Rajasthan Royals, Kings XI to furnish bank guarantees

Rajasthan Royals, Kings XI to furnish bank guarantees
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First Published: Mon, Dec 20 2010. 10 50 PM IST
Updated: Mon, Dec 20 2010. 10 50 PM IST
Mumbai: The two Indian Premier League (IPL) teams that faced expulsion, Rajasthan Royals and Kings XI Punjab, are ready to comply with the Bombay high court’s orders and furnish bank guarantees by 3 January, allowing them to participate in the players’ auction to be held by the Board of Control for Cricket in India (BCCI) and play in season 4 of the fixture.
The court has asked the Royals, run by Jaipur IPL Cricket Pvt. Ltd, to deposit $20.83 million (Rs 94.4 crore) as players’ salaries for two years and to protect their contracts. The bank guarantee to be deposited with the court will be in favour of BCCI.
Kings XI Punjab, run by KPH Dream Cricket Pvt. Ltd, has to deposit $32.77 million. A person closely associated with the Mohali team said it has to deposit money “for the losses that BCCI might suffer in case the final verdict of the arbitration goes against us. We are confident about the verdict, that is why we are willing to furnish this huge amount.”
Kings XI will raise money from its shareholders in the respective ratio of their stakes in the team, said an executive close to the development. The four investors—Gaurav Burman, Mohit Burman, Ness Wadia and Preity Zinta—hold 23% each. The Apeejay Surrendra Group’s Karan Paul has a 4% stake while another 4% is held by Root Investments Pvt. Ltd.
Sean Morris, chief executive of Rajasthan Royals, said that it hadn’t been decided whether the money will be raised internally or as a loan. “We’ve always followed the court’s ruling. Twice they’ve ruled in our favour,” he said. The team is promoted by actor Shilpa Shetty and her businessman husband Raj Kundra.
It’s not clear whether BCCI will move the Supreme Court after having lost an appeal twice in the high court.
An official of the sports administrator said on condition of anonymity that the board has not taken a call on moving court over the expulsion of the two teams.
“First, let the courts open (3 January) and let these teams make the necessary deposits and then let’s see. They are saying now that they will comply with the court order, but I have serious doubts. Whatever we do will depend on whether they comply,” the BCCI official said.
BCCI doesn’t have much room for manoeuvre because of the year-end holidays.
“The courts are closed till early January. If they appeal after the auction, the whole process becomes a lot more complex,” said Indranil Blah, chief operating officer, Kwan Entertainment and Marketing Solutions Pvt. Ltd, a sports marketing agency.
It may not be easy to adjust the players if the two teams are expelled after the auction. “They (BCCI) are on the backfoot as far as advertisers and sponsors go,” Blah said.
The number of matches will increase this season because of the addition of two teams to the existing eight.
“If there were 60 matches, now IPL could have 94 or more. BCCI had so far planned for just eight teams,” Blah said. “Now it will have to squeeze 10 teams into their 45-day schedule for IPL. A lot of the matches may just land up in non-prime time and that wouldn’t sit well with sponsors.”
In spite of the uncertainty about the number of matches, the franchises, old and new, are planning their sponsorship activities.
A person familiar with the developments at the new team, Kochi, said: “We are exploring the possibility of auctioning the team’s title. It is a good branding opportunity for companies without owning a team and will generate revenue for us. The Anchor group, the lead investor, will have the rights to match the sponsorship amount at any point of time.” Anchor Earth owns 27% in the Kochi IPL team.
A Mumbai Indians executive said the franchise will seek to raise more sponsorship money than in the previous season as several of its existing sponsors will extend partnerships to cover the new season as well.
“But we’ll make our plans known once the auctions happen and the composition of the team is known,” he said.
Raghu Iyer, chief marketing officer of Rajasthan Royals, said advertisers belonging to industries such as telecom, mobile phones and insurance were keen to participate, but deals are still at various stages of finalization.
“In any given year, we see a jump of 70% or more in sponsorships over the previous year. For merchandise and apparel, our partner continues to be Puma,” he added.
An executive at Multi Screen Media Pvt. Ltd, which owns the broadcast rights for IPL, had said earlier that the company got around Rs 800 crore in revenue in the previous season. “We should at least make Rs 1,100 crore-plus this year, with the inclusion of the new teams.”
anushree.m@livemint.com
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First Published: Mon, Dec 20 2010. 10 50 PM IST