Asia

From F1 to football to cricket: Ahmedabad IPL team owners are leading sports investors

October 26, 2021
Henry Club

Formula One, Football, Rugby and now Cricket.

Private equity firm CVC Capital Partners, a major player in the international game, was on Monday announced as the owners of the new Ahmedabad-based Indian Premier League (IPL) franchise with a winning bid of Rs 5,625 crore – an amount they paid. BCCI will do in next 10 years

This may sound like an eye-watering statistic, but sports economics experts agree that it is not ‘just some random punt’ by CVC, which is ruthlessly profiting from its other sporting ventures, particularly Formula One. Have a reputation for chasing. He said CVC’s investment was proof that they were “attracted by the potential of the Indian market”, “affirming the commercial trajectory of the IPL”, and “a prelude to those seeking to establish a first-mover advantage in American cricket”. Huh. .

Also, Monday’s announcements by the cricket board about two new IPL franchises could also point towards the Indian direction, and by extension, world cricket will take in the coming decade. “Soon afterwards, we could see an extended IPL, which could go on for four to six months and thus affect 50-over cricket. There is an imperative about it,” said an industry observer.

Simon Chadwick, director of the Center for the Eurasian Sport Industry at the Lyon-based Emilion Business School, said CVC’s investment comes at a time when “other global sports investors – such as Silver Lake and Mubadala – are already investing in Indian sport.” Indian digital economy.

Apart from the obvious and lucrative business reasons, CVC’s other motivation to invest in Indian cricket, Chadwick said, would be to gain a foothold in American cricket as well. “It is also important to note that cricket is showing signs that it is gaining traction in the United States,” Chadwick said. “CVC’s investment in Indian cricket could serve as a prelude to those looking to establish a first mover advantage in American cricket.”

But primarily, he said, the move makes “clear sense for CVC” in terms of commercial potential. “India’s annual economic growth is approaching 10 percent, nearly 50 percent of its population can be labeled as middle class, and the country has over two hundred billionaires,” Chadwick said. “Financially, the numbers seem to be adding up, especially as the country’s digital economy is projected to be worth $800 billion by 2030. This is not some random punt from the CVC.”

show me the money

By 2030, the CVC could “look for an exit” from the IPL, said sports lawyer Nandan Kamath, unlike the owner of new Lucknow franchise RPSG, to whom he added, who appear to be longer. This means higher growth from the sale of IPL media rights and sponsorships in the coming cycles, a part of which is shared with the franchises. It is estimated that the media rights auction of the IPL could fetch the cricket board up to $5 billion for the next five-year cycle from 2023 to 2027.

“As the US sports market matures, private equity portfolios are diversifying into sports with diverse audiences, such as rugby and cricket,” Kamat said. “These are seen as having high growth potential over a period of perhaps 7-10 years when CVC may seek an exit.”

The 10-year cycle is also in sync with other CVC sports ventures, most notably Formula One. Between 2006 and 2017 CVC owned F1, paying around £1.4 billion for a majority stake. According to The Guardian, he earned up to £3.5 billion in 10 years.

The report said that the then deputy team principal of Force India, Bob Fernley, accused the CVC of “raping the game” at the time. “All their action has been taken to get as much money out of the game as possible and to make as little as possible,” Fernley was quoted as saying.

The Financial Times reported that in Germany and Italy too, the top football leagues of the two countries had recently turned down investments from the CVC. In August, sports investors bought a 10 percent stake in the Spanish league for about $3 billion. According to The New York Times, the move was opposed by four clubs, including Real Madrid and Barcelona, ​​who opted out of it. CVC has made a total investment of approximately $800 million in professional rugby.

However, Chadwick believed that CVC’s entry into the Indian sports market could move the “commercially mature” IPL into the “commercial stratosphere”.

“IPL was a reaction to our time-poor, instant-hit consumption culture. If anything, its format and staging are far more relevant now than ever before. Its fast pace and celebrity associations are helping to make other cricket formats obsolete, especially the 50-over game,” Chadwick said. “IPL is already commercially mature, but with digital developments now gaining new momentum, the advent of CVC shows that it is about to enter the commercial stratosphere.”

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