top-flight Spanish football league, and also have considerable expertise in rugby leagues abroad. The IPL, though, will be the first time CVC operate a franchise as opposed to their typical strength of investing in and operating a sporting competition. It is reported that this is the second time CVC were attempting to manage a club in the IPL, having failed to purchase a stake in the Delhi franchise in 2018, which went to Jindal South West (JSW) (JSW). CVC’s Ahmedabad home will be the world’s largest cricket venue, the Narendra Modi Stadium, which has a stated capacity of 132,000 people. The Atal Bihari Vajpayee Ekana Cricket Stadium will host Lucknow’s home games.