Thread by @KShriniwasRao

#Thread #IPL #Franchises : )

In 2008, original eight franchises of IPL were sold for a collective Rs 2,900 crore. Just two new franchises today have gone at 4.3 times that value. These are huge comparisons, no doubt. But let’s adjust them for inflation. (1/13)

The value of the US$ in 2008 stood at 40 and today, it stands at 74. So, if adjusted for inflation, what would be the value of those 2008 investments if made today? Let’s take a look… and let the imagination run a bit wild. (2/13)

Mumbai Indians was bought in 2008 at approx. Rs 447.6 cr… Adjusted to inflation, in 2021, that cost would stand at Rs 828 cr.
Likewise…
RCB in 2008: Rs 446 cr; In 2021: Rs 827 cr.
Deccan Chargers (SRH now) in 2008: Rs 428 cr; In 2021: Rs 792 cr. (3/13)

CSK in 2008: Rs 364 cr; in 2021: Rs 673 cr.
Delhi in 2008: Rs 336 cr; In 2021: Rs 621 cr.
KXIP (now Punjab Kings) in 2008: Rs 304 cr; In 2021: Rs 562 cr.
KKR in 2008: Rs 300 cr; In 2021: Rs 556 cr.
RR in 2008: Rs 268 cr; In 2021: Rs 496 cr. (4/13)

However, this is just inflation adjusted to the rising value of the US dollar. But what if these numbers were stacked up against the rising value of the broadcast rights and sponsorships? (5/13)

Broadcast rights sold in 2008 went at Rs 8200 cr for 10 yrs. In 2017, same rights were sold at Rs 16,347 cr for 5 yrs (4 times up). DLF paid Rs 200 cr as title rights in 2008 for 5 yrs. In 2017, Vivo paid Rs 2200 crore for title rights for 5 yrs. A straight 11-time jump. (6/13)

Broadcast rights were sold in 2008 for for 10 years. In 2017, Star bought the same rights for JUST FIVE YEARS. Which means, 2008 value for five years should stay pinned at Rs 4,100 cr (which was a billion dollars back then at Rs 40 a dollar). (7/13)

So, in today’s value, Star would theoretically pay Rs 32,694 crore for a 10-year deal, right? (Rs 16,347 x 2) – broadly speaking. 10 years brought down to five, and rights doubling up, is technically a four-time jump. (8/13)

Let’s assume Vivo overbid for title rights and the real value is what Dream11 paid in 2020 – Rs 220 per year, which totals to Rs 1,100 crore for five years – again a five-time jump in what DLF had paid in 2008. (9/13)

So, here’s one way to look at what the cost of the franchise would be in 2008 when they were bought, if adjusted to today’s central revenue pool value – in line with how broadcast rights & sponsorships have gone up. (10/13)

If we take a 4-time jump into consideration, the cost of Mumbai Indians – at today’s central pool value – would be Rs 1,788 crore.
Likewise: RCB: Rs 1,784 cr; Deccan (now Sunrisers): 1,712 cr; CSK: Rs 1,456 cr; Punjab: Rs 1,216 cr; KKR: Rs 1200 cr; RR: 1,072 cr. (11/13)

If adjusted for inflation as well as today’s central revenue pool value, here’s what the value will be: MI: Rs 3,312 cr; RCB: Rs 3,308 cr; DC (now SRH): Rs 3,168 cr; CSK: Rs 2,692 cr; Delhi: Rs 2,484 cr; KXIP (now PK): Rs 2,248 cr; KKR: Rs, 2,224 cr; RR: Rs 1,984 cr. (12/13)

Now, just think 10 years ahead: The price that RP-Sanjiv Goenka Group and CVC Capital have paid today is bearing in mind central revenue pool value and inflation-adjustments over next 10 yrs. We’re already looking at central revenue pool touching Rs 40,000 cr. : ) : ) (13/13)