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Explained | The IPL ten

General view of the IPL Trophy during the 2nd qualifier match of the Vivo 2017 Indian Premier League between the Mumbai Indians and the Kolkata Knight Riders held at the M.Chinnaswamy Stadium in Bangalore, India on the 19th May 2017 Photo by Shaun Roy - Sportzpics - IPL

General view of the IPL Trophy during the 2nd qualifier match of the Vivo 2017 Indian Premier League between the Mumbai Indians and the Kolkata Knight Riders held at the M.Chinnaswamy Stadium in Bangalore, India on the 19th May 2017 Photo by Shaun Roy - Sportzpics - IPL

The story so far: On October 25, two new teams were added to the Indian Premier League (IPL) bandwagon after the Board of Control for Cricket in India (BCCI) awarded franchise rights to Lucknow and Ahmedabad . While the Kolkata-based RP-Sanjiv Goenka Group (RPSG) acquired the Lucknow team for ₹7,090 crore, CVC Capital Partners, which submitted the bid through its subsidiary Irelia Company Pte Ltd., bought the Ahmedabad franchise for ₹5,625 crore. Lucknow and Ahmedabad were chosen ahead of Indore, Dharamshala, Cuttack and Guwahati, the other cities in the mix.

Who are the new owners?

RPSG and CVC Capital Partners outbid several other heavyweight parties such as the Adani Group, Glazer Family (owners of famous English football club Manchester United) and Aurobindo Pharma. Founded by Sanjiv Goenka, RPSG is an Indian business conglomerate with interests in power and energy, retail, IT-enabled services, FMCG, infrastructure and education. RPSG likely picked Lucknow as its home base given that the group’s Noida Power Company Limited and retail outlets operate in the Greater Noida region. RPSG had earlier owned Rising Pune Supergiant, which featured in the IPL in 2016 and 2017. CVC Capital Partners is a private equity and investment advisory firm, headquartered in Luxembourg. The firm is not a new entrant to the world of sports, having earlier invested in Spain’s top football league, LaLiga, Formula One and Premiership Rugby. The company’s investments in sport betting companies, Tipico and Sisal, however, have caused some concern. Former IPL chairman Lalit Modi questioned the firm’s legitimacy on Twitter.

Also read: Old teams can retain four, three early picks for new IPL franchises

Why was the bid price higher than the base price?

The key reason for the high price is likely to be the IPL media rights contract that is up for grabs for the 2023-27 cycle. Broadcast revenue is the most significant portion of the BCCI’s central revenue pool from where money flows down to the franchises. From 2008 to 2017, Sony paid around ₹900 crore a year for the television rights. For 2018-22, Star raised it to a whopping ₹3,270 crore per year and with it — according to a How India Lives report published in Mint earlier this year — IPL’s valuation went up 40%. The new broadcasting deal (2023-27) is expected to rake in upwards of ₹5,000 crore a year. This is an attractive enough proposition for a prospective owner to bid large amounts. The high price of the new teams also gives a fair indication of the value of the existing teams, giving old owners leverage if they decide to sell stakes.

How long do they have to pay the bid amount?

The new teams can pay their bid amount over a 10-year period, with BCCI president and former India captain Sourav Ganguly saying that the ₹12,715 crore will be used to improve Indian cricket across levels. The BCCI and franchises share earnings from the IPL’s central revenue pool, which includes money from broadcast, title rights and official partners. The BCCI reportedly keeps 50% of the revenue and distributes the rest equally among the franchises.

What are the revenue streams for a franchise?

Apart from getting revenue from the central pool, franchises earn money through brand sponsorships and match-ticket sales. Brand sponsors include various deals, including logos on team jerseys and helmets, digital sponsors, and so forth. The successful Mumbai Indians franchise, for example, boasts of around 20 sponsors, including the likes of Samsung, DHL, Colgate and Cadbury Dairy Milk. There is also prize money on offer, with the 2021 IPL champion Chennai Super Kings receiving ₹20 crore.

Will the player retention policy and tournament format change?

In order to ensure a level playing field, the two new franchises are likely to be offered three player selections before the mega 2022 IPL auction. The existing teams will likely be allowed to retain four players from their 2021 squads. The match schedule may be similar to what was followed in the 10-team 2011 IPL edition. Teams are set to be divided into two groups of five, with a team facing the other sides in the same group twice (home and away), the four teams from the second group once (two at home and two away), and the fifth remaining side in the other group twice (home and away). This ensures seven home and seven away matches. A total of 74 matches will be held in IPL 2022, an increase from the 60 matches played in the previous edition.

 


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