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BCCI tender for new IPL franchises to roll out; here’s what to expect… | Cricket News – Times of India

MUMBAI: The BCCI is all set to roll out the tender document to invite bids for two new franchises to be added to the Indian Premier League (IPL). The document is ready, waiting to be made available to potential bidders anytime within the next 24 hours.
The tender to bid for these two new franchises involves the following aspects: Rs 3,000 should be the valuation of the company / consortium bidding for a potential franchise; Close to Rs 1700 cr (the upper price at which BCCI last sold a franchise – to Sahara in 2010) could possibly be the base price for the bidding to begin; it’ll be a closed bid with no technical aspect to it; the potential bidder can write to the BCCI requesting clarifications in the tender document – one that will be reverted to over the next month; the BCCI will list the number of cities available in the present settings for potential bidders to select from; and finally, the winning bids, upon submission, will be announced around the time when the IPL-2021 edition’s knockouts are in progress.
The cricket board has been planning this entire exercise for a year now and investors ranging from pharma companies in Gujarat and Andhra Pradesh to retail and industrial services in West Bengal; investment bankers, private equity players who hob-nob between the Dalal Street and the Wall Street; consortium or clutches of lesser-known businessmen have been eyeing the space.
“Yes, the tender document is ready. It’s coming out and the Board expects great amount of interest and traction,” says a top BCCI official privy to developments.
The two cities in the race to be hotly bid for are Ahmedabad and Lucknow. Ahmedabad because the city now boasts of the country and the world’s biggest cricket infrastructure that includes a 1.10 lac-capacity stadium. The second city in contention is Lucknow – the capital of Uttar Pradesh, a state that goes into a very important election next year, has a world-class infrastructure in the form of the Atal Bihari Vajpayee Stadium (also called the Ekana Cricket Stadium) and is home to a region that accounts for more than 50% consumption of live cricket in the country on television – essentially the so-called ‘heartland’.
There’ll be other cities in the fray too – Nagpur, Raipur, Pune, Visakhapatnam, Ranchi, etc. But expect bidding to take place for Ahmedabad and Lucknow and for each franchise to be sold at anywhere between Rs 3,500 to Rs 4,000 crore.
The company / consortium that wins the bidding process will go on to own the franchise for perpetuity.
Under the present five-year media rights cycle, IPL’s combined central revenues (broadcast + title rights + official partners) stands at an approximate Rs 19,500 crore. The BCCI and the eight franchises share this revenue 50:50. So, half of Rs 19,500 crore – that is Rs 9,750 crore – goes to the BCCI and the rest is distributed among the franchises over a period of five years. This brings in for each franchise an approximate Rs 1,220 crore over a period of five years, which further boils down to around Rs 245 crore-a-year.
Add to the central revenue, a franchise’s own local revenue earnings comprising sponsorships, gate revenues and local partnerships. This differs from team to team. Mumbai Indians, for instance, manage to rope in sponsors in excess of Rs 50 crore every season, while some of the other teams earn between Rs 18 to 25 crore-a-year. Add to this, an approximate gate revenue of anywhere between Rs 2.5 to Rs 3 crore per match and the average local revenue for a team oscillates between Rs 40 to 70 crore every season.
For the sake of ease of calculation, let’s say that average local revenue of a franchise is Rs 45 crore. When added to the central revenue pool of Rs 245 crore, a franchise’s total revenue per season prior to EBITDA stands at an approximate Rs 290 crore. Add to that the prize money – the IPL 2020 winners MI received 20 cr, while the runners up DC got 12.5 crore – and a team’s revenues can go past Rs 300-crore mark.
But what the potential buyers of the two new teams are looking at very carefully is the likely bump up in IPL revenues starting 2023 when the media rights will be up for grabs for the next five years. This will mean that the team’s share of the central pool will expand too. Add to it, the competition between bidders that’ll further drive the price up.
“Anybody who’s looking to buy a team should be willing to bear around a Rs 1000-cr loss in the first 10 years and then wait to make up for it once the payment cycle (to BCCI) gets over,” say those who track the space.

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