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