The Estimate Cost Of New IPL’S Franchise
The verdict is yet out on RedBird Capital’s purchase of a 15% share in the Indian Premier League’s (IPL) Jaipur franchise, but the American investor’s purchase of a 15% stake at an overall valuation of Rs 1855 crore indicates the transactions to come.
Transaction New Standard
Navrose Dondy, the founder and MD of Delhi-based Creatigies Communications Pvt Ltd, believes the transaction has set a new standard.
“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.”
Planning To Complete The Sale
The BCCI intends to complete the sale of two franchises before the IPL 14’s second leg, most likely in July, and interested parties now have some ideas of what the ultimate price would be.
“We understand the tender will be released next month; we’ve been waiting for this for a long time,” stated the CEO of a company interested in purchasing a team. “We won’t be astonished if the base price is $250 million.”
Values Of Each Team
If the Royals are valued at Rs 1855 crore, the Chennai Super Kings’ stock has recently risen and is currently trading at roughly Rs 75 in the unlisted market. The MS Dhoni-led three-time IPL champions are valued at around Rs 2200-2300 crores, according to this assessment. Its value on the open market would be 20% higher, around Rs 2500 crore. CSK, like KKR and RCB, is known for being a high-value franchise, with the Mumbai Indians team likely to cost between Rs 2700 and Rs 2800 crores.
Another franchise official believes that Rs 1855 is a small sum given the upcoming new media rights contract.
He believes that a club like the Kolkata Knight Riders, which earns a lot of money through sponsorship and gate collections, may cost more than Rs 4000 crore once the new media rights agreement is completed next year, which is likely to increase by 50%.
“We always knew that the new teams would be upwards of USD 300-400 million,” says N Santosh, managing partner of D&P Advisory.
“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.”
“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 adds.
Santosh has worked on the brand valuation of the IPL and its teams, and he believes the BCCI will rank the new teams as No2,3, or4, if not No 1.