God’s own country Kerala may be working to join the Indian Premier League (IPL), the 20-20 cricket format that is proving to be a potent cocktail of sports and entertainment.

Kerala’s largest financial services player Muthoot Pappachan Group--with diversified interests in hospitality, real estate and education—is understood to be a leading a consortium of investors and cinema personalities such as director Priyadarshan (Bollywood flick Hera Pheri) and Malayalam superstar Mohanlal to bid for the new IPL teams that are expected to be introduced by way of a bidding process in the near future.

Sources familiar with the development told VCCircle that some investors from the Middle-East would also partner the Muthoot Group in bidding for the new team.

Responding to an e-mail query sent by VCCircle, Muthoot Group director George Muthoot said, “its too premature to talk on the subject now.”

A source familiar with the development said, the Muthoot Group is in the process of creating a new entity/company for the IPL foray. Both Priyadarshan and Mohanlal are believed to be taking 10-15% stake each in the venture while Muthoot Group will hold a substantial stake along with some investors from the Middle-East.

The consortium may earmark up to Rs 1,400 crore to be spent on their IPL team, if they win the bid, over the next two to three years, a source said.   

The IPL fourth season, next year, will see the introduction of two new teams taking the total tally to 10. The bidding process is expected to start before the IPL season three starts. Bidding parties will need to specify their venue preference and the bid amount. The venues with the two highest bids will be chosen. And, the reserve price for bids has been fixed at $225 million, up from $50 million at the time of initial auctions two years ago, perking up valuations across the board.

Currently, there are eight teams representing the four metro cities (Delhi, Mumbai, Kolkata and Chennai), Hyderabad, Bangalore, Punjab and Rajasthan. 

It is not clear if the Kerala consortium will push for Kochi, the only region in the south which is not represented so far. Typically, business houses have chosen those cities where they have significant operations or where the city offers them great branding potential. For instance, Bangalore-based GMR Group, which owns Delhi Daredevils team, has a brand connection with this region as it operates the Delhi airport. Vijay Mallya (Bangalore), Mukesh Ambani (Mumbai) and N Srinivasan (Chennai) are associated with cities where their business headquarters are.

IPL, which is a glamorous combination of corporate icons, film stars and global cricketing legends, is actually turning out to be more about business than pure sport. With big money riding on players and teams, valuations of existing teams may be as high as $300 million as the format and model is now well-entrenched in the sports calendar and the entertainment itinerary.

In an earlier interview with VCCircle, Balu Nayar, Managing Director, Morpheus Media Fund, said, "I think a target of $225-250 million as the reserve price of expansion franchisee is a reasonable one, as the business model and the sustainability of IPL in general, as well as the value of team ownership has been clearly established. The best approach for an existing team owner should probably be to wait out the bidding process for new teams, as disappointed bidders will then look at existing teams at interesting valuations." As former managing director of IMG India, Nayar was involved in the conceptualisation, modelling and monetisation of the IPL.

Critics, however, say that the valuations may not be in line with the revenue streams for teams, which is mainly share from broadcast rights, sponsorships, stadium tickets and merchandise sales.

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