Why Indian businessmen are buying cricketing franchises abroad

Away from all this, Mallya, chairman of the United Breweries Group, was busy hiring players for his newly-acquired cricketing franchise at the Barbados Concorde Experience in Christ Church Parish, Barbados.

A day ago, Mallya bought the Caribbean Premier League (CPL) franchise, the Barbados Tridents. The Tridents is one of the six participating franchises in the CPL Twenty20 tournament in the West Indies and is now in its fourth season. As Tridents’ owner, Mallaya will pay $2 million as franchise fee to the CPL and will also pay player salaries.

Mallya also owns Royal Challengers Bangalore (RCB), which is among the eight franchises that participate in the billion-dollar Twenty20 tournament, the Indian Premier League (IPL).

By acquiring the Tridents, Mallya joined his IPL colleague and actor Shah Rukh Khan, who bought a stake in CPL franchise Trinidad and Tobago Red Steel in June last year. Earlier this month, the franchise was renamed Trinbago Knight Riders or TKR, in sync with the Kolkata Knight Riders, which Khan’s Red Chillies Entertainment owns in the IPL.

Mallya said his involvement with the CPL was both a business and a personal decision, given his previous interests in the region. “I didn’t jump into the CPL in year one. I was busy concentrating on building my IPL franchise and I knew that the CPL will have some teething problems in the first couple of years. When I was convinced that the CPL was now a proper, growing T20 league here in the West Indies, I decided to take a good hard look. I was told that the Barbados franchise was available, which was great news for me personally," he said.

The chief executive of Red Chillies Entertainment that owns TKR, Venky Mysore, too is excited about the new marketplace. “We are very excited to show our commitment to the marketplace, and in line with our vision of expanding the Knight Riders brand, it’s very exciting for us to rename the team as Trinbago Knight Riders. We’ve had a chance to discuss the idea with a lot of people, the local people and they like the idea of Trinbago, and love the idea of Knight Riders. Knight Riders has become a significant brand in the IPL and in India in particular. We also have a massive global fan following. With us, bringing the Knight Riders brand to Trinbago, we’ll have a chance to drive a stake in the ground in this place as well, and hopefully, it’ll also grow from strength to strength," he said.

But why now CPL?

There are several reasons why Indian businessmen are keen on picking up cricketing franchises in other leagues, even if Indian cricketers (big and small names) are not involved in the league, like the CPL.

For a start, there’s visibility, and plenty of it. The timing of the CPL is such that it begins a couple of months after the IPL, in July, which gives some of these franchises an extended visibility period, from six weeks at home (IPL), to a further four weeks in the CPL. More importantly, the price points are low, which makes these teams attractive to buy. “It’s a massive boost for the CPL," says Peter Breen, head of communications, CPL. “The involvement of owners who successfully run franchises in the IPL can only make the tournament better."

The CPL, he adds, is a good proposition as it attracts some of the best players. “The talent in the league includes the likes of AB de Villers and Faf du Plessis who’ve just signed up for us. It’s a huge thing for the CPL that it can attract players of that stature," Breen says.

For Indian franchises, involvement in these leagues also gives them a chance to have a good look at the local players in the region, given that they feature in the IPL auction list every year.

Besides the two Indian owners Khan and Mallya, the league also attracted Indian two-wheeler maker Hero MotoCorp Ltd as its title sponsor for its third edition last year. “It makes perfect business sense for a sponsor because it costs them one-tenth of what it would in the IPL," says Tuhin Mishra, managing director and co-founder, Baseline Ventures, a sports marketing, entertainment and licensing company.

America, ahoy!

This time around, the International Cricket Council (ICC) has allowed the CPL to organize matches in North America (in cricketing terms, the US and Canada), and that too could be a big factor in luring Indian business interest. This year, the US will host six matches, predominantly in Florida. “The American market is an exciting opportunity, not just for the CPL, but for Indian owners. It’s the first time that professional cricket league will be hosting matches there, its not often that the audience there gets to see some of the most talented cricketers in the world play," said Breen.

The US is widely recognized as a cricket-starved, untapped market for administrators. “It (the US) is a massive market, if not for the Knight Riders, but for someone like Shah Rukh Khan. Even if he’s not making movies, through the CPL, he is there, he is visible during the tournament. This is a case of extended visibility from the IPL," Mishra added.

Global franchise opportunity?

Interestingly, this is not the first time that an opportunity to own more than one cricketing franchise has come up. In 2010, the Rajasthan Royals announced the formation of a global cricketing franchise comprising themselves, Hampshire (England), Victoria (Australia) and Cape Cobras (South Africa) and Trinidad and Tobago (West Indies). The idea was to unite them under the Royals banner to ensure round-the-year visibility of the brand. Besides, the concept also involved seamless transfer of players from one team to the other and giving opportunities to fringe players from these teams. However, it failed to take off.

Mishra says involvement in these leagues adds up to the valuation of the overall franchise. “Tomorrow or whenever, if they want to sell their franchise, their valuation with all these teams in place, will automatically go up," he said.

Mallya and Khan’s involvement in the CPL is likely to lead many franchise owners to expand their footprint to other leagues such as the Big Bash League in Australia or the Ram Slam T20 Cup in South Africa, or even the newly-launched Pakistan Super League (PSL).

“It’s only a matter of time and the low price points could attract a lot of Indians." says Mishra. “The quality of cricket in the Big Bash League at times is better than the IPL, and passionate cricket lovers in India follow that tournament, so it is surely a possibility."

Last year, reports in the Pakistani media said that several Indian personalities, including businessmen and film stars, were interested in buying franchises in the PSL. That, however, did not happen. In 2011, when Cricket Australia were exploring the possibility of privatising the BBL, with each franchise valued at $50 million, several Indians were interested. That too didn’t exactly go to plan.

With English cricket set to introduce a city-based franchise format for its Twenty20 competition from 2017, Indian businessmen could well be lining up to pick up some teams there. “It’s like the model they follow in football, where a European team picks up ownership in other leagues, say the Major League Soccer," says Mishra.

Manchester City is a classic example. It has bought clubs in the US (New York City FC) and Australia (Melbourne City FC) over the last few years.