Why corporates betting big on IPL?

Vying for cricket ecosystem to boost brand image

- Corporates consider IPL a very positive global valuation as a property

- It's also giving a clue about exorbitant future broadcast bids

- RPSG Ventures got the Lucknow team for Rs 7,090 cr

- Ahmedabad team went to Irelia Company (CVC Capital) for Rs 5,625 crore

- Adani Group was the third-highest bidder with the same bid price of Rs5,100 cr for both Ahmedabad and Lucknow

Mumbai: Experts say that the exorbitant price at which two new IPL franchises - Lucknow and Ahmedabad were bid is quite valid and they have given a logic behind that.

Two corporate bigwigs- RP Sanjiv Goenka Group (RPSG) and CVC Capital Partners (Irelia) - have bid successfully a staggering sum of money, running over $1.6 billion, to buy the two new IPL franchises Lucknow and Ahmedabad. These names were announced by BCCI on Monday last.

Talking to Bizz Buzz, Dr Sandeep Goyal, Managing Director, Rediffusion, said: "The team prices may look exorbitant at first glance. But these numbers need to be seen from two perspectives. First, that the ownership is perpetual. And payment has to be made over 10 years. With broadcast money climbing substantially every five years, team owners tend to gain the most. So, in the long run what looks expensive is really not so."

The Governing Council of the IPL had issued an Invitation to Tender (ITT) to acquire the right to own and operate two new franchises. Pursuant to the tender process, various interested parties submitted their bids for the new franchises. The bids were submitted by the authorised representatives of the interested parties at Dubai on October 25.

Not to mention that this is the second time CVC were looking to run a team in the IPL. It had failed to acquire a stake in the Delhi franchise in 2018, which went to Jindal South West (JSW). According to Harish Bijoor, Brand Guru & Founder, Harish Bijoor Consults Inc, "a near $2 billion investment in two new teams signifies a very positive global valuation of IPL as a property! It does also give you a clue that broadcast bids are also going to look big!"

While RPSG Ventures got the Lucknow team for Rs 7,090 crore, the Ahmedabad team went to Irelia Company, which is popularly known as CVC Capital Partners, for Rs 5,625 crore, a BCCI statement said.

Commenting on it, N Chandramouli, CEO, TRA Research, a consumer insights and brand analytics company, said: "Team ownership in IPL has become more than just an investment, and brings with it glamour, status and inclusion into an exclusive group for the promoters of the team. So, one does not base such an investment purely on RoI. It has a large dose of vanity included."

The new franchises will participate in IPL from 2022 season onwards subject to the bidders completing the post-bid formalities as specified in the ITT document. The IPL 2022 season will comprise ten teams and will have 74 matches, wherein each team will play 7 home and 7 away matches.

BCCI President, Sourav Ganguly said: "The BCCI is happy to welcome two new teams from the next season of the Indian Premier League. I would like to congratulate RPSG Ventures & Irelia Company for being the successful bidders. The IPL will now go to two new cities in India viz in Lucknow and Ahmedabad. It is heartening to see the inclusion of two new teams at such a high valuation, and it reiterates the cricketing and financial strength of our cricket ecosystem."

The bids, enclosed in a sealed envelope, were opened after a lengthy technical evaluation process.

According to Ganguly, "true to IPL's motto of 'Where Talent Meets Opportunity', the inclusion of two new teams will bring more domestic cricketers from our country to the global stage. 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. I am keenly looking forward to IPL 2022."

Jay Shah, Honorary Secretary, BCCI said, "it is a momentous day for all of us and I formally welcome RPSG Ventures Ltd. and Irelia Company Pte Ltd. into the IPL fold. 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."

Some of the bidders who also participated in the bidding include Lancer Capital, which owns Manchester United football club, Ahmedabad-based Indian infrastructure biggie Adani Group, Torrent Pharma, Kotak Group, All Cargo Logistics, Capri Global, and Hindustan Media Ventures. Interestingly. The Adani Group was the third-highest bidder among the final nine, listing the same bid price - Rs5,100 crore - for both Ahmedabad and Lucknow.