IPL franchises valuation skyrockets: Original teams could reach $2 billion each

Mumbai: The original eight Indian Premier League franchises would command valuations of up to $2 billion each, according to IPL executives and people involved in Torrent Group's acquisition of a majority stake in Gujarat Titans (GT) from CVC Capital for nearly $900 million. The original eight franchises can easily command between 1.5 to 2 times the close to $900-million valuation of the loss-making GT, depending on their cash flows and the fan bases, they said.

Some may launch an initial public offering (IPO) or sell shares in the unlisted market to capitalise on this, people cited above said.

Top teams like Mumbai Indians, Chennai Super Kings, and Royal Challengers Bengaluru may be valued double that of GT, they said. Kolkata Knight Riders, Rajasthan Royals, Punjab Kings, Sunrisers Hyderabad and Delhi Capitals could command 1.5 times premium over GT's valuation.

"The original eight franchises are generating healthy cash flows each year. Hence, they will command a much higher valuation compared to GT, which is still in losses," a top official with a leading IPL team said on condition of anonymity.

Another executive pointed out that some IPL franchises have built a strong global brand by acquiring teams in cricket leagues outside India. IPL franchise owners, including Reliance Industries, Sun TV Network, RPSG Group, JSW GMR Cricket and Shah Rukh Khan's Knight Riders, have acquired franchises in cricket leagues in South Africa, the UAE, England, and the US.

"This diversification not only strengthens their brand but also provides them with the necessary scale to consider a stock market listing," the executive said.

Santosh N, managing partner at valuation service provider D and P Advisory, said Torrent Group's deal for GT has set a new benchmark for IPL team valuations. "If the Gujarat Titans can command such a high price after just a few years, other franchises will likely follow suit in terms of attracting investors," he noted.

Brand Finance India managing director Ajimon Francis said Torrent acquired a majority stake in GT at a premium, and a similar premium can be applied to other teams. "Most of the big team brands are now global brands with a presence in multiple geographies and also in multiple business formats," he said.

The IPL brand has been valued at over $10 billion by multiple firms, including Houlihan Lokey, Brand Finance, and D and P Advisory, with estimates ranging from $10 billion to $16 billion in 2024.

The surge in brand value has been driven by the ₹48,390-crore media rights deal the Board of Control for Cricket in India (BCCI) inked in 2022 with Disney Star India and Viacom18 (which have since merged) and multi-year sponsorship deals worth ₹4,000 crore with companies like Tata Sons, My11Circle, Ceat, and AngelOne.

The combined revenue of the ten IPL franchises more than doubled to ₹6,797 crore in FY24, compared to ₹3,082 crore the previous year, according to financial data from Tofler. Even as the valuation of IPL franchises has risen, Francis of Brand Finance believes no franchise will sell a majority stake, and even those willing to dilute will only sell minority stakes since most owners want to retain control over the teams. "Some minor offer for sale may happen in hush with new investors coming in to replace the earlier," he noted.

A case in point is PE firm RedBird Capital Partners reportedly looking to sell its stake in Rajasthan Royals at a premium. According to Santosh, some of the factors driving these valuations higher include the FOMO (fear of missing out) effect, as many investors and large corporates are chasing a limited number of assets. "IPL is a trophy asset and comes with 'bragging rights,' and you are ready to pay a premium for the same," he said. "Due to the limited assets available, the price at which they may get transacted might be significantly higher than their true intrinsic value."