Valuation problem: BCCI to auction Deccan Chargers?

The Board of Control for Cricket in India (BCCI) has decided to take a final call on the fate of the IPL franchisee Deccan Chargers on 15 September in Chennai, after potential buyers rejected the price being sought by the team’s debt ridden owners, Deccan Chronicle Holdings.

Earlier reports said Chennai-based Sun group and a prominent Mumbai-based businessman had shown interest in buying a stake, but the deal fell through because the owners were asking for around Rs 1,000 crore - the price that Sahara paid for its franchise.

The Deccan Chronicle group had acquired the franchise for approximately Rs 588 crore in 2008.

It doesn’t help that the market conditions are bad, making the valuation seem steep, and that the owners are in financial distress. Given the financial liabilities of the franchise owner, prospective buyers are keeping away seeking a better deal.

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The BCCI working committee met in New Delhi on Tuesday to discuss about finding a prospective buyer as the current owner, Deccan Chronicle Holdings Limited (DCHL), has been under financial stress and has been unable to pay salaries to the team’s players.

The board has given the IPL team another ten days to find a solution and could use this time to help the beleaguered franchise float a tender, and allow the highest bidder to replace them.

“There are a lot of legal implications due to which we have not been able to take a concrete decision today at the meeting. The matter will again come up for discussion at a working committee meeting on September 15 in Chennai,” a senior working committee member told PTI.

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It has been learnt that all the committee members have unanimously agreed and requested BCCI president N Srinivasan to sort out the ongoing mess regarding the Hyderabad-based franchisee.

Some of the members have suggested that the BCCI should issue an advertisement in newspapers inviting bids from prospective buyers. These bids will remain closed till 15 September, by which time the franchisee has been told to clear some amount of its financial liability.

If Deccan fails to sell the team on its own, the BCCI board could encash the bank guarantees given earlier by Deccan Chronicle Holdings to pay players’ salaries. If a new buyer comes through the tender process, the money which Deccan will raise by selling the team will go to its lenders.

According to the senior BCCI officials, the Board is looking at a buyer who will at least agree on paying the players’ dues that are pending from the 2012 edition of the IPL.