India news August 31, 2012

Chargers owners in 'advanced' talks to sell franchise


Deccan Chronicle Holdings Limited (DCHL), the owner of the IPL team Deccan Chargers, is in advanced talks to sell the franchise, its chairman T Venkatram Reddy has said. The group has been forced to consider selling the team to raise funds to help it tide over a liquidity crisis brought on by a poor expansion strategy.

"We will sell our cricket team Deccan Chargers, which will sort out most of the immediate requirements," Reddy told the Economic Times in an interview. "We are at an advanced stage of negotiations to sell Deccan Chargers. And then the company will be back in action. The newspaper business will not be sold." The group reportedly needs an infusion of about Rs 500 crore (US$90 million approx.) to get through the current crisis.

DCHL had appointed Religare Capital to handle the deal to sell the team back in June. Chargers have not paid all its players in full following the 2012 IPL season and the BCCI had set August 31 as the deadline for all player payments to be made.

One potential complication for the sale is the board's contention that it holds the ownership rights and that no franchise can mortgage the rights without its consent. At an emergency meeting on August 14, the IPL governing council confronted the owners and asked them why the company had mortgaged the team ownership rights to two leading Indian banks.

According to Reddy, the company tried to expand its newspaper business too quickly and are now paying the price for that approach.

The Deccan Chargers franchise was bought by DCHL for $107 million in the first IPL team auction in 2008. At the time, it was the third-most expensive franchise, after Mumbai Indians and Royal Challengers Bangalore. During the second team auction in 2010, the Pune franchise was sold to the Sahara group for $370 million while the now dissolved Kochi franchise was bought by a consortium for $333 million.

If the owners succeed in selling the team, they would be the second in the IPL to sell at least a part of the franchise. In 2009, Rajasthan Royals, then the reigning IPL champions, sold an 11.7% stake in the franchise for approximately $15.4 million to Shilpa Shetty, the Bollywood actress, and her partner Raj Kundra, a UK-based businessman. That put the valuation of the franchise at around $140 million, more than double the $67 million the owners, Emerging Media, paid for it in 2008.

Chargers won the IPL in 2009 but have largely struggled since then. They finished eighth out of nine teams in 2012, winning just four games under the leadership of Kumar Sangakkara, the former Sri Lanka captain, and Cameron White, the Australia batsman.

Tariq Engineer is a senior sub-editor at ESPNcricinfo

Comments have now been closed for this article

  • Ajit on September 2, 2012, 9:21 GMT

    Great news for the DC franchise and players!!!

  • Dummy4 on September 2, 2012, 4:21 GMT

    there is nothing wrong in selling a minority stake. this is pretty much a norm in every business ..! why is there unnecessary wholaboo !

  • Bilal on September 1, 2012, 17:46 GMT

    when so many franchises are looking to sell, it shows that there is something wrong with the business model. I don't get it that where the franchises would make money as brands are still new so there is no money in merchandising. While Money from gate receipts and share of TV rights must barely cover huge operating costs of these franchises. IPL must rethink their business model as a franchise System only works when franchisee are happy which doesn't seem to be the case here. Every passing year we hear financial issues of franchisees while BCCI is turning up huge profits. Those profits must be passed onto the Franchises

  • PRADEEP KUMAR on September 1, 2012, 16:10 GMT

    When franchise contract finish with the players at that time to keep IPL alive, authority has to review the ceiling of money to the players. I feel even half of at present money what they give to player should be good enough. Still they will attract the outside player as well as local player. Any payment under the table will be leaked should be deal with strict rule and also number of player foreign as well as local should be reduced to 30%. If it is not done at right time then IPL feat will be like ICL and very soon they have to close this chapter or owner keep selling their franchise soon to the other people.

  • Krishna on September 1, 2012, 12:18 GMT

    All we can hope is a better business man buys this team and helps young talent to play in IPL

  • Dummy4 on September 1, 2012, 10:17 GMT

    Is this Franchise will be Sell by the Auction?

  • VINODK on September 1, 2012, 10:01 GMT

    @Kavindevan, Yea and in ur Mickey Mouse league what do the people do?

  • Kavin on September 1, 2012, 6:45 GMT

    A very smart decision because IPL is hopeless and only watched by those people who go to stadiums either on free passes or to shout when that stupid tune is played by the DJ....

  • Dummy4 on September 1, 2012, 0:58 GMT

    very smart move, now that there are so many other leagues bpl, spl, the charm of league cricket will fade away in few years...its the best time to sell

  • Dummy4 on August 31, 2012, 18:32 GMT

    sad news, as mr reddy is a nice man, he has given a filip to hyderabad ysters,sad

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