Pune and Kochi unveiled as new IPL franchises

Pune and Kochi unveiled as new IPL franchises

Cricinfo staff

March 21, 2010

The financial might of the IPL was on display again on Sunday when Pune and Kochi became the league's two new franchises, being sold for a value in excess of the original eight franchises combined.

The Sahara group, the biggest patron of sports in the country, became owners of the Pune franchise after offering a staggering US$370m. The other new franchisee is a consortium of five companies called Rendezvous Sports World, which bid US$333.33m for Kochi. The pair beat three other qualified bidders who were in the fray to become part of the IPL.

In fact, Sahara had the highest bids for three cities - Ahmedabad, Pune and Nagpur - but it eventually opted for Pune.

Unveiling the winners at the ITC Park Sheraton in Chennai on Sunday, Lalit Modi, the IPL commissioner said, "The bidding was extremely competitive and I hope they [the bidders] make good business." He also indicated that the franchise fee for the two new teams was for 10 years.

The IPL will now feature 10 teams and - if the current format is retained - a total of 94 games, from the existing 60. After the first season in 2008, the league has already expanded its reach to other centres such as Cuttack, Ahmedabad, Nagpur and Dharamsala.

Pune is believed to have been on top of the bidders' list mainly because of its proximity to Mumbai. Abhijit Sarkar, the corporate communications head of the Sahara Group, did indicate that "logistics and infrastructure" were two important parameters behind finalising the venue. Also, infrastructure-wise Pune has always been a thriving metro, housing a huge and bustling corporate sector.

Another important advantage that Pune had over its rivals was a young population with a high disposable income - matching the target audience Modi has always kept in mind while promoting the IPL brand.

Also, Sahara and the two other bidders would have kept in mind that a lot of the fans travelled to the DY Patil Stadium in Navi Mumbai during the IPL games, which is a two-hour's drive from Pune via the expressway.

Ajay Shirke, president of the Maharashtra Cricket Association (MCA) and a prominent businessmen from Pune, said he was happy about Pune being rated as the most popular venue at the auction, with three out of the five bidders preferring Pune as their home base over the rest of the 11 cities.

"MCA has always maintained that we will support all bids that are made for Pune," Shirke, who was present at the auction venue in Chennai, told Cricinfo. "That only increases Pune's association with cricket manifold.

"What they [the bidders] would have kept in mind was the market of Mumbai and Pune are nearby. Then there are private cities like Lavasa and Sahara's own Aamby Valley, which is about 20 kilometres from the ground."

According to Shirke, the Sahara franchise would have its home ground situated on the outskirts of Pune city, in Gahunje, which is on the Mumbai-Pune expressway. The ground construction is already underway with Shapoorji Pallonji being the main contractors.

He was confident that the ground would be ready in time for the IPL's fourth season when Sahara would unveil its team. "The construction work has already started and it should be ready by March 2011," Shirke said.

The franchise auction process was to have been completed on March 7 but was postponed by two weeks after the bidders and the BCCI objected to stiff financial clauses.

http://www.cricinfo.com/ipl2010/content/current/story/452856.html

surprised with kochi. i thought ahmedabad would be the second city of choice

[quoteThe financial might of the IPL was on display again on Sunday when Pune and Kochi became the league's two new franchises, being sold for a value in excess of the original eight franchises combined.[/quote]

That's the most interesting part for me.

So what happens when Sahara goes bust???

So to put it into perspective Manchester United (without the debt) would probably be valued at around the 1 billion mark.

I'm surprised that Kochi is going to IPL. I thought he would have been on a good wicket at Channel 7.

Is Mel going with him?

Care factor 0

enough to read and post on this thread

Obscene spending again this time.

Market capitalisation will become an issue at some stage. Someone's gotta lose money on it eventually, and with the sums being thrown around now, it could well be a case of one brick taking down the whole wall.

Zat wrote:Market capitalisation will become an issue at some stage. Someone's gotta lose money on it eventually, and with the sums being thrown around now, it could well be a case of one brick taking down the whole wall.

There’s a lot of junk in that statement, Zat. It’s based on
1. erroneous market evaluation (if any)
2. ignorance of prevailing economic and monetary growth
3. faulty assessment of product value within the given market
4. gross ignorance of demand and supply rules
5. total neglect of capital appreciation

Question:
If 8 franchises in total cost around 600+ million 3 years ago and 2 franchises today cost 700+ million, what is the initial capital invested then worth today? (better known as capital gains)

* files away Zat's application and CV for a post as financial advisor marking it in red - jack of all trades, master of none *

So the economy's still on the up and t20 will continue to grow at exponential rates, as will the TV rights and income for the franchises? OK, cool.

Zat wrote:So the economy's still on the up and t20 will continue to grow at exponential rates, as will the TV rights and income for the franchises? OK, cool.

mirchy is obviously a merchant banker or stockbroker.

doremi wrote:Obscene spending again this time.

Same here.

Is BCCI still called a non profit organization, assuming all this money goes to BCCI.

So the economy's still on the up

Yes, it is. It slowed a bit during the world recession, but never recededinto negative margins

t20 will continue to grow at exponential rates

Yes, the market value will. See point 4 above. Maybe even faster in value as the new contracts have been signed for 10 years and not many franchises can be made available without a change in the presentation of the IPL.

as will the TV rights and income for the franchises?

Yes on that count too, when the present tv rights contractual periods run out.

OK, cool

Agree, if T20 keeps churning out latent domestic talent inherently available in the country. You might disagree, but this format has contributed immensely to India’s bench strength. The average age is around 25, which should answer any questions about the future of cricket in India and its growth / market value.