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Kochi franchise terminated by BCCI

The Kochi Tuskers Kerala franchise has been issued a suspension notice by the BCCI for non-payment of a bank guarantee, PTI has reported

Brad Hodge celebrates dismissing Pinal Shah, Kochi Tuskers Kerala v Rajasthan Royals, IPL 2011, Indore, May 15, 2011

Kochi Tuskers Kerala will not be part of future IPLs  •  AFP

The Kochi Tuskers Kerala IPL franchise has been terminated by the BCCI for breaching its terms of agreement, the new board president N Srinivasan has said after the annual general meeting in Mumbai. The trigger for the decision was the franchise's inability to furnish a new bank guarantee for 2011. It is understood that the deadline for Kochi to submit the bank guarantee was March 26, 2011. So the BCCI felt it had every right to terminate the contract once the franchise had failed to produce it.
"Because of the irremediable breach committed by the Kochi franchise, the BCCI has decided to encash the bank guarantee [for 2010] in its possession and also terminate the franchise," Srinivasan said. When asked if Kochi had any chance of returning, Srinivasan responded: "No, we have terminated the franchise because the breach is not capable of being remedied."
Under the terms of the franchise agreement, each franchise has to submit a bank guarantee every year that covers the fee payable to the BCCI. "We waited for six months for the fresh bank guarantee to come," a top BCCI official told ESPNcricinfo. "They kept saying they will, they will, they will. That had no meaning."
According to the official Shashank Manohar, who stepped down as BCCI president at the AGM, had told Kochi's owners that in case they needed an extension, they should send a letter signed by all the owners stating they would fulfill their commitments under the franchise agreement or the BCCI could encash the bank guarantee. The franchise had assured Manohar they would send the letter the same evening.
"The last president [Manohar] said that that if you want an extension of two to three days or more, you give us a letter signed by all the owners saying that we undertake to pay the guarantee money by such and such a date," the official said. "And if we fail to do that we have no objection to the bank guarantee to be encashed by the BCCI."
The official said the Kochi owners sent a "simple letter" that did not include all the details Manohar had asked for and so the board took the decision to terminate the franchise. "[These] things do not work. It is even unfair to the other franchises."
According to the official, the BCCI was not worried about Kochi going to court because it was the franchise that had defaulted. As for the players, they are likely to go back into the auction. "And in case the players' dues are not paid, we would ensure that it is paid from the bank guarantee money we encash."
The chairman of Kochi, Mukesh Patel, however, denied that the franchise owed the board any money. "The BCCI notice is wrong, prima facie," he told PTI. "We will take legal action against them after our legal team reviews the case in a day or two. Maybe we have to move court. We have never defaulted. The BCCI will be paying us Rs 12 to 15 crore ($2.5 million to $3.13 million) next month as a part of our central revenue."
The franchise's dispute centres on the BCCI's decision to reduce the number of IPL games from 94 to 74. "The number of games in Tender Document was 94; they then reduced it to 74 but did not reduce the franchise fees."
The BCCI also appointed Rajiv Shukla as the new IPL chairman, succeeding Chirayu Amin, and said that the league's governing council would take a decision on whether to have another auction for a new franchise. With Kochi's termination, the ten-team competition will be reduced to nine.
The consortium that owns Kochi is reported to have defaulted on an annual payment of Rs 156 crores as a bank guarantee. In April 2010, the BCCI's working committee had rejected demands from Kochi and Pune Warriors for a reduction in their franchisee fees. The two new franchises, which made their debuts in 2011, had sought a 25% waiver on the grounds that the BCCI had stated in the bidding document that each team would play 18 league matches in a season. The schedule was later reduced to 14 matches per team.
The two teams already paid 75% of this year's installment and wanted the balance waived. They argued the reduction in matches was a breach of the terms of the Invitation to Tender the BCCI had issued before the two new teams were bought. Since they had based their bid on the number of matches to be played, a reduction should therefore be accompanied by a reduction in the franchise fee. However, the BCCI voted to turn down the request at its meeting in Mumbai in April.
In March 2010, the Sahara group had bid $370 million to became owners of the Pune franchise while a consortium of five companies called Rendezvous Sports World offered $333.33 million for Kochi.