Sun TV Network is new owner of Hyderabad IPL team franchise, bid $80M for first 5 years
Kalanithi Maran-led media house Sun Television Network has won the bid for the franchisee rights for Hyderabad team of the domestic T-20 club tournament Indian Premier League (IPL) for Rs 85.05 crore ($16 million) per year. The Board of Control for Cricket in India (BCCI) had called for bids after scrapping the rights of cash-strapped media group Deccan Chronicle Holdings Ltd, the previous team owner of Deccan Chargers.
The bid for the Hyderabad team of IPL, which finished last in the inaugural edition of the tournament only to bounce back to win it in the second year, also saw interest from PVP Ventures which had offered Rs 69.03 crore a year. PVP Ventures is also a public listed firm led by Prasad V Potluti and is into real estate development.
Sun TV Network will pay Rs 85.05 crore per year for the first five years (2013-2017) and will shell out an amount equal to 20 per cent of the franchisee income each year in four quarterly instalments. The firm has disclosed it has bagged the franchisee rights in perpetuity, unless it’s terminated or transferred in the future.
As per a statement by BCCI secretary Sanjay Jagdale, Sun TV’s bid was twice the amount paid by Deccan Chronicle in 2008. Deccan Chronicle had shelled out $107 million (around Rs 426 crore back then) to bag the franchisee for 10 years which translated into roughly Rs 42.6 crore a year).
The BCCI had placed a base price of Rs 300 crore for the 10-year contract for the new IPL team to replace Deccan Chargers, which is almost half of what the BCCI set during 2010, when Pune and Kochi IPL teams came into existence.
Sun TV scrip was down 3.75 per cent after the news was made public and was quoting at Rs 342.6 a share on the BSE during mid-day trades in a strong Mumbai market on Thursday. Deccan Chronicle scrip, which hit a new low on Thursday, was up 4.9 per cent, after hitting upper circuit limit for the day.
Just two weeks ago the struggling IPL franchise owned by Deccan Chronicle was sold to Mumbai-based real estate firm Kamla Landmarc for an undisclosed sum. Simultaneously, the IPL franchise was terminated by BCCI.
This was after the previous owner failed to submit bank guarantee of Rs 100 crore to the cricket board as per a deadline.
The owners immediately issued a legal challenge against the expulsion, a case which is still ongoing.
This was the second IPL team franchise to be terminated by BCCI who last year scrapped the contract of the Kochi franchise for defaulting on payments.
Post, the controversy of Deccan Chargers, the rules of owning a franchise have been made stricter by BCCI. It has reserved the right to terminate the contract if the owners fail to pay the players or change the ownership pattern without informing the Board.
As per the fresh rulebook, the new franchise had to submit Rs 20 crore performance deposit during the submission of bids. This is an amount that BCCI would forfeit if the IPL team fails to provide an annual bank guarantee.
(Edited by Prem Udayabhanu)