Bowing to criticism of the $1 billion net worth criterion for the bidders, the Indian Premier League, on Sunday, cancelled the existing tender for two new franchises and decided to re-issue a new one on March 9 with relaxed pre-conditions. IPL chairman Lalit Modi said the reporters after the governing council meeting, that new bids will be issued on March 9th and the fresh bids are to be submitted before 10 A.M March 21st and the tenders will be opened by 11 A.M on the same day.
The minimum bidding amount, however remains the same as $225 and the existing tenders were not opened and were returned back to the bidders.The new process will have the following amended rules.
- The condition of bidders having a net worth of $1 billion was removed from the new tender.
- The Governing Council reduced the $100 million refundable deposit was reduced to $10 million to be submitted by 20th.
- Modi also said that 100 per cent bank guarantee demanded from the bidders when they are successful has been reduced to 10 per cent rolling back guarantee to be paid within 48 hours which is on par with the first tendering process.
It was a reversal of Modi’s stand that the high entry fee was a means of keeping away frivolous investors. “We put a high-end clause for entry because we need to get solid companies,” he had told in a press meet on Saturday. “This business requires a long gestation period and that is the reason we want to secure ourselves. The BCCI always secures itself.”
The IPL Chairman said that he was disappointed with the cancellation of tenders, but it was the decision of the Governing Council. In his words, “Of course I am disappointed. But it was the decision of the governing council”.
“We received letters from many companies who expressed interest but said that the $1 billion (Rs 4,500 crore) net worth criteria, which owners of existing franchises had not been asked for, was a problem. They asked why they were being asked for the new criteria, which eliminates them from bidding. Hence the clause has been amended,” IPL Chairman Lalit Modi said after the meeting.
This proves that the IPL Governing Council had over-estimated the the viability of its terms and conditions for potential franchise owners.It also gave credence to the claim made on Friday by Priyadarshan, a film director, that the $1 billion clause was unviable and had put him off bidding for a franchise.
Eventually, there were only three bidders left, with the first one being a consortium of Saif Ali Khan (son of former Indian Captain MAK Pataudi), Kareena Kapoor and her sister Karishma Kapoor, Pune’s Panchshil group of industries and Venugopal Dhoot, owner of electronics manufacturer Videocon, who were bidding from Pune. The second one being the Adani Group for Ahmedabad and the third one was the Jaypee group for an undisclosed venue.
The cities in the fray were Pune, Ahmedabad, Nagpur, Kanpur, Dharamsala, Vizag, Rajkot, Cuttack, Baroda, Kochi, Indore and Gwalior. The base price for the bid is more than four times the value set in January 2008, when the original eight franchises were auctioned. Other terms and conditions were similarly stringent – all bidders had to stump up a returnable deposit of $100 million before the bid, as against the $5 million (approximately) stipulated in 2008.
By: Ganta Rakesh