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Sanjiv Goenka and Intex get Pune and Rajkot IPL teams

MUMBAI: The Indian Premier League (IPL) has got two new team owners as Kolkata businessman Sanjiv Goenka’s New Rising Group and Delhi-based mobile phone manufacturer Intex Technologies have bagged the rights to Pune and Rajkot teams respectively.

This is Goenka’s second outing as a franchise owner. In soccer, he owns the Indian Super League (ISL) Kolkata franchise along with Harshavardhan Neotia, Utsav Parekh and Sourav Ganguly. Intex, on the other hand, has been a regular advertiser of cricket on television.

The two new teams will replace Chennai Super Kings (CSK) and Rajasthan Royals (RR), which were suspended by the RM Lodha committee for two years on charges of spot fixing.

Subhashish MitraIn a reverse bidding process deployed to choose the two new franchises, New Rising quoted minus Rs 16 crore (Rs 160 million) while Intex won the bid at minus Rs 10 crore (Rs 100 million). The two new franchises have selected their respective franchise cities as their home grounds.

Commenting on New Rising’s decision to participate in the IPL, New Rising executive director and group company secretary Subhashish Mitra said, “Our aim is to be associated with the great game of cricket in our humble capacity, and the IPL has given us that opportunity. Pune is a great city and we have a very soft corner for it. When we were going through the list of cities available, Pune struck a chord with our mind and we are very glad that we got Pune. We are very proud to have built this association with Pune.”

keshav bansalIntex Technologies director Keshav Bansal noted, “I am a great sports enthusiast myself and have a passion for cricket since childhood. I also feel there is a great synergy between the brand, Intex and the IPL, which is the most covered cricket tournament across the globe. So, it is a great opportunity for the brand as well me, personally, given my passion for the sport.”

The BCCI deployed the reverse bidding process as the two teams will participate in the IPL for two years only.

As per the invitation to tender (ITT) released by the BCCI last month, the rights on offer for new franchises included the right to operate and manage the two franchises during the 2016 and 2017 seasons but not thereafter, to exploit the team rights, to stage its home matches and a host of other rights.

The bidders had two options—i) to bid the lowest amount on the base price of reverse bid and get a share of central revenue pool, or ii) make a negative bid under which they will pay franchise fee while foregoing their share of central revenue.

The base price for the reverse bid was set at Rs 40 crore (Rs 400 million). Bidders had to quote an amount lesser than the base price to get the franchise rights. The base price is the share of the central revenue pool that each franchise gets every year. Bidders winning under this criterion were to get the amount that they bid as central revenue pool for two years. They were not required to pay any franchise fee.

The bidders were also allowed to bid in the negative, meaning that they will not get any revenue from the central pool. However, they will pay franchise fee based on their negative bid amount. Goenka’s New Rising and Intex had taken this route of bidding.

Rajeev ShuklaIPL chairman Rajeev Shukla said that the two winners who would replace the suspended CSK and RR were part of a total of five bidders, including Harsh Goenka’s RPG Group, Chennai’s cement giant Chettinad Group, and Axis Chemicals.

As many as 21 entities had bought the IPL tender documents.

Shukla revealed that New Rising also had Nagpur as one of their options, for which they bid minus Rs 11 crore (Rs 110 million). Intex also bid for Nagpur and Visakhapatnam for Rs 10 crore each (Rs 100 million).

Chettinad quoted Rs 27 crore (Rs 270 million) for Pune and Chennai, while RPG bid Rs 17.88 crore (Rs 178.8 million) for Pune and Rs 20.88 crore (Rs 208.8 million) for Rajkot. Axis’s bids were Rs 15 crore (Rs 150 million) for Nagpur and Kanpur, and Rs 10 crore (Rs 100 million) for Pune.

BCCI laughs all the way to the bank

With the two franchises making negative bids, the Board of Control for Cricket in India (BCCI) is eyeing an additional revenue of Rs 360 crore (Rs 3.6 billion) over the next two years.

Shashank_Vyankatesh_Manohar“New Rising for Pune had given a bid of Rs -16 crore (Rs-160 million) and Intex mobile for Rajkot has given a bid of Rs -10 crore (Rs 100 million), and because of these two new bids, the board’s revenue is going to increase by nearly Rs 180 crore (Rs 1.8 billion) annually. So for two years, the board would make more than Rs 360 crore (Rs 3.6 billion),” exulted BCCI president Shashank Manohar.

Manohar also informed that there would be a draft auction on 15 December, where the two new franchises would be entitled to pick five players.

Each of the two franchises will get to choose five players from a pool of 50 (from CSK and RR), out of which maximum of four Indian capped players are allowed. Pune will have the first go at the bid. The last date for them to draft their picks is 15 December. The salary cap has been fixed at Rs 66 crore (Rs 660 million) per franchise.

The remaining players from the two franchises will go into the auction pool, which will also have players from other franchises. The auction of released players and the new players will be held in Bengaluru on 6 February.

Manohar also said that the 2016 season of the IPL would be played between 9 April and 29 May. The franchise workshop will be conducted in Srinagar on 13 and 14 January.

Industry Speak

vinit karnikESP Properties national director Vinit Karnik said that the addition of two new teams would open up more inventories for sponsorship.

“The two new teams open up new inventory in two different markets because CSK and RR had sold a lot of assets on real estate. Therefore, this is an additional inventory that is up for grabs for new advertisers. Gujarat gets a team for the first time because a lot of local Gujarati advertisers are national brands and that’s a team to watch out for from advertising point of view,” Karnik averred.

Indranil Das BlahCAA KWAN founding partner Indranil Das Blah believes that managing an IPL team even for a short period will give the owners an insight into the business of managing sport franchises.

“Unlike other team owners who have bought into the IPL, this won’t be about valuation. It’s more of activation for two years rather than brand building. Apart from getting eyeballs, it also gives the new franchises an entry into the BCCI system. This will help in understanding how workings are, what levers you can push, what buttons you can cut, and whenever the BCCI decides to expand to more teams, then you are in a better position to bid,” said Blah.

Mohit Burman01Kings XI Punjab co-owner Mohit Burman said that the news of two new franchises was good for Brand IPL. He also feels that the reverse bidding evens out as the franchises are not getting central revenue and they are paying a much lower fee.

“After the issues with Chennai and Rajasthan, everybody believed that Brand IPL had taken a hit. But the interest in the new teams means that there is still a lot of demand.

“But they will still both lose money. Pune will lose less than Rajkot. I am not sure about the stadium attendance in Rajkot. They will have to go to clients for sponsors. They have to build fans and their brand. Two years is a short time. The player costs will be the biggest factor for them, which is not the case with some franchises for whom the franchise fee is the highest cost,” he added.