Stiff clauses leave only 4 in race for IPL teams

Only four bidders are expected to be in the fray when the Indian Premier League (IPL) opens bids for two new teams in the Twenty20  tournament on Sunday, as stiff bidding clauses have made several interested parties to stay away.

Consortiums led by Adani Group chairman Gautam Adani, Kerala-based financial services player Muthoot Group, Hero Honda MD Pawan Munjal and members of agriculture minister Sharad Pawar’s family are the likely bidders, according to people close to the matter.

“Most bids are expected to be made through consortiums with private equity funding,” said an official involved with the IPL.

A minimum bidding price of $225 million and the condition that a bank guarantee for the entire amount for the 10-year contract be submitted within a week of winning the bid have made several parties, including the Sahara Group, ICICI Ventures, and Bollywood stars Ajay Devgn and Sanjay Dutt, from taking part in the process, said officials of three industrial houses that have decided not to bid for the new teams.

The IPL, which has turned into the most valuable cricket property in no time, is increasing the number of franchise teams from eight to ten from its fourth season next year.

The minimum bid price has been fixed at $225 million (Rs 1,042 crore) per franchisee, against $50 million (over Rs 230 crore) in the maiden auction in 2008 when franchisees were required to submit just 10% of their bid amount as bank guarantee.

New cities in the fray from where potential bidders can participate include Pune, Ahmedabad, Nagpur, Kanpur, Dharamsala, Vizag, Rajkot, Cuttack, Baroda, Kochi, Indore and Gwalior.

According to the tender, sold for Rs 5 lakh each, interested bidders should submit a bank guarantee of Rs 460 crore to participate in the bidding process.

An Adani group official has confirmed the group’s interest in bidding for an IPL team. “We did buy the tender but the price is too steep so have decided to stay away from the bidding process,” said the head of a Delhi-based industrialist group.

Industrialist Pawan Munjal had in December told ET that he may look at bidding for a fresh IPL team in his personal capacity.

With the UK-based brand valuation consultancy Brand Finance valuing IPL at $4.1 billion (Rs 18,998 crore) this year, the organisers clearly want the maximum bang for buck from the two new teams.

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