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sports | IST

New IPL team owner Sanjiv Goenka explains Rs 7090 crore bid math for Lucknow team

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RSPG Ventures' winning bid of Rs 7,090 crore for the Lucknow franchise bids up not just its stock, but also those of existing team owners Sun TV and United Spirits. Sanjiv Goenka, Chairman, RP Sanjiv Goenka Group spoke to CNBC-TV18.

Business tycoon Sanjiv Goenka and international equity investment firm Irelia Company Pte Limited (CVC Capital) have shelled out a combined Rs 12,715 crore (approx USD 1.7 billion) to win the bids for two new IPL teams, a windfall that far exceeded BCCI's expectations.
The BCCI was hoping for a cumulative bid in the range of Rs 10,000 crore but to their surprise, earned Rs 7090 crore from Goenka's RPSG Group for the Lucknow franchise, while CVC capital forked out Rs 5625 crore for the Ahmedabad team. The two new sides will take part in the 2022 IPL.
Sanjiv Goenka, Chairman, RP Sanjiv Goenka Group spoke to CNBC-TV18 and explained the cost breakdown of his bid amount.
“Year one the outgo will be around Rs 450-500 crore, year two onwards it will be somewhere between Rs 250-300 crore depending upon what the broadcast revenues are for BCCI. So from year two to year six, you will be say Rs 250-300 crore which is about Rs 13,000-14,000 crore. Year seven onwards, I expect that to go down to roughly Rs 100 crore a year," he said.
The team is looking at roughly a total outgo of about Rs 2000- 2200 core. Goenka elaborated his investment recovery plans too.
“Today I am getting an IPL team for a net present value of Rs 2,100 -2,250 crore now that is the way I look at it. With maybe year four or year five, with the permission of BCCI, I could actually dilute 25 percent by that time I expect the valuation to be Es 10,000 crore and if I dilute 25 percent at a value of Rs 10,000 crore the entire thing becomes free for me,” he said.
On value drivers and fierce competition Goenka explained that star players ensure better valuations in terms of sponsorships, etc. Who the Lucknow based side will eventually get is will depend on which players are retained by the existing franchisees.
"We have an experience of what we did with Pune and we had a very small bunch of players to pick from. Yet in year two, we were able to get a lot of new young players and build it into a good fighting unit with a good performance track record. So yes, you need stars, you need experience, but you can also do with young, good, capable talent. So Washington Sundar, Rahul Chahar, Deepak Chahar, they were all part of the Pune team Shardul Thakur and so it is a question of how you build it," Goenka said.
Goenka isn't really bothered about funding.
“Funding at the end of the day, you are looking at Rs 500 crore in year one and you are looking at Rs 250-300 core so it is really not even a big deal. Part of it will come from RPSG Ventures and part of it will come from my own private unlisted companies. We are not touching either CESC or Saregama, or Firstsource or Phillips Carbon, or any of these entities for any funding of this venture,” he explained.
For the full interview, watch the accompanying video
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