From Rs 270 crore to 7090 crore, what makes IPL teams such a sought after investment

The best thing about Brijesh Patel, IPL Commissioner, is, he understands money. Far better than most people. Time after time he has shown his acumen during his days as KSCA secretary, NCA chairman, BCCI and IPL member.

The allotment of Lucknow to RP Sanjeev Goenka Ventures Ltd was a classic example of quick thinking and ensuring maximum accrual to BCCI coffers. Goenka, at an identical sum of Rs 7,090 crores was highest bidder for both Ahmedabad and Lucknow franchises (He was also sole bidder at Rs 4790 crore was the Indore franchise). However, the second highest bidder for both cities (Irelia Company Pte Ltd) CVC Capital put in different sums – Rs 5625 crore for Ahmedabad and Rs 5,166 crore for Lucknow.

Thus, had Goenka been allowed to choose Ahmedabad, the winning bid for Lucknow would have been lower by Rs 399 crore and consequently, left BCCI poorer by the same amount. In 2008 although erstwhile IPL Commissioner Lalit Modi had persuaded Vijay Mallya to let go of Mumbai and instead accept Bangalore, BCCI had allowed franchises to pick and choose their cities. A similar ‘choice-option’ on Monday would have deprived the Board of Rs 400 crore and IPL Commissioner Patel swiftly moved to plug that.

Still, what we saw was a humongous sum of money spent to buy just two city teams for the next 10 years. To put this in perspective, the government of India sold Air India to the Tatas just a few days back for Rs 18,000 crore. Now the sale of merely two IPL franchises has fetched BCCI Rs 12715 crore. The Tatas at least got hundreds of airplanes, pilots, tech teams, parking bays, flight routes, etc for the money spent!

Certainly, whichever way you view it, the world of IPL cricket has changed unbelievably since 2008, when Lalit Modi put together the concept of franchise cricket to subvert and demolish the rebel ICL. At that time there were few takers for Rajasthan (sold for 67M USD — about 270 crore), Punjab (76M), Kolkata (75M), or even Chennai (91M) franchises.

N Srinivasan, BCCI treasurer, had to be persuaded by Lalit Modi and president Shashank Manohar to buy Chennai. A crucial clause in BCCI rules regarding conflict of interest had to be amended to tide over Srinivasan’s acquisition of CSK. Shah Rukh Khan too had to be coaxed into buying Kolkata. Buyers had to be strung together for some other teams too. Few expected IPL to last beyond the initial years.

The cities, at that time, had been identified after a study gave weightage to various factors like population, spending habits, saving habits, salaries of youth, willingness to spend, acceptance of innovative ideas, etc.

The IPL, glamorised by celebrity owners and mega entertainment stars not only survived gloriously, but it has also changed many aspects of the game’s concepts worldwide. It gave a tremendous boost to player earning, spreading of the game to nook and corner of the country, encouraged talent scouts to spread out, brought in expert coaches, physios, trainers, dieticians, marketing wizards, entertainers, logistics specialists, management experts, turf professionals, sponsors, event managers, product and celebrity managers, communication specialists, etc.

There was huge money to be made across the board. The game and an aspirational lifestyle were successfully sold across the length and breadth of the country. Suddenly, owning an IPL team and signing up marquee players meant more than just splurging money. It was an acceptable business expense and it helped open up opportunities for franchise owners.

It is no wonder that the auction of the two teams attracted 22 huge national and international heavy weights ranging from Adani group, Kotak Group, Lancer Capital — Avram Glazer (owners of Manchester United), All Cargo Logistics, Capri Global to Hindustan Media Ventures, etc.

Seeing the massive splurge of money to buy two franchises, many existing franchise owners who had paid peanuts in comparison to get stuck into IPL and all the opportunities it provided, would have been smug that they had got in when they did.

Of course, Goenka and CVC may not grudge them that for they obviously think that their ride in the IPL will be worth all of Rs 12715 crores over 10 years.

Strangely, Amrit Mathur, a very knowledgeable and seasoned cricket administrator, believed that it would be a ‘guaranteed loss of Rs 350-400 crore every year’ for Sanjeev Goenka. The extremely business-savvy Goenka, who has had a bite of IPL cricket earlier would not see it that way. He had owned Rising Pune Super Giants in 2016 (when they finished runners-up) and in 2017, the two years CSK and RR were suspended from IPL.

Simple economics of 7090.crores for Lucknow —GUARANTEED LOSS of 350-400 crores every year .
That should sink in , not the bid price . How does this work ?

— Amrit Mathur (@AmritMathur1) October 25, 2021

He had even sacked MS Dhoni as skipper in 2017 when the team was not doing well. He’s well aware of what he would be walking into. He would have seen prospects galore opening up in India’s largest and most populous state which is only now being primed for massive investments and opportunities. And what a buzz his franchise, their auction picks and IPL matches will create for UP’s electorate in the run up to next year’s momentous assembly elections! Ahmedabad’s massive Narendra Modi Stadium, which like Lucknow’s Atal Bihari Vajpayee Ekana Cricket Stadium is relatively new, too will be put to use a lot more and that should be a boon in the tri-state (Gujarat, Baroda, Saurashtra for Ranji Trophy) which has thrown up many exciting players of late (Jasprit Bumrah, the Pandya brothers — Hardik and Krunal, Ravindra Jadeja, Cheteshwar Pujara and others). CVC Capital who have a stake in La Liga, Spain’s famous football league and earlier had a stake in Formula 1, like RPSG, fulfilled all of BCCI’s criteria, including having a turnover of at least Rs 3000 per year for the last three years and net asset value of Rs 2500 per year for the last three years. Meanwhile, former England captain Michael Vaughan put the right spin to the direction IPL and world cricket were headed: "With two new franchises going for huge numbers it is very clear the IPL is the most powerful aspect of the game now."

With the 2 new franchises going for huge numbers it’s now very clear the IPL is the most powerful aspect of game now .. It’s inevitable that we will see more games & longer tournaments ., #IPL

— Michael Vaughan (@MichaelVaughan) October 25, 2021

Indeed, there will be more of everything in IPL from now on: matches, players, match days, sponsors, grounds, umpires, coverage and above all, money.

Just strap yourself for the ride of a lifetime.

Vedam Jaishankar is a senior journalist and has covered cricket worldwide. He is author of Courage, Conviction, Controversy & Cricket.