If you swapped the five players the new Pune Indian Premier League franchise bought at the auction on Tuesday with the five the new Rajkot franchise bought, it is likely neither franchise would be too upset.
Both teams picked big names and big talents while spending their entire kitty of Rs 39 crores.
But when it comes to the bottom line, the Pune franchise, which was bought by the Sanjiv Goenka group, was the clear winner for one reason - MS Dhoni. India’s limited-overs captain brings with him not only his leadership skills and his devastating ability as a finisher, but also an unrivalled brand value.
“Compared to all the other players [in the auction], Dhoni is easily worth at least two times the value of anyone else,” Melroy D’Souza, the COO of Professional Management Group told Firstpost. “Commercially, he is the biggest name in the entire draw and he will attract many more sponsors and help raise more sponsorships than the other players.”
This is especially important for the new, albeit temporary, franchises, because unlike the six original franchises they will be competing against, they will get no share of the IPL’s central revenue, worth roughly Rs 70 crore a year. Instead, thanks to the reverse bidding process, Pune will pay the BCCI Rs 16 crore a year while Rajkot (bought by Intex), will pay Rs 10 crore. Factor in the Rs 66 crore salary cap plus the expenses (travel, staff salaries etc.) that come with running a team and you are looking at an outlay of roughly Rs 100 crore per year.
While the owners of the teams and their companies stand to benefit from the considerable exposure the IPL will generate for them, the business risk in owning an IPL team was made evident by the drop in value of CESC Ltd. shares on 9 December (CESC is one of the companies in the Goenka portfolio).
DNA reported that “sentiment towards the power utility firm turned negative on Tuesday during the close of the trading time when Goenka disclosed to the exchanges that New Rising Promoters, which won the bid for acquiring the Pune franchise for two years, is a subsidiary of listed entity CESC Ltd.”
The same story references a research note published by Antique Stock Broking, which argued that acquiring the Pune franchise was negative development for the group, primarily because of the cash outlay.
While the Sanjiv Goenka Group has a market capitalisation of about Rs 12,000 crore and could afford to lose Rs 100 crore, it is therefore still imperative to pull in as many sponsorships as possible and sell as many tickets as possible to minimise losses. Having Dhoni on the team sheet with boost both.
“It [Dhoni] is a great value proposition for them because they need money,” Samir Kale, the founder of PR firm CMCG India said. “They need to generate the money on their own, for which you need someone like Dhoni. They [Sanjiv Goenka Group] have multiple businesses, so they will exploit that.”
Complicating matters is the short two-year lifespan for the franchises, which limits the benefit for sponsors, who prefer longer term deals. “The short term will be a hindrance,” Sanjay Shukla, the COO of Percept One said. “To get Dhoni will negate that factor. It is 100 percent an advantage. Dhoni being Dhoni, people will definitely support the franchise, not only because of the brand but because he is a great leader and there is scope for winning.”
Dhoni cost the Pune franchise Rs 12.5 crore on paper (in actuality he will be paid his Chennai Super Kings salary, which is higher but undisclosed) against a total salary cap of Rs 66 crore. That means he is single-handedly costing the team almost one-fifth of their total funds. But even at that price, Shukla reckons Dhoni is a bargain.
“They will definitely recover their money. The return on investment will do wonders.”
The prospect of Dhoni walking on to the cricket field in a uniform that isn’t CSK yellow is also unlikely to muddy the water for fans because CSK won’t be part of the tournament for the next two years. “If [CSK] was there, there would be confusion among consumers,” Kale said. “Public memory shifts very quickly unless there is a reminder. And there is no reminder now.”
This opens up another potential advantage for Pune. “Chennai guys might end up supporting Pune team,” Shukla said. “Dhoni was almost anna there so Tamil Nadu could support Pune.”
That would set-up an interesting dynamic given that Mumbai Indians and CSK had developed the biggest rivalry in the IPL. The Pune franchise could also eat into the Maharashtra support base for Mumbai. The combination would spice up the matches between the two teams and generate even more fan interest.
Not everyone is convinced of this, though. “It [support] will be divided,” Kale said. “Some of [Dhoni’s] fans will come to Pune but [his presence] will not bring in the passion for the city (Chennai). It will be his fans individually.
“That part only will shift. The entire lot won’t move.”
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Updated Date: Dec 17, 2015 08:51:11 IST