Opacity name of the game in IPL

SUNDAY MIDDAY

INDIAN OWNERSHIP LEAGUE
The IPL whirligig has attracted a clutch of disparate, but moniedindividuals to either bag city based franchises individually or asmembers of a consortium. Many of them are billionaires and ranked inthe prestigious Forbes list. Remember, two years ago in 2008, it wasan untried and untested formula in India. While many reckon that theBCCI and Lalit Modi cloned the idea from Subhash Chandra's IndianCricket League, the reality is that Modi actually invested time,effort and energy into building a spitting image of Major LeagueBaseball (MLB), English Premier League, NBA and NFL; which are some ofthe best known city based sporting franchise models. Modi has takenIPL to a level which the ICL could only hope for. By roping in a headycocktail of bulge bracket industrialists, glamour quotient film stars,wannabe and newbie investors who want to make a statement, Modi hasdone what nobody has managed to achieve in the country. An amalgam ofcricket and entertainment resulting in what appears to be a gangbustercommercial operation.
While opacity dominates the ownership structure of the ten differentfranchises (two more having been added recently), some of themanagements are clear as daylight. But others which have multipleowners coming together as a consortium have less clarity onshareholding. But wherever individuals or companies are owners, thenthe owning entity is for most part a fully owned subsidiary. DeccanChargers for instance owned by the listed company Deccan ChronicleHoldings, Delhi Daredevils which is owned by GMR Sports P Ltd in turnpart of the listed GMR Ltd. In the beauty parade that took place onJanuary 24, 2008, Mukesh Ambani's Reliance Industries emerged as thebuyer of the Mumbai franchise for $111.9 million (Rs 441 crore). Theownership structure works like this - RIL group firm India Sportswinowns 95 per cent while Deutsche Bank's Anshu Jain owns 5 per cent.With one of the richest men in the world and certainly the wealthiestin India buying a team, Modi had effectively managed a mini coup.Mukesh Ambani's wife Nita is now running the franchise personally.Similarly, the high profile liquor baron Vijay Mallya stepped up tothe plate and bought the Bangalore team - christening it RoyalChallengers. The team owned by UB Sports under Mallya's flagship firmUB Group now has his son Siddharth Mallya managing the team. Mallyapaid $111.6 million for the team.
If Mukesh Ambani and Vijay Mallya represented two pillars of bigbusiness in IPL, then on the other end of the vector was the EmergingMedia consortium that bought Rajasthan Royals for a bargain basementprice of $67 million. Last year when rumours of Manoj Badale promotedEmerging Media picking up a direct stake of 50.3 per cent in IPLfranchise Rajasthan Royals swirled about, Emerging Media was quick toclarify that there was no change whatsoever in the franchise'sshareholding pattern. The franchise spokesperson had then said, "Therehave been reports in a cross section of the media on Emerging Mediapicking up majority stake in the IPL franchise, Rajasthan Royals. Wewish to clarify that all these reports are completely unfounded andbaseless. There has been no change whatsoever in the shareholdingpattern of Rajasthan Royals." Rajasthan Royals, the franchise is ownedby Jaipur IPL Cricket, wholly owned by Mauritius based EM SportingHoldings. It was largely believed that Manoj Badale was the majorityowner of the franchise, but as it turned out, the Nigeria NRIChellaram family (Suresh and Aditya) owned 44.1 per cent in theMauritius holding company. Badale is a minority partner in the holdingcompany with 32.4 per cent while the balance 23.5 per cent is dividedbetween Blue Water Estate owned by Lachlan Murdoch and KukiInvestments owned by UK based Kundra (Raj) family and Shilpa Shetty.Rajasthan Royals were the cheapest franchise bought for $67 million in10 equal payments of $6.7 million per year for 10 years. When RajKundra picked up stake in the franchise, it was valued at $140million. Kundra bought 11.7 per cent stake for $15.4 million.Incidentally, Nigeria based NRI Suresh Chellaram is Lalit Modi'sbrother in law which led to charges of IPL being Indian PariwarLeague.
Prominent southern based industrialist and owner of India Cements - NSrinivasan - who is also the BCCI secretary and slated to become itspresident this September is the owner of Chennai Super Kings. ChennaiSuper Kings is a fully owned subsidiary of India Cements and in alllikelihood, CSK will be first off the blocks to list on the stockexchanges next year. At a recent analyst meet, Srinivasan indicatedthis. Srinivasan was treasurer of the BCCI in 2008. With valuations ofthe two new teams at astronomical levels of $333.33 million and $370million, the existing eight franchise owners are now in a position todemand more for stakes in their clubs. In any case, there was a threeyear lock in period for the eight original franchises which ends atthe conclusion of season 3. They could not sell more than 49 per centin their clubs. But now talk is is gaining currency that Kings XIPunjab owners Mohit Burman (Dabur), Karan Paul (Apeejay Surendra),Ness Wadia (Bombay Dyeing) and actress Preity Zinta are ready to exit.Mohit Burman confirmed to this writer that the going price is $300million, four times the price that the foursome paid in 2008 for thefranchise - $76 million. Burman saying that he was bound by aconfidentiality agreement added that neither Venugopal Dhoot ofVideocon or Pawan Munjal of Hero Honda were the suitors. Tracing theetymology of the franchise ownership, Burman had said that Ness, Karanand himself had grown up together and remained friends for a long timeand when the IPL came about decided to come together to bid. Mohit'sUK based brother Gaurav is Modi's step son in law.
Just as Mukesh Ambani and Vijay Mallya were a catch for Lalit Modi,the presence of superstar Shahrukh Khan was a vindication of themystical and magical X factor. SRK or King Khan is the majority ownerof Kolkata Knight Riders along with actress Juhi Chawla and herhusband Jai Mehta. KKR is vested in SRK's production company RedChillies Entertainment. That brings us to the two lesser establishedplayers - Delhi Daredevils and Deccan Chargers - who used this mix ofglamour and sport to further their own brand salience and credo. TVenkat Ram Reddy, owner of newspaper group Deccan Chronicle Holdingsbought the Hyderabad franchise for $107 million. Sometime last year, avaluation exercise was conducted which discovered a price of Rs 1240crore for the Chargers. This is when top rated media investmentmanagement firm Group M came on board by picking up 20 per cent in theteam. Infrastructure player GMR owned by G Mallikarjun Rao bought theDelhi franchise - Delhi Daredevils. Naresh Ganaparthi of GMR was thebidder officially. It made eminent sense for GMR was building outDelhi's multi million dollar airport project. GMR Sports is theholding entity of DD.
When the 2008 team auctions concluded, Reliance ADAG and Subroto RoySahara were seen as number nine and ten in the queue. When the bidsopened for the two additional franchises earlier this year, SubrotoRoy's Sahara Adventure Sports outbid favourites Gautam Adani andVenugopal Dhoot's Videocon in conjunction with Saif Ali Khan andKareena Kapoor with $370 million. Suborto Roy's association withIndian cricket is well documented, while the Rendezvous World Sportsconsortium was a big surprise. Vivek Venugopal (Elite Group), AnchorSwitches, Rosy Blue Diamond, Mukesh Patel and Ravi and Sanjay Gaikwad(who between them own 25 per cent and are also involved with UFOMoviez which has the theatrical rights to the IPL) are the officialowners, but secret ownership given to a politician, a former Indiancaptain and a present Indian player created a flutter in the dovecotesrecently till all notions were dispelled when they signed a freshagreement with IPL.
Once these entities list on the stock exchanges and become publiclimited companies, the levels of transparency will automaticallyincrease and clearer accounts of ownership will become known.