MUMBAI: The Indian Premier League (IPL) is entering a new cycle of valuations. Just two bidders for a new IPL franchise and a comparatively low bid of Rs 4.25 billion by Sun TV Network for the Hyderabad team for five years doesn?t augur well for the world?s richest cricket property.

Some of the existing franchises wanting to exit or dilute stake are fearing that they would have to wait longer. The low price and absence of widespread interest in owning an IPL team has, indeed, dampened the prospects of some of the existing franchises selling stakes at higher valuations.

"If only two parties wanted to bid for a new franchise, then where will the interest in an existing franchise come from? If any of the current franchise owners wanted to exit or sell a stake at a high valuation, they should have done it earlier. That ship has now sailed," Dabur India director and co-owner of Kings XI Punjab IPL team Mohit Burman told Indiantelevision.com.

Incidentally, Kings XI Punjab, Rajasthan Royals and Shah Rukh Khan?s Kolkata Knight Riders are looking to sell stakes.

The IPL franchises were in general hoping to get good returns on their investments after the Board of Control for Cricket in India (BCCI) sold Pune and Kochi franchises at very high prices. The Kochi team, which now does not exist, was won with a bid of $333.3 million and the Pune team was bought for $370 million by Sahara group in 2010.

Some analysts had then pointed out that the winning bids for Kochi and Pune teams had defied business logic as many existing franchises were already finding it difficult to break-even save for the ones that were bought at lower prices.

Sun TV Network?s winning bid is less than half of what PVP Ventures had bid (Rs 9 billion) for Deccan Chargers just a month ago. Its bid is 23 per cent higher than that of PVP Ventures? current bid.

Sun Group?s S L Narayanan made this point loud and clear when he said, "The price we have paid is attractive because the last deal (for Pune team by Sahara) was almost at Rs 170 crore (Rs 1.7 billion) per annum. We have got it at about 50 per cent of that transaction."

Narayanan also said that the company has done its math well before taking the plunge in cricket business. "We have a fair understanding of what are the inflows and what are the expenses," he asserted.

Burman said the price paid for by Sun TV is good for them. "The fact that a reputable media company has come in will only help IPL grow. They are present in multiple media."

Brand Finance India MD Unni Krishnan is not surprised at the difference in price between what Sun TV paid now and what Sahara paid in 2010.

"Brand Finance is of the view that the IPL?s ecosystem?s long-term value has been steadily coming under pressure and is tracking back to its base value of $2 billion from the heights of $4 billion. Further the Deccan Chargers? team had come under a cloud due to misconduct and poor governance, in a sense mirroring a lot of ills which IPL as a whole faces! So the valuation is very much in keeping with the trends we see," he avers.

Asked if the price that Sun TV paid makes business sense, he said that it depends on what view Sun TV is taking. "If they believe, they can trade on this asset for a higher value in 2-3 years, they might be disappointed. If they are willing to set the house in order and work on the long-term value of the franchise it does make sense."

He, however, is not surprised that only two companies Sun TV and PVP Ventures bid. "Not surprising as stakeholders are becoming wary of the IPL brand and business model. The waning interest and valuation are strong signals that that the IPL brand and its long-term value are being eroded."

According to Group ESP Managing Partner Hiren Pandit, the fact that only two bids were received goes on to show the wariness about IPL as a business venture. "The fact that only two bids were received shows that corporates are wary about owning an IPL team," he says.

Pandit pointed out that Sun TV was in a better positioned to extract better sponsorship revenues by offering packaged deals that would include the television network owned by the channels. Sun would, however, have to deal with the challenge of gate receipts since Hyderabad is not a great ?ticket-revenue? market compared to Mumbai or Delhi.

BCCI president N Srinivasan is undeterred. He contends that Sun TV Network?s bid must be compared to what was being paid by Deccan Chronicle Holdings Limited (DCHL) for the Hyderabad franchise.

"This is twice the value of Deccan Chargers and if you take into account the sharing of central rights compared to the expansion of franchises (addition of Pune and Kochi) you will find that it represents higher value and it?s a very good value. More importantly, it?s a very credible franchise owner. I think they will add value to the league."

Srinivasan also said that the value of Hyderabad franchise shouldn?t be compared with the ones put in by Sahara Group for the Pune team. Reason: Sahara by virtue of being a late entrant and paying a higher franchise fee gets 80 per cent of revenue share from the central pool as compared to other franchises which get 60 per cent beginning with IPL season 5.

"The original eight franchises had a 10 year period and now five years are left. So after 10 years the arrangement is such that you don?t pay a franchise fee but you pay 20 per cent of the income so that it?s consistent for all. The Pune franchise gets 80 per cent of the income whereas from year five onwards other franchises get 60 per cent revenue. So there is difference in the income," he explained.

Also Read: Sun TV bags IPL franchise for Rs 850.5 mn a year

MUMBAI: Kalanithi Maran-owned media conglomerate Sun TV Network on Thursday won the Hyderabad Indian Premier League (IPL) franchise putting in the highest bid that was 23 per cent more than the second bid for the same team.

Sun bid Rs 850.5 million a year while the next bid was for Rs 690.3 million from PVP Ventures, which had earlier bid a whopping Rs 9.0 billion for buying the sacked, financially-distressed Hyderabad team Deccan Chargers.

The earlier Hyderabad franchise owned by Deccan Chronicle Holdings Ltd (DCHL) still had five years to go under the contract with Indian Premier League (IPL), when it failed to get a respite from both the Bombay High Court and the Supreme Court to get its termination stayed earlier this month.

Sun will get to own the franchise for a period of five years till 2017 paying Rs 4.25 billion as franchise fee to the Board of Control for Cricket in India (BCCI).

When DCHL?s Deccan Chargers won the bid for its Hyderabad team in January 2008, it had committed to pay $107 million (Rs 4.21 billion) over a period of 10 years which worked out to $10.7 million (Rs 421 million) per year at the rupee-dollar exchange rate prevalent in January 2008.

From 2018, Sun will own the yet-to-be named franchise in perpetuity and will pay 20 per cent of the franchise revenue every year as fee to the BCCI.

According to an IPL Governing Council member, Sun TV has paid Rs 200 million as performance guarantee and Rs 850.5 million as bank guarantee for the 2013 when the company will make its IPL debut.

"Sun TV Network has won the Hyderabad Franchise for an amount of Rs 85.05 crores (Rs 855.5 million) per year. This Franchise fee represents a premium of over a 100 per cent above the amount paid by DCHL for the Hyderabad Franchise in 2008," BCCI secretary Sanjay Jagdale said in a statement.

"The Sun TV Network bid was substantially higher than the second bid of PVP Ventures, which was Rs 69.03 crores (Rs 690.3 million)," he added.

The IPL Governing Council met earlier today in Mumbai to open the bids for a new IPL Franchise. The BCCI had on 14 October invited bids for adding the ninth IPL team after the exit of Deccan Chargers and had opened up the bidding for any of the 10 cities including Ahmedabad, Vizag, Hyderabad and Noida. The response to the bidding was lukewarm as Sun TV and PVP Ventures were the only two bidders and both bid for Hyderabad.

Sun will also have the right to sign existing Deccan Chargers players. The players who are not signed by their existing franchises will go into the auction pool.

The franchises have to sign contracts with existing players before the 31 October deadline.

Also Read: New IPL valuation set by Sun TV to deter deals

MUMBAI: The Supreme Court has struck down the Special Leave Petition filed by Deccan Chronicle Holdings Limited‘s to stay the termination of its IPL team Deccan Chargers by the BCCI thereby dashing all hopes for the media company to get back the team and sell it to pay off debt.

The bench headed by Chief Justice Altamas Kabir dismissed DCHL‘s plea seeking extension till 25 October for furnishing Rs 1 billion bank guarantee. The bench also comprised Justice SS Nijjar and Justice J Chelameswar.

DCHL had moved Supreme Court against Bombay High Court‘s order of setting aside the status quo order passed by the Bombay High Court. However the apex court declined to interfere with High Court‘s decision.

The apex court also accepted BCCI‘s submission that the termination of contract has come to effect from 12 October, the deadline set by Bombay High Court for DCHL to furnish bank guarantee.

The Court had on 9 October extended deadline by three days to allow DCHL more time to furnish bank guarantee while warning that failure to do so would mean that the BCCI‘s termination of Deccan Chargers would stand.

"The position today stands that the agreement between Deccan Chargers and BCCI is terminated and the effect of extension of time to deposit the bank guarantee will amount to forcing the contract," the bench said.

"It has been pointed out by the BCCI about the fact of termination of contract which is effective from October 12. In such circumstance we are not inclined to entertain the Special Leave Petition (SLP)."

The Bench, however, added that the order will not affect the arbitration proceedings between the Deccan Chargers and the BCCI. The Bombay High Court had last month appointed CK Thakkar as the arbitrator to look into the legality of the termination of Deccan Chargers termination from IPL.

DCHL through senior advocate Mukul Rohatgi contended that it should be given a chance to furnish the bank guarantee by 25 October. BCCI‘s counsel CA Sundaram opposed DCHL‘s plea saying that the media company was heavily indebted and had failed to meet the obligation towards banks and financial institutions.

Earlier, the Bombay HC had refused to grant any interim relief to DCHL against termination of its franchise agreement by the BCCI.

Justice RD Dhanuka had quashed the status quo order passed by the arbitrator contending that the arbitrator is not "superior" to the high court and cannot pass an order which overrides the high court‘s direction.

The arbitrator had passed an order directing BCCI not to go ahead with its termination of Deccan Chargers following which the BCCI challenged the order in High Court and secured a stay.

With termination notice standing, the DCHL‘s attempt to sell the franchise to Mumbai-based real estate firm Kamla Landmarc proved a non-starter. Kamla Landmarc is believed to have committed Rs 12.5 billion for acquiring the franchise.

MUMBAI: The Bombay High Court has quashed all hopes for cash-strapped Deccan Chronicles Holdings Limited (DCHL) by setting aside the status quo order passed by the arbitrator granting relief to its IPL team Deccan Chargers.

In a double whammy, the court had also refused to grant any interim relief to DCHL against termination of its franchise agreement by the BCCI. The Court said that the legality of the termination would be decided by the arbitrator.

With this order, Deccan Chargers termination from IPL stands as was the case on 12 October when the franchise had failed to furnish Rs 1 billion bank guarantee following which it was ousted from the season 6 of IPL.

Justice RD Dhanuka quashed the status quo order passed by the arbitrator after hearing a petition filed by the Board of Control for Cricket in India (BCCI). While passing the order, Justice Dhanuka said that the arbitrator is not "superior" to the high court and cannot pass an order which overrides the high court?s direction.

"Arbitrator had no jurisdiction to grant status quo. On the same day (12 October), the high court had denied extension of time to DCHL to furnish Rs 100 crore (Rs 1 billion) bank guarantee as directed by the court on October 1," Justice Dhanuka said.

He also said that once the Court has rejected relief, the plea made before the arbitrator is not maintainable.

Justice Dhanuka also noted that the order passed by Justice SJ Kathwala on 1 October directing DCHL to furnish bank guarantee was "self operative and protective of the interests of both DCHL and BCCI".

He refused to grant any relief to DCHL since it has still not been able to furnish bank guarantee. "DCHL has still not furnished bank guarantee. Hence there is no change in circumstances to grant relief to DCHL. No case is made out for interim relief for granting stay on termination. The application seeking stay is a gross abuse of law," Justice Dhanuka said.

The DCHL had on Wednesday requested the court to grant relief contending that the termination of Deccan Chargers was not anybody?s interest whether it is owners, players or lenders. It also pointed out that DCHL has till now invested Rs 6 billion in the franchise.

Retired Supreme Court Judge C K Thakkar, who was last month appointed as the arbitrator, had passed an order last week directing BCCI not to go ahead with its termination of Deccan Chargers following which the BCCI challenged the order in High Court and secured a stay.

Backed by its lenders, DCHL had said that it was ready to furnish bank guarantee by 9 October as directed by the court on 1 October. However, it could not furnish bank guarantee by the designated time following which the court granted it three more days to furnish the amount.

Despite extension of deadline, DCHL was unable to furnish irrevocable and unconditional bank guarantee of Rs 1 billion by 12 October which led to its termination from the IPL after the court refused to grant more time to DCHL to furnish bank guarantee.

The Court had said in its 1 October order that the BCCI?s termination notice would stand if DCHL fails to furnish bank guarantee. The interim relief provided by the arbitrator also proved short lived as the court stayed the status quo order passed by the arbitrator extending deadline for submitting bank guarantee.

With termination notice standing, the DCHL?s attempt to sell the franchise to Mumbai-based real estate firm Kamla Landmarc proved a non-starter. Kamla Landmarc is believed to have committed Rs 12.5 billion for acquiring the franchise.

The DCHL plea comes on a day when IPL Governing Council is meeting in Mumbai to discuss the termination of Deccan Chargers and the fate of the players since 31 October is the deadline for resigning players.

Earlier, the BCCI had floated tenders for a new franchise after terminating Deccan Chargers.The tender notice for a fresh franchise invites bids in respect of 12 cities including Ahmedabad, Cuttack, Dharamsala, Indore, Kanpur, Kochi, Nagpur, Noida, Rajkot, Ranchi, Hyderabad and Visakhapatnam.

MUMBAI: The last word on the BCCI-Deccan Chargers has not been said yet as the Bombay High Court Wednesday reserved its order till tomorrow on an appeal filed by the Board of Control for Cricket in India (BCCI).

The BCCI had approached Bombay HC challenging the ‘status quo‘ order passed by an arbitrator in its dispute with financially distressed Deccan Chronicle Holdings Limited (DCHL). The hearing on the issue was today.

Retired Supreme Court Judge C K Thakkar, who was last month appointed as the arbitrator, had last week passed an order directing BCCI not to go ahead with its termination of Deccan Chargers following which the BCCI challenged the order in High Court and secured a stay.

Earlier Deccan Chargers had faced termination from the IPL following DCHL?s inability to furnish irrevocable and unconditional bank guarantee of Rs 1 billion by 12 October.

Backed by its lenders, DCHL said that it was ready to furnish bank guarantee as directed by the court on 1 October. DCHL lenders have also filed a plea seeking interim relief against the termination of the franchise.

The Court had on 12 October refused to grant more time to DCHL to furnish bank guarantee after the company failed to meet the deadline for furnishing bank guarantee contending.

The Court had said that the BCCI‘s termination notice would stand if DCHL fails to furnish bank guarantee. The interim relief provided by the arbitrator also proved short lived as the court stayed the status quo order passed by the arbitrator extending deadline for submitting bank guarantee.

With termination notice standing, the DCHL‘s attempt to sell the franchise to Mumbai-based real estate firm Kamla Landmarc proved a non-starter. Kamla Landmarc is believed to have committed Rs 12.5 billion for acquiring the franchise.

The DCHL plea comes on a day when IPL Governing Council is meeting in Mumbai to discuss the termination of Deccan Chargers and the fate of the players since 31 October is the deadline for resigning players.

Earlier, the BCCI had floated tenders for a new franchise after terminating Deccan Chargers.

MUMBAI: After BCCI terminated Deccan Chargers and floated a tender for a new IPL franchise, it is the IPL Governing Council which has decided to meet here on 17 October to chalk out future strategy for the tournament.

IPL GC is expected to discuss the termination of Deccan Chargers for breach of contract.

The meeting also holds significance since it is happening at a time when the 31 October deadline of re-signing players is looming large. All the franchises are expected to renew contracts with their existing players.

"There is a meeting of the IPL Governing Council in Mumbai on October 17th. I don?t know any other details," said BCCI CAO Prof Ratnakar Shetty.

IPL GC is made up of Chairman Rajeev Shukla, Arun Jaitley, Anirudh Chaudhary, Dr G Ganga Raju, Sanjay Patel, Amitabh Choudhary, Ravi Shastri and M P Pandove.

The Deccan Chronicle Holdings Limited (DCHL), the parent company of Deccan Chargers, was unable to furnish a bank guarantee of Rs 1 billion which meant that its association with IPL ended. The Court had clearly said that the termination notice will stand if DCHL fails to provide Rs 1 billion unconditional and irrevocable bank guarantee.

Following DCHL?s inability to furnish bank guarantee as per Court direction, the arbitrator had passed a status order thereby throwing a lifeline at the beleagured media company.

The status order passed by the arbitrator also gave five more days to DCHl to furnish bank guarante despite the Bombay HC refusing to entertain their plea to extend the deadline. The BCCI had obtained a stay order from the Bombay HC against arbitrators decision thereby dashing its hopes of entering IPL.

The DCHL had on Friday also announced that it was in talks with real estate firm Kamla Lanmarc to sell the franchise. However the deal could go for a toss now that the termination notice is in effect.

The BCCI had on Sunday invited tenders for a new IPL team.

The tender notice for a fresh franchise invites bids for 12 cities: Hyderabad, Ahmedabad, Cuttack, Dharamsala, Indore, Kanpur, Kochi, Nagpur, Noida, Rajkot, Ranchi and Visakhapatnam.

The last date for submission of the bids is 25 October. Bids can be collected from today. Under this invitation to tender, the winning bidder will be granted the right to own and operate a new team which will compete in the IPL from 2013 onwards.