However, some IPL franchise owners have expressed concerns, particularly over the controlling stake, which is one of the two key factors that determine the success and longevity of any joint venture, along with trust. Hundred is no different.
“This is going to be a new thing for everyone coming in because in all the other franchise investments, we are 100 per cent owners,” said the head of the IPL-winning franchise. “The dynamics are very different. Here, it’s going to be a joint venture. There’s valuation issues, there’s ownership issues, there’s operational issues. All of these issues come into play immediately.”
According to the official, who declined to be named, the mere fact that there are other partners, whether minority or majority, has created a “hurdle” and “a huge difference” in how franchises operate elsewhere. “If you have 49%, who is going to take responsibility? Do you want to be a pure investor? Probably not. I don’t know the answer to that yet.
“But we’ve heard that controls and all that stuff can be built in for investors coming in. I don’t know if there’s going to be enough desire and interest to say, ‘Okay, here’s the check. I want to be a passive investor. Let’s just let it run its course and contribute as much as we can.’ No.”
“The key question is how much of that 49% is worth to the overall value? If that number is too big and I’m not sure about it and I see enough returns, I’d rather take a small stake from the start.”
IPL CEO says he is open to taking a smaller stake in Hundred.
ECB’s Head of Business Operations Vikram Banerjee visited India during the IPL 2024 and met with owners and management of various franchises to address investor concerns.
“For a lot of them, it’s a brand thing,” Banerjee said on the subject of control. “For a lot of them, it’s cricket, control of the cricket side and other things, a majority stake in terms of equity of equity, pure and simple. So we understand that and we understand where they are. Then we build that into the process.
“If you look at the eight teams, there’s going to be a variety of products that are going to be coming to market, and when we get to market in September, that clarity will be there. And that clarity will be there at this point where we believe we have a variety of products that fit all the different categories. And as the conversations build, the details will build in October, November, December. By the time we get through that process, we’ll be at a really good place.”
Of the eight franchises so far, MCC has declared that it will consider selling some or all of its 51% stake, subject to approval from its members through a vote by mid-September. Surrey, which owns the other London-based franchise Oval Invincibles, has said it has no plans to sell its 51% stake.
ECB Chief Executive Richard Gould did not rule out the possibility of investors taking a 100% stake, provided they met various criteria. “There is certainly an opportunity for people to potentially take 100% ownership. It depends on the capabilities they can bring to the table in terms of financial and operational delivery. That opportunity exists.”
The ECB has made it clear from the start that the highest bid will not necessarily win. While there is no denying that money is important, Banerjee said the board also wants partners who are willing to support the growth of the game at all levels.
Venky Mysore, CEO of IPL champions Kolkata Knight Riders, said the success of a joint venture depends on the “chemistry” between the investor and the county in the case of Hundred. Mysore has been the head of the Knight Riders Group since 2011 and has overseen the acquisition and establishment of teams in the Caribbean Premier League, International League T20 and Major League Cricket.
“Like all joint ventures, Hundred has a legacy problem,” Mysore told ESPNcricinfo earlier this month. “The existing shareholder group has been around for over 100 years and suddenly a new investor has come in and joined hands.
“Ultimately in any joint venture, in my experience, it comes down to a chemistry recipe. It’s not about numbers. It’s not about a closed bid and ‘here’s the check’, the highest bidder wins. From our perspective, and from the perspective of the partners we’ve already talked to, it’s about that chemistry. Can you work together? Because this is a long-term thing.
“Let me say this ourselves… we think long term. So something like (Hundred) is, again, thinking long term and then saying, ‘Okay, this is a joint venture.’ If it’s going to be successful, people, chemistry, is going to be a big deciding factor. And that’s generally the risk with joint ventures.”
But not everyone is chasing a majority stake. The CEO of a third IPL team told ESPNcricinfo that they are dipping their toes in the sand and do not fully understand the business model, so they would prefer to buy smaller stakes in franchises and expand gradually.
“49% is good enough to start with,” the CEO said. “The key question is how much of the total value is that 49%? If the number is too big and I’m not sure about it and I see enough returns, I’ll take a small stake first, and then I’ll add the option to take a larger stake every year or every five years.”
Nagraj Gollapudi is the news editor for ESPNcricinfo.
