By Nick Harris
8 March 2010
The Indian Premier League’s bungled auction yesterday of two new franchises, on sale for at least $225m each (£149m), was not the total failure it initially appeared, sportingintelligence can reveal, with the IPL’s chairman, Lalit Modi, telling this website today that the IPL received three “valid” bids for at least the minimum amounts. Modi added that those bids each came with $100m guarantees.
With the IPL’s 2010 season due to start on Friday, Modi had hoped to announce new owners yesterday for two new teams to compete from 2011 onwards. Instead, the auction was cancelled. Modi said this was because the bidding rules – including a minimum “net worth” for bidders of $1bn (£662m) – had decimated interest to just a few parties.
Critics have suggested that the IPL has been too ambitious in its pricing, thus failed to attract much interest and is now embarrassed because few credible buyers came forward.
No so, Modi has told sportingintelligence today. In an email exchange, we asked him to clarify reports that the IPL had three valid bids, each of at least $225m.
Modi replied: “Three, yes, valid. Can’t give other details like names, etc, as we only opened the 3 bank guarantees of $100m each. And they were all valid. Who the [full] consortium [members] was is difficult to know.”
Modi claimed last month that a “very famous” English Premier League club was interested in bidding, but sportingintelligence understands there was no such interested party involved yesterday, directly or otherwise. Asked to confirm that no Premier League club had bid, Modi replied: “No idea who is part of [any] consortium [that bid].”
The new franchisees, when they eventually take control, will locate their teams in a choice of cities; those “available” are Ahmedabad, Baroda, Cuttack, Dharamsala, Gwalior, Indore, Kanpur, Kochi, Nagpur, Pune, Rajkot and Vizag.
One of the potential bidders not put off yesterday was understood to be business tycoon Gautam Adani of the Adani Group, who has a personal fortune of $7bn, latterly from plastics. He wants an Ahmedabad franchise.
Another bidder was Venugopal Dhoot, the owner of the Videocon electronics firm. He is worth $1.8bn and he heads a consortium including Bollywood stars Saif Ali Khan, Kareena Kapoor and her sister, Karisma. They want the Pune franchise and reportedly bid $300m.
After the auction was abandoned, Dhoot said: “It is unfortunate. But there is a clause in the tender document which gives IPL the rights to re-tender and we have to abide. We had submitted the bid performance guarantee and the bank guarantee . We will now bid again.”
The third bidder yesterday (although there was some suggestion of missing a deadline) was understood to be businessman Jaiprakash Gaur, worth around $1bn and the man behind the Jaypee Group, an industrial conglomerate. His preferred franchise has not been confirmed but he could be interested in Kanpur.
At a press conference yesterday intended to announce the winning bidders, Modi instead announced the whole process was off, and said a revised tender document will be available from tomorrow, 9 March, with a new bidding deadline of 21 March.
Modi has said that the auction will be re-staged not through lack of interest first time, but because he says “many many” bidders wanted to join in but were put off by the $1bn net worth requirement. Modi has talked about making IPL as popular as the English Premier League around the world and will need to deliver a successful auction to help back up such claims.
“The relaxation [of the bid conditions] has been done because we received many, many letters from many, many companies who have expressed interest to participate but said that the $1bn net worth criteria was not there in the first tender [for the inaugural auction for the 2008 season], and asked why we’re putting a new criteria that eliminated many people who might want to bid . . . that clause has been amended to give more people the chance to bid.”
He said there will be no shift downwards in minimum price. “The minimum bid amount remains the same, at $225m. In fact we looked at increasing it because of the bids [we did receive] but we left it at $225m.”
That last sentence suggests the IPL could have sold its new franchises for at least the lowest asking price already, and thinks it can sell for even more later this month. Time will show the credibility of that.