Rajasthan Royals $1.65 billion deal hits trouble as Kal Somani consortium plans legal action

A consortium led by Lakshmi Mittal, Aditya Mittal, and Adar Poonawalla has reached a final agreement to acquire the Rajasthan Royals (RR) franchise along with sister teams. However, the United States-based group led by Kal Somani is preparing a possible legal challenge after their advanced talks collapsed.

The final agreement sets the new enterprise value of the Rajasthan Royals at around $1.65 billion (Rs 15,660 crore). The Mittal family will hold a 75 percent majority stake, Adar Poonawalla will own 18 percent, while existing shareholders, including founder Manoj Badale, will retain the remaining seven percent.

Key Points

• Rajasthan Royals $1.65B deal finalised with Mittal family and Adar Poonawalla
• Kal Somani-led consortium preparing legal action
• Dispute over delays and bad-faith negotiations
  

Rajasthan Royals Ownership Deal Hits Turbulence

According to a report by Cricbuzz, it began internal discussions on legal action and public relations strategies across the United States. The report added that the group is planning to respond quickly by issuing formal legal notices to the relevant parties today.

“We have had calls this morning with legal and PR in the USA. We are deciding on our PR. A legal letter will be sent today," the report quoted a source as saying.

“We will discuss it with our group if we are going to go public on the matter since litigation will be involved."

Earlier reports on March 24, Kal Somani won a bid with prominent investors, including Walmart heir Rob Walton, owner of the NFL's Denver Broncos, and Sheila Ford Hamp, owner of the NFL's Detroit Lions. There is also a strong chance that the BCCI could become directly involved in this dispute.

Also Read: Rajasthan Royals sold for $1.65 billion to Mittal family, Adar Poonawalla, after Kal Somani's deal collapse

Consortium Accuses Rajasthan Royals of Delays and Bad-Faith Talks in Failed Deal

The consortium accused the Rajasthan Royals management of dragging the documentation process while holding side negotiations in bad faith. The report added that the group had hundreds of queries about unpaid dues and ongoing legal cases and had been ready to complete the deal for over a week.

“They slow-dragged it. They continued negotiations in good faith until the last second," the source added.

"We had queries such as whether the BCCI dues were paid. We wanted to know the status of legal cases. There were 100s of such questions. From our end we have been ready to close for 10 days. There was deliberate delay and then side dealings."

The Kal Somani deal reportedly collapsed because the businessman failed to meet a one-month exclusivity period required to make the official payment. Manoj Badale put the franchise up for sale as he wanted to exit before the next round of Indian Premier League media rights, which is expected to be challenging.

Somani Group Denies Funding Issues, Opposes Manoj Badale's Role in Rajasthan Royals Deal

The Somani-led group dismissed claims that funding issues blocked the deal. The report added that strong backing from the Walton and Hamp families ensured enough capital for the billion-dollar transaction.

“With the Walton and Hamp families behind him, money was never an issue," the report’s source said.

Another key issue in talks was the future role of existing lead owner Manoj Badale. The Somani group opposed keeping him, while the final deal with the Mittal investors kept Badale in an important role to support the franchise with his experience.

Franchise valuations continue to rise as these assets remain scarce. The Aditya Birla Group bought Royal Challengers Bengaluru for $1.78 billion in March, while Torrent Pharma valued Gujarat Titans at around $800 million last year after the $1.6 billion combined expansion value in 2021.

FAQ

• Why is Rajasthan Royals’ deal facing trouble?
  Due to a potential legal challenge from the Kal Somani-led consortium after their bid collapsed.
• Who is buying Rajasthan Royals?
  A consortium led by Lakshmi Mittal, Aditya Mittal, and Adar Poonawalla.
• What is the deal value?
  Around $1.65 billion.

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