IPL 2022 – SRH & CSK Franchises: With the entry of two new teams at a huge premium to the upcoming edition of the Indian Premier League (IPL), the existing franchises are laughing all the way to the bank. Chennai Super Kings (CSK) shares have sky-rocketed in the grey market & Sun TV owned Sunrisers Hyderabad (SRH) is calling it a zero investment asset. Not only this team can now also explore an option of IPO listing to unlock value and maximize shareholder returns – Follow IPL 2022 LIVE Updates on InsideSport.in
The existing franchises valuations have zoomed like crazy after two new franchises were auctioned at record-breaking prices.
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IPL 2022: Sunrisers Hyderabad can explore IPO listing, CSK ready to become 1st sports unicorn
IPL 2022 – Sunrisers Hyderabad IPO Listing? At the earnings call of parent entity SUN TV, Group CFO declared that the company is not averse to spinning off its IPL franchise as a separate entity or explore its IPO listing to unlock value and maximise shareholder returns.
Sun TV also declared that company has earned ₹175.55 crore in IPL revenues for H1 ended Sept 2021.
“If there is a way in which value unlocking can be done for the benefit of the shareholders, we would certainly look at it at an appropriate time,” SL Narayanan, Group CFO of Sun TV Network, said at the second quarter earnings call on Monday. “At this point in time, SunRisers is a division of Sun TV Network Limited and we disclose its revenues and costs every season,” he added.
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CSK Shares Zoom in the unlisted market, can become India’s first sports-unicorn
IPL 2022 – CSK Valuations Zoom: CSK recently won IPL 2021 title and that led to increase in its share-price in the grey-market. But after Sanjiv Goenka-owned RPSG Group bought IPL’s Lucknow franchise with 7,000-crore plus bid & CVC Capital acquiring Ahmedabad franchise for 5,625 crore, the CSK share price has further sky-rocketed like crazy.
- The stock was trading at Rs 110-120 in the week of IPL Finals but currently is trading Rs 200-225 price-band.
- The scrip was trading at Rs 90-100 a month ago in the informal market.
- The CSK stock price has soared more than 1,500 per cent in just three years, from the level of Rs 12-15 in November 2018.
As of today’s India cements shares in the market are being traded at Rs. 222 and m-cap of around Rs 7,000 crore. CSK is already touching the same market cap of the parent company & is now on cusp of becoming India’s first SPORTS-UNICORN.
“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.” – N Srinivasan, the Managing director of India Cements told Business Standard few weeks back.
Life Insurance Corporation of India (LIC) holds 6.04 per cent stake in the company while Ace investor Radhakishan Damani held 2.39 per cent or 73,69,263 shares in the company till the last quarter of FY 2018.
It is notable that CSK is the only sports team in the country whose shares are available for public investment, and attracts interest due to previous performances.
Sunrisers Hyderabad ZERO INVESTMENT asset for us – SunTV: The sale of new teams, bumper media rights deal & increase in viewership has made franchises richer by few thousand crores. Take a example of SRH, who joined the party late but still are making hundred of millions on their initial investments.
- In 2012, the Kalanithi Maran-promoted media group had bought SunRisers Hyderabad for ₹85.05 crore per year payable for five years between 2013 and 2017.
- As per SRH’s own declaration SRH lost about ₹147 crore in the first five years.
- SRH Recouped all their losses in 6th year & now franchise generates positive cash-flows
“With a new contract kicking in after that, we recovered almost all of those losses in the sixth year. In that sense, we have created an asset with zero investment,” declared SunTV CFO.
Also Read: IPL 2022: Sanjay Bangar replaces Simon Katich as Royal Challengers Bangalore…
SRH & CSK are not the only teams that are getting benefited from the increase in the valuations over the years.
In 2018, Jindal South West (JSW) Sports bought a 50 per cent stake in Delhi Daredevils from GMR Sports Private Limited for reportedly 550 Cr. Now the same stake is valued at minimum 5-6 times.
In June 2021, US-based private investment firm RedBird Capital Partners, which has interest in the parent company of Liverpool Football Club and Boston Red Sox, picked up a 15 per cent stake in Rajasthan Royals for reportedly 1500 Cr.
IPL 2022: Other franchsies also have offers that are 12-15 times than what they have bought the asset for. The trend clearly conveys, even if franchises fail to win the league titles on ground, the owners of the franchsies are clear winners on the commercial pitch.
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