Indian Premier League 2010 / News
- Indian Premier League home
- |
- News
- |
- Features
- |
- Photos
- |
- Fixtures
- |
- Results
- |
- Teams
- |
- Squads
- |
- Grounds
- |
- Points Table
- |
- Tournament Stats
- |
- Records
- |
- Season
|
Indian Premier League 2010
Two new franchises to be unveiled on Sunday
Nagraj Gollapudi
March 6, 2010
|
|||
|
Related Links
Features : Unveiling of new IPL franchises
News : BCCI president wanted franchise tender postponed News : New IPL franchises to be revealed on March 7 News : $225m base price for two new IPL franchises Series/Tournaments:
Indian Premier League
Teams:
India
|
|||
The IPL will unveil its two new franchises on Sunday in what is expected to be the latest indication of the league's financial strength and marketing savvy. The bidders' identities have not been made public but Cricinfo understands there are between eight and 12 investors who have met the various conditions and are prepared to start bidding at $225 million, with the bids expected to touch $300 million.
That base price is more than four times the value set in January 2008, when the original eight franchises were auctioned, and reflects the IPL's appeal to business investors. Other terms and conditions are similarly stringent - all bidders have to stump up a returnable deposit of $100 million before the bid, as against the $5 million (approximately) stipulated in 2008.
That is intended to keep out frivolous bidding, Lalit Modi, the IPL's chairman, said. "We put a high-end clause for entry to people, asking them to give $100 million guarantee in advance because we need to get solid companies," Modi told Cricinfo. "This business requires a long gestation period and that is the reason we want to secure ourselves. The BCCI always secures itself."
Less clear at this stage is the procedure once the bid is won. In 2008, the eight new franchise owners had to pay 10% of the winning bid amount up front; reports suggest those successful on Sunday will have to produce a bank guarantee for the entire bid amount within seven days. "That's speculation," Modi said. "That is not the case. There are numerous conditions and you can qualify under any conditions."
Another reported condition became the subject of controversy on Friday when Priyadarshan, an award-winning film director, claimed bidders had been asked to furnish a bank guarantee of $1 billion.
The IPL has softened its stance a little by retaining the discretion to change the bank guarantee amount for the winning bidder. But people already in the IPL business back the organisers' decision to set steep conditions. "It is a stiff condition and may be the intention is to get only a certain number of bids since only two franchises are up for stake," an official of an existing franchise said.
The willingness of investors to invest big money, especially in the current economic climate, is all the more surprising given that, as franchise owners, they get no fixed assets. The costs are high, as one cricket-related businessman explained. "On annual basis the winning bidder would have to spend to the tune of about 200 crore (US$44m), considering the base price is itself $225m for 10 years which works out to a minimum of $22.5m annually, which is about 100 crores. If the bid is won at a higher amount, say about $300m then the annual payment climbs up by 30-40 crores. You then add the various costs of running the team you will need to spend about 200 crores," he said.
Also, the franchises will almost certainly be based in relatively small markets - the metros and bigger cities already have teams. The favourites to be host cities for the two new franchises are Ahmedabad, Lucknow, Pune and Nagpur.
Signs of the IPL's growing net worth were evident in February 2009 when Rajasthan Royals, the then IPL champions, sold a 11.7% stake in their franchise for approximately US$15.4 million. That put the valuation of the franchise at around $140m, more than double the $67m paid for it a year previously.
Nagraj Gollapudi is an assistant editor at Cricinfo
Feeds: Nagraj Gollapudi
© ESPN EMEA Ltd.
| Comments have now been closed for this article |
||||||
TopE-mail
Feedback
Print
Nagraj Gollapudi
Tournament Results
Sponsored Links
Watch Bollywood movies for free
Citibank NRI Account, Fast Reliable & Secure Way to
Transfer Money. Apply Online Now!
Access your Indian Rupee earnings from anywhere in the world.
ICICI Bank Money2India brings " locked exchange rate" and a free gift
on registering and transfer of USD 250 and above.
BUY England 2012 official Test & ODI kit
Available now at Cricshop
Well said Wanderer, at the end of the day if these companies go public as some have already shown the signs and if at all things go bad its the common man which will suffer, the only pro in this case is that in India cricket sells. Peeps will go to any length to watch a match , thus profits wont decline in the near future, but if at all things go bad due to further non -growth of core industries, cricket will definitely feel the pinch.
Posted by Sanks555 on (March 07 2010, 07:20 AM GMT)Most IPL teams are yet to make money. Source: http://timesofindia.indiatimes.com/sports/cricket/ipl/top-stories/Most-IPL-teams-are-yet-to-make-profits-Kings-XI-Punjab/articleshow/5425782.cms
Posted by Rockers.Raghu on (March 07 2010, 05:33 AM GMT)@wanderer1:d richest football team is r.madrid followed by barca n 3rd is man utd... of course man utd is facing debt problems but not r.madrid or barca... all d 3 has a profit of more than $400m in d 20008-09 season!!! yet still man utd is facing debt means that they r not thinkin much when making transactions... but c r.madrid n barca... they bid on gud players n make them great!!
Posted by Pavan94 on (March 07 2010, 03:23 AM GMT)This is very depressing... the more teams there the more money modi makes, the only thing that little man is after is all the money he can get from the crowds and the rich franchise owners. not really a fan of the two new teams, hope they fail who knows, it might be goo.
Posted by LITT on (March 07 2010, 03:06 AM GMT)i think it make more sense to have teams from untapped areas, like kerala, lucknow, ahmedabad etc., but i don't think there should be a Pune team, as it is so close to mumbai, and i guess most of pune people already follow mumbai indians as their home team. @123456789sharath: bid starts at 12 noon.
Posted by dibbu on (March 07 2010, 02:51 AM GMT)I don't understand why half the time people commenting on cricinfo just crib about how much money other people have and how they choose to spend it! If you don't like it, move to Cuba, will ya!
Posted by YGSR on (March 07 2010, 02:12 AM GMT)IPL and BCCI were upset when due to general elections in 2009, the matches were shifted to South Africa because the Indian public were denied the chance to see the matches. Now in 2010, both IPL and BCCI say that IPL 2010 shall be held in India only because the Indian public should not be denied their opportunity to see their favorite cricketers in action. In this scenario, both IPL and BCCI played 'dirty politics' with the cricket-loving public of Hyderabad. They have to explain whether the cricket-loving public of Hyderabad are Indians or not and also whether Hyderabad belongs to India or not? Thus both IPL and BCCI have brought 'disgrace' to this great nation by upholding their slogan 'CHEAT HYDERABAD, VOTE IPL AND BCCI'. 'Ethics and Corporate Governance' have taken a back-seat at IPL and BCCI. It is time for the necessary statutory authorities to step in and correct the 'indiscipline' in this business which is detrimental to its most important stakeholders: general public.
Posted by KTiwari on (March 07 2010, 02:06 AM GMT)hope some of the franchines list soon on BSE soon that normal people can buy a piece of it
Posted by KhanXpress on (March 07 2010, 01:51 AM GMT)Delighted to see the current ratings of IPL… I am sure every dollar invested would multiple many times given the love we Indians have for cricket. Also please don't compare a football club with IPL as the audience for cricket is much larger than football (especially in India).. Moreover, the security is just a hoax to scare away the good investment from India. Keep going guys, u rock! And, more power to u Mr Modi. God bless and Allah Hafiz. This is Mohammad signing off from Dallas.
Posted by bd_zindabad on (March 07 2010, 01:24 AM GMT)as an economist,i must say it will be quite difficult to reap solid and significant profits. the upside is that the market is yet to be saturated , and given winning performences of a team, profits will increase. however it will take a few years to make significant returns, and by then, the market may well be saturated, or ICC get harsher with player availability/team schedules, and/or security problems. if the outlook is sound for the nest 3 and 4 yers max, then its a solid investment. Otherwise franchises may be found short. the economist.