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At least three bids expected for new IPL franchise

Amol Karhadkar

October 24, 2012

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Amit Mishra completed his second IPL hat-trick, Kings XI Punjab v Deccan Chargers, IPL 2011, Dharamsala, May 21, 2011
The IPL governing council could decide to send the Deccan Chargers players back into the auction pool © Associated Press
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For the second time in as many months, the BCCI's mandarins will assemble in an attempt to find a new franchise owner for the IPL on Thursday. Their last attempt was foiled when the owners of Deccan Chargers rejected the sole bid by PVP Ventures to take over the then beleaguered (and now terminated) Hyderabad franchise on September 13, and the BCCI would be hoping Thursday does not see a repeat.

Despite several litigation issues that have dogged the league over the last year and the departure of its title sponsor, it is unlikely the new invitation to tender - floated by the board on October 14 after India's Supreme Court upheld Chargers' termination - will pass without any serious bidders. When the BCCI top brass meet in Mumbai on Thursday, they would be hoping to have "at least three" bidders for the new IPL team that would feature in at least five editions of the tournament from the 2013 season. "Around half a dozen tender documents have been bought by prospective owners, so it cannot be said that the response has been negative," a BCCI insider told ESPNcricinfo.

It is important to note that a lower base price has been set for the new team, a factor that is expected to draw more interest from bidders. When the Sahara group bought the Pune franchise in 2010, the base price was $225m (about Rs 1035 crore by 2010 rates) for 10 years (about Rs 103 crore per year). It was learnt that this time, the BCCI has set the base price at Rs 60 crore ($11.2 million) per year for a period of five years.

Though the BCCI bigwigs were tightlipped over the expected winning bid amount, a market expert, requesting anonymity, said he "won't be surprised if the winning bid is around Rs 600 crore ($112 million) for five years".

Recently, hours before the Chargers' termination, a Mumbai-based realty firm, the Kamla Landmarc group had offered to buy Chargers for Rs 1250 crore ($231.5 million) payable over ten years, the amount being confirmed by Ajay Vazirani, senior partner of Hariani & Co, legal advisors to the Landmarc group.

"If the base price is lowered, then it will certainly become an investor-friendly entity," said Prahlad Kakkar, a leading ad filmmaker in Mumbai. "What has been happening till now is the cost of the team is so high that the only option to make money is to sell the team. A lowered base price suddenly makes it more viable for a lot of investors."

The BCCI tender had invited bids with respect to 12 cities: Ahmedabad, Cuttack, Dharamsala, Hyderabad, Indore, Kanpur, Kochi, Nagpur, Noida, Rajkot, Ranchi and Vizag. Among those who will most likely submit their bids are PVP Ventures, whose efforts to buy Chargers last month went in vain. It is also possible that the Ahmedabad-based Adani group, with interests in shipping, mining and agriculture, and Noida-based Jaypee group, who are infrastructure specialists and currently own the Indian F1 track, could end up bidding for their home cities.

The BCCI has imposed stringent measures when it comes to the termination clause by adding a performance deposit, which the owners of the team forfeit should they fail to pay their bank guarantee.

On Thursday, the IPL governing council will also discuss several issues around IPL 2013, including, it is believed, the fate of the Chargers players. The governing council could decide to send all those players back into the auction pool.

Amol Karhadkar is a correspondent at ESPNcricinfo

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