BCCI Expecting Intense Bidding For Two New IPL Teams

Cricket News By TODAYLIVESCORE.INFO - BCCI expecting intense bidding for two new IPL teams. Over 20 parties have shown interest in buying two new IPL teams.

BCCI Expecting Intense Bidding For Two New IPL TeamsOver 20 parties have shown interest in buying two new IPL teams.

The last person to purchase the Invitation To Tender document for the two new Indian Premier League teams was a certain Rajesh Gupta. He had bought the bidding papers on October 20, the last day of the twice extended deadline for the sale of the ITT. It has sparked off a bit of chatter in the IPL over who could this party be?

Inquiries have revealed that he could be one of the Gupta brothers – Ajay, Atul and Rajesh – from Saharanpur, Uttar Pradesh, who had set up businesses in South Africa and are now believed to have now settled in the UAE. It is to be seen if he/they will turn up for bidding on Monday (October 25) but the Board of Control for Cricket in India expects about a dozen parties to show up. Over 20 parties have purchased the bid documents.

“Given the popularity of the IPL teams and business proposition, we are expecting some serious competitive bidding tomorrow,” said BCCI treasurer Arun Dhumal, hoping that the board will be able to announce the names of the new owners on Monday itself. Franchises at any two centres — Cuttack, Guwahati, Indore, Ahmedabad, Lucknow and Dharamsala — are up for sale. Taj Dubai is the watering hole for all the concerned parties and they have been told to submit the bids by 11 AM Dubai time on Monday.

What is making the BCCI confident is the interest of some foreign parties. In fact, the names of the Bollywood couple – Deepika Padukone and Ranveer Singh – have emerged after they have been, reportedly, roped in by a foreign investor as their faces in their potential IPL foray. Given the net worth criteria of Rs 2500 crore, it is doubtful individually or together the couple would meet the financial qualification if one were to define the net worth in a broad sense – assets minus liabilities. But their presence spices up the process. Also spicing up things is the news that an overseas investment firm has approached a couple of Indian business houses – the Adanis and Kotak Groups – to be their partners in the bidding process. Both parties, last heard, have declined to join.

Given the escalating stakes and rising interest for the IPL teams, a joint venture could ease the financial burden that comes in the first 10 years for a new franchise. Conservative market estimates say the cost of the new teams would go around Rs 3500 crore (the base price is Rs 2000 crore) and that would mean at least a shortfall of Rs 200-250 crore a year, even after the new media rights sale, which kicks in only in 2023.

A price of Rs 3500 crore would mean Rs 350 crore a year towards franchise fee and another Rs 150 crore expenditure towards player-coaches salaries and operational costs. The returns would be about Rs 250-300 crore (including central revenue, sponsorship, gate collection and merchandising). That leaves one with a deficit of Rs 200-250 crore a year. The burden maybe a little less when the next cycle of media rights deal is made, five years later.

A loss of Rs 250 crore a year is not for the small parties and that is why the IPL has been an exclusive league. Deep pockets like the Adanis (Gautam Adani), the Goenkas (Sanjiv Goenka of RPSG Group), Ahmedabad's Torrent Pharma and Aurobindo Pharma (Sarat Chandra Reddy, incidentally the president of Andhra Cricket Association) could afford just like the CVC Capital or Manchester United team. But a joint venture halves the financial liability for the first 10 years after which period the new teams could start making profits.

It is still in a realm of speculation if a consortium, a joint venture or an individual would end up winning the bids on Monday but it will be difficult for any party to stave off the challenge from the Adani and the RPSG groups, who are believed to be seriously determined to buy the teams.

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