The Hindu Business Line : Private equity funds jostle with cos for IPL franchise rights

Chennai, Jan. 18 A clutch of high profile corporates, high net worth individuals, and several private equity funds have thrown their hat into the ring to bid for the team rights across the eight cities where the BCCI’s Indian Premier League’s forthcoming T20 tournament will be held.

According to sources, several businessmen such as the Ambani brothers, the Future group’s Kishore Biyani, liquor baron Vijay Mallya have all thrown their hat into the ring to bid for the team franchisees, the bids for which will be opened on January 24. An official confirmed that several more than the 32 organisations (companies, funds and consortiums), announced on January 14, have bought the invitation to tender document. Among them are at least six private equity funds. The IPL media rights bid was won by World Sports Group with Sony Television, as revealed earlier this week.

More to join?

The minimum bid price for the franchises is $50 million. But with the value of the media rights (the WSG-Sony combine bid $1.026 billion over 10 years) disclosed, the IPL expects many more organisations to join the fray as the media rights value has a direct bearing on the profitability of the franchises.

As an official in the know of the process commented, “The bids are expected to be in multiples of the reserve price.”

Mr Balu Nayar, Managing Director, of IMG, the sports management group which is structuring the whole bid process, said that sponsorship of a team is unlike a normal one as it is over an extended period of time. “It increases the intensity of the sponsorship,” he added.

Each franchisee, according to the IPL, can bid to own teams in any of the 12 cities that satisfy the eligibility criteria, which includes a minimum stadium capacity of 25,000 along with floodlight facilities. The 12 cities are: Kolkata, Mumbai, Ahmedabad, Chennai, Bangalore, Cuttack, Kanpur, Gwalior, Mohali, Jaipur, Delhi and Hyderabad.

There will be a total of eight teams in the first year and the matches will be telecast at prime time by SET. While the bidders can put in their bids for a team in any of the cities, they can own only one.

Players auction

The team franchise bids will be followed by the players auction on February 7. IPL has contracted the top 80 players according to ICC rankings and the players will be selected by the team owners through the auction. A few ‘iconic’ players will play for the cities they hail from — Tendulkar from Mumbai and Dravid from Bangalore.

IPL says that it will run a multi-million dollar marketing campaign for its brand launch and has sought presentations from Leo Burnett, O&M and JWT for a creative agency while for media planning it says it is in discussion with MindShare, a WPP group company.

The IPL franchise model, says a media release, will give the franchisee a share of both the central revenues and local revenues, the former being the media rights revenues while local revenues will extend from gate collections to merchandising.

The tournament will begin on April 18 and there will be 59 matches, spread over 44 days.

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