MUMBAI: The timing is rather convenient. More so as it comes two days ahead of the 20 October deadline (last date extended a second time) set by the BCCI to place bids for one of two new Indian Premier League franchises that will debut in the 2022 season of the IPL.
With its fourth IPL title win on Friday, Chennai Super Kings COULD be on track to POSSIBLY becomed the country’s first ‘sports unicorn’, Business Standard reports.
N Srinivasan, MD of the India Cements, the corporate entity that owns CSK, as also the former head honcho of the Indian cricket board, told Business Standard that his IPL team’s market cap would soon go past that of its parent given the success of the team and encouragement to other sports leagues in the country.
In a recent interview, given on the occasion of India Cements completing 75 years of its existence, Srinivasan had said: “Brand CSK will outgrow Brand India Cements. If you look at the history of franchise-based leagues in the US, it will outgrow everything. Passion for cricket is so much in India. The road between countries will see franchise-based leagues getting the precedence as we go along.”
As per the business daily, CSK’s unlisted shares were trading at around Rs 135 each, taking its market capitalisation to around Rs 42 billion ($557.45 million) soon after the victory in the tournament, as compared with a value of around Rs 24.65 billion (Rs 80 per share) in April. In comparison, the shares of India Cement were trading at Rs 214.40 per share with an m-cap of around Rs 66.442 billion.
BS quoted an expert to suggest that IF two new franchises joining the IPL in 2022 are valued around Rs 50 billion, then CSK’s shares could very well jump to Rs 200 in the grey market.
An expert SportzPower spoke to had this to say on the potential sale price of a new IPL team. Calculating at Rs 22 billion on a cash flow basis and Rs 35 billion on return on equity basis, “I think the teams will go around Rs 35 billion or more.”
For some context, the most recent stake offload by an IPL team was as recently as in June wherein Rajasthan Royals parent company Emerging Media Sporting Holding Ltd offloaded a 15% stake to US private investment firm RedBird Capital Partners at a at $250 million (Rs 18.538 billion) valuation.
As far as SportzPower is concerned, the ONLY way a new IPL team can go for a Rs 50 billion sale price is if someone is making a “trophy purchase” and financial logic has been given the royal heave-ho.
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