Kaun banega franchise owner?

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Lalit Modi true to his style has priced the new IPL teambids extremely aggressively. Against a base price of $50 million whenIPL was architected, he has upped the ante significantly to $225million. The question is - does he have just cause to do this? Well,if you go by the tournament's hype and popularity and adjust the baseprice for inflation three years later, I guess the answer would be inthe affirmative. But does the environment and the marketplace warrantsuch a spike? Is there enough appetite amongst cricket crazycorporates who have suddenyl discovered a new mantra - return oninvestment - in the way they invest in cricket properties? The answermy friends may well lie in the wind, but the overwhelming feeling isthat only a handful of companies would be interested. A base price of$225 million would roughly translate into Rs 1000 crore over a 8-10year period. Yes, that seems stiff. Agreed that broadcast revenues areto be split between the team franchisees, but instead of 8 cuts, therewill be 10 now, which means that the pie is getting smaller. Thetender process and the tender documents will reveal the way forwardhere.
More importantly, the $225 million is the base price; then there isthe cost of building a team and its supporting eco system. It is anexpensive proposition all around and only those with extremely deeppockets can revel in this kind of hoopla. IPL insiders claim that fivenew venues will be thrown open to the team bidders - Ahmedabad andKanpur are certainties. This is because even last time round, peopleevinced interest in acquiring teams from these two centres. AnilAmbani's ADAG and Subroto Roy's Sahara primarily. The high base pricewill be a deterrant for a lot of people, namely actors and the like.Other than Mukesh Ambani (Mumbai Indians), Vijay Mallya (RoyalChallengers), Deccan Chronicle (Deccan Chargers), India Cements(Chennai Super Kings) and GMR (Delhi Daredevils) , all the otherfranchisees have fragmented ownership. Rajasthan Royals, Kings XIPunjab and Kolkata Knight Riders have multiple owners.
Many of the franchise owners have grouched privately over the dynamicsof putting together teams, replete with players, support staff,marketing human resources and other cogs thet make up a team. However,with the tournament back in India, there may well be interest becauseof the sheer glamour quotient that comes with owning a franchise. Thefact that a fresh auction of all players for season four may alsoprove to be a driver. With the Governing Council removing the cap ontwo Aussie centrally contracted players allowed per franchise alsocoming into effect, it may well galvanise activity. If some clarityemerges on doing away with marquee players as Icons, then there mayjust be that much more activity. All this may lead to a bidding frenzyin season 4. There were a lot of unknowns when IPL was constructed,two seasons down the road, one realises that valuable players are notnecessarily Icon or marquee players. Let me give you the example ofDelhi Daredevils - Dirk Nannes, T Dilshan, A B De Villiers and DineshKarthik may well be seen as more valuable players now given theiramazing performance levels in the first two seasons. Ditto for othersides too. Some of the players in the existing gene pool have revelledin T 20 cricket. Goa's unheralded and unknown Shadab Jakati, SudeepTyagi of CSK, Shane Watson of RR, Fidel Edwards for DC; the list isendless. These players with proven skills will be sought after ratherthan an injury prone Kevin Pietersen or Andrew Flintoff.
With all players contracted for three years, the mix will be excitingas they go under the hammer all over again. Yes, the IPL from season 4onwards thrown open myriad possibilities. My concern is whether Modiand the BCCI have over extended themselves after the Team jerseyfiasco. Pricing is critical in India. Yes, there is interest in owninga team in the IPL, I wonder how many have the gumption and stomach tobuild a franchise and take it to the next level. At the end of theday, a team franchise is also a branding exercise. Deccan Chroniclefor one has effectively marketed his newspapers, Reliance Industriesis not in any real consumer facing business other than retail, VijayMallya can do surrogate advertising for his liquor products usingRoyal Challengers, Shahrukh Khan has got it all wrong, GMR is in theinfrastructure space, the four owners of Kings XI Punjab havedisparate businesses - Ness Wadia, Mohit Burman, Priety Zinta, KaranPaul and you could argue that India Cements is also using CSK forbranding. Which leaves Rajasthan Royals, again multiple owners withdisparate interests. On the other hand both ADAG and Sahara need abranding device as powerful as a IPL team. Anil Ambani owns India'ssecond largest telecoms - Reliance Mobile now available both in GSMand CDMA while Subroto Roy is aggresisvely promoting his housingcompany Sahara City Homes these days. The new commercial with theentire Indian team is a case in point. This must be part of therestructured Team Jersey deal with Sahara till June where the BCCImust have allowed its contracted players to appear in the commercial.
Depending on the city, there could well be other biggies interested inacquiring a franchise. Sunil Mittal, owner of Bharti Airtel for one.But again what is crucial is the city that will be allotted thefranchise. I can think of Hero Honda, great supporters of cricket, butnone of the north Indian cities are available. These cities will haveto have excellent cricket and allied infrastructure. So a Motera isdefinitely on the cards, maybe a Kanpur, Cuttack and Gwalior as well. Nowwhoever buys a team has to have some cultural or personal affinity forthat city. One can understand Sahara bidding for say a Kanpur orLucknow franchise, because it is part of their sphere of operationsand influence. Ahmedabad is close to Anil Ambani for he himself is aGujarati and started his career in the Reliance factories there. Punemay well be another centre, one had heard of the Pawards and horseracebreeder Cyrus Poonawala coming together to buy the franchise. For aBharti or Hero Honda, a city in Punjab like Ludhiana would have beenideal, for they can trace their roots to the city. Given the highentry barrier due to the pricing, an alliance between two businesshouses cannot be ruled out either.
Once the venues are known, the tender process is available in publicdomain, more clarity will emerge. Till then, keep speculating.