If reports published in CricBuzz are to be believed, the Board of Control for Cricket in India (BCCI) is planning to complete the sale of two new teams before the second leg of IPL 14 kicks off in the United Arab Emirates later this year.
The development comes after an American investor Redbird Capital bought a 15 percent stake of the Jaipur-based Rajasthan Royals at an overall valuation of Rs 1855 Crore.
The sale has set a new benchmark, according to Navros Dony, the founder, and CEO of the Delhi-based Creatiges Communications Pvt. Ltd amid the raging pandemic.
“It is a fair price and definitely gives heart to the current IPL owners, who may have taken a hit because of the pandemic, downturn, lack of crowds, etc. I have seen a report showing a decline in the valuation of the brand IPL and its teams. This deal shows that there is no stopping cricket in India. The game has not only survived the pandemic, but also thrived.”
The RedBird-Royals deal has now raised the bar for the two new IPL teams that the BCCI is planning to auction next month.
And, now the interested parties have a fair indication of the final prize.
“We understand the tender will be floated next month, we have been waiting for this for quite some time. We will not be surprised if 250 million is the base price.” said a CEO of the firm that is desperate to buy an IPL Team.
If Rajasthan Royals are valued at Rs 1855 Crores, the value of high profile franchises like Chennai Super Kings, Mumbai Indians, Kolkata Knight Riders could be expected to be within the range of 2500-3000 crore.
However, another official feels that Rs 1855 Crore is not a huge amount considering the new media rights deal is around the corner.
“We always knew that the new teams would be upwards of USD 300-400 million,” N Santosh, managing partner of D&P Advisory, said.
“Look we are talking of RR, which is not one of the highest-ranked franchises, going by different IPL parameters. If its value is USD 250 million, it is only good news for the BCCI.” he added.
“In that perspective, the BCCI would be looking between USD 300-400 million. We were anticipating that six months back. With RedBird, that estimation gets reaffirmed. An average team now should cost USD 300 million, so the new team should be around 400 million (about Rs 3000 crore). If we also factor in the Ahmedabad point, the largest stadium in the world, there could be a chance of a huge gap between the price of the two new teams – one may go for USD 400 million and another for USD 350 million,” Santosh added.
As far as the base price of the new IPL franchises is concerned, those involved in previous sales of the franchises believe that it is a non-issue if the BCCI can make sure that more parties have shown interest.
They further added that currently each team gets Rs 150 Crore from central revenue and top teams can further earn Rs 100 Crore from gate collections and sponsorships which will only increase once the new media rights are signed.
”He can recover around Rs 150-200 crore out of that in the first 10 years when some losses are inevitable. He will keep making the moolah after 10 years,” the source said.
“The key to getting a good price is telling the world that more parties have interest. If a potential bidder is made known that the biggest business houses have purchased the tender document, the price will automatically shoot up. The media plays a big role in creating the hype. How the BCCI will manage the sale and orchestrate the hype is important,” the source added.