It is not one but two IPL teams that are in look out for investors. The Royal Challengers Bengaluru news is already in the buzz, and there is a lot of talk in the IPL about another team trying to sell a stake of their business, most likely a minority equity.
The franchise administration has long hoped for some funding because the cost of running an IPL club is increasing at an exponential rate.
However, RCB’s quest for purchasers is more recent, and the news is that six parties have expressed interest in the Bengaluru franchise if its parent firm, Diageo Great Britain, decides to sell it-something the Indian parties are still unsure of.
The view is the British liquor giant can alter its mind at the last minute even if there are hints that shareholders of the corporation are not too happy about continuing with an IPL franchise, a non-core operation of the firm.
As far as the public is aware, the Diageo management has had discussions with a number of Indian and American parties, including Parth Jindal of the JSW Group and Adar Poonawala of the Serum Institute. It is also thought that the Adani Group and a well-known Delhi-based business magnate with holdings in several industries are interested in purchasing it. In addition to the four previously listed, two US-based private equity firms are weighing options.
When the IPL was extended in 2010 under Lalit Modi, Adar’s father Cyrus purchased the ITT, and the Poonawala family had previously looked into potential with an IPL franchise. In the end, Sahara and Rendezvous Sports won the bids. The short lifespan of the two teams, who were situated in Pune and Kochi, is a different story. Adar’s recent remark against RCB caused quite a stir. “At the right valuation, @RCBTweets is a great team…(sic)” is what he tweeted on X. Rumor has it that he might join forces with an American financial group.
The Jindal group will have to leave DC if it makes a serious bid for RCB because it owns 50% of the Delhi Capitals. The Adani Group has a well-known interest in the IPL; in 2022, when the Board of Control for Cricket in India (BCCI) sold two new teams, it came very close to purchasing the Ahmedabad team.
Valuation is the primary determinant of whether the team will be purchased or sold. There are differing opinions on whether an IPL franchise can really cost that much, but Diageo is reportedly quoting USD 2 billion. In the upcoming cycle, which will go up for auction in the upcoming years, it will rely on the media rights value prediction, which is a forward-looking view. There is a belief that the value may not increase exponentially as it did in the previous two cycles due to the merger of Jio and Star, the fierce rivals of the previous cycle.
There is also the belief that JioStar’s valuation will inevitably rise after the company disclosed that its subscriber base had increased to over 500 million. If the company charged INR 100 for the IPL, it would earn around INR 50 billion (almost INR 5000 crore) per month. With 96 scheduled games, the IPL is expected to stretch for four months, from March to June. The subscription income alone might bring in over INR 20,000 crore, or USD 2.3 billion, in a single season.
Over the course of five seasons, the broadcaster expects to earn over USD 10 billion from subscriptions alone. Additionally, an additional USD 2.5 billion might be generated over a five-year cycle from the INR 5000 crore in advertising revenue from a single season. The value of media rights was at USD 6.3 billion in the most recent cycle. There is always potential for media rights to increase in value in 2027.
Diageo reportedly engaged two private banks, most notably Citi, to offer guidance on the transaction. It is currently uncertain whether the purchase would get forward at all because Diageo’s India branch is purportedly opposed to it. Some of its representatives recently traveled to the UK to discuss the matter.
The valuation of RCB is not the only problem. Any new buyer might have to inherit it because the June 4 catastrophe case is still pending, and there is also uncertainty in Bengaluru city. Since the stampede, cricket has essentially been prohibited in the M. Chinnaswamy Stadium. In the upcoming weeks, the sale should become fully clear.