With about 22 heavyweight entities getting involved in the bidding for two new IPL franchises, we can understand how far IPL has come as a financial behemoth. The BCCI on Monday named RSPG Ventures Limited and Irelia Company Pte Ltd. (CVC Capital Partners) as the owners of two new IPL teams – Ahmedabad and Lucknow from 2022.
Sanjeev Goenka’s RSPG Ventures Limited bid’s almost a billion dollars for new IPL franchise Lucknow. Irelia Co Pte Ltd (CVC Capital Partners) paid approximately $750 million and became the second highest bidder as they acquired Ahmedabad. Mumbai Indians is the most expensive out of the 8 original IPL teams. Mumbai Indians acquired for $111.9 million (₹450 crore then) with Rajasthan Royals, the least expensive, snapped up for $67 million (₹270 crore then).
Cricket has evolved as one of the most entertaining sports in the worlds. With the introduction of the T20 format, it has overshadowed all the other formats of cricket. The IPL has evolved as the world’s fastest growing sports league.
The IPL Governing Council said last month IPL media rights tender for the 2023-2027 cycle will be released immediately after the announcement of the two new teams on 25th October.
“The IPL Media Rights tender for the cycle 2023-2027 will be released immediately after the appointment of two new IPL teams, which is scheduled to be announced on 25th October 2021,” the IPL Governing Council said in a statement.
The BCCI wants to checkmate the International Cricket Council (ICC) by auctioning IPL media rights before the international cricket body can sell off its India rights package for a period of 5 years. The ICC media rights are currently held by Star Sports Network till 2023. The sports broadcasters had paid close to $2B for the 8-year long cycle.
Due to the addition of two new IPL franchise from the 2022 season onwards, the tournament will have a total of 74 matches. Each team will play 7 home matches and 7 away matches. The BCCI will see a huge growth in the earnings due to the addition of two new teams.
An experienced media professional said: “It is difficult to predict the IPL media rights value, but if we take the current five-year rights value as the base price, then it should easily cross $5 billion. The interested players for IPL rights would be Star, Sony, Reliance and Amazon. The upcoming auction will elevate the status of IPL globally as a valuable sports property.”
A senior media professional said that the IPL media rights tender may come any time soon. He also added that the IPL media rights valuation will increase further after the addition of two new teams.
“The auction of two new teams will boost the overall value of IPL including the media rights. The IPL media rights value will only go up further than what was anticipated earlier,” the official said.
“Buying an IPL team is like buying an IP for perpetuity. Even if the new franchises don’t make money for the first 10 years, they have time to build this business and become profitable since the team is owned for perpetuity. Unlike a franchise owner, the media rights’ holder will only own the rights for five years. They will have different considerations while deciding on the bid amount for the property,” the professional stated.
A senior BCCI official said PTI that a US based company is interested in acquiring the IPL media rights.
“With 10 teams playing IPL from 2022, the matches will go up to 74 and in any case, the valuation of the property increases,” the official had said.
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The current rights are held by Disney owned Star India for 2018-22 which is worth ₹16,347 crore, which assures ₹54.60 crore per match. As estimated, the IPL accounts for 40% of cricket’s global revenue. It is expected that the broadcasting rights will go as up as INR 30,000-40,000 crore in the 2023-27 period depending upon the bidding frenzy.
We will also see a participation from Star India, Sony Pictures Networks India (SPNI), Reliance Jio-Viacom18, and Amazon to acquire the media rights for IPL.
Former direction of Kolkata Knight Riders Joy Bhattacharya sees the big money buys of new franchises as a long-term investment.
“The one great thing is they get rights to perpetuity (in IPL). For someone like Sanjiv Goenka, the time frame in IPL is large. They are not looking for immediate profits; they are looking at 10 years and beyond. It’s amazing how the league has grown.
“The important thing is more and more private equity firms are coming in, investing in sports. Look at CVC, they have invested in volleyball, which is a billion-dollar thing.”
In 2020, CVC and the International Volleyball Federation formed Volleyball World with a $300 million investment from the firm.
“Sports is a driver. Investments are not just about passion for sport, shelf life of the product is long. Private equity firms, they know sports provide value in terms of global exposure, teams like say Man United with a global footprint. They are reaching a worldwide audience. And Asia is the fastest growing in sports,” he says.
Joy Bhattacharya comments on the future of IPL. He says: “Once you reach 10 teams, you can’t really expand. But there are other ways. You can start a second-tier IPL, take it to 10 smaller cities. In 2-3 years, women’s IPL is likely to start, there can be other products around the league.”