Published: Apr 24, 2015, 03:33 PM (IST)
Edited: Apr 24, 2015, 04:59 PM (IST)
Chennai Super Kings’ (CSK) ownership was transferred by the Indian Cements to one of its subsidiary following the Supreme Court’s verdict earlier this year which forbade Board of Control for Cricket in India (BCCI) officials from owning teams. What caught everyone’s attention was that the owners tried to pass off CSK’s value at Rs 5 lakhs, which is shockingly so low that it becomes laughable. Nishad Pai Vaidya examines the bizarre claim.
How can an Indian Premier League (IPL) franchise be valued at Rs 5 lakhs?! Yes, of all teams, the Chennai Super Kings (CSK), arguably the best team in the tournament, with some of the biggest names in cricket, was valued for pittance by its owners, the India Cements. Media reports claim that India Cements sold Chennai Super Kings (CSK) to its subsidiary for that price. This was done after the Supreme Court of India established that an official of the board cannot own an IPL franchise. Hence this sale took place.
But wait. Think again. Only Rs 5 Lakhs?!
For those unaware with the Indian numeric system, that sum is equivalent to half a million Indian rupees. Going by the current exchange rate, it is about USD 8,000. At the outset, it sounds not only absolutely bizarre, but ridiculous and at the same time, mirthful. It is simply laughable that one of the most successful sports team — which plays in the richest Twenty20 cricket league — the one which was valued in millions last year, tried to push for such a small valuation. READ: Chennai Super Kings’ surprisingly low value to be discussed at BCCI Working
What one must understand is that it is more than the title being transferred, but there is a whole lot that goes behind an IPL franchise.
When the CSK retained five of its key players last year, they spent Rs 40 crore (Rs 400 million) of their purse. Chennai Super Kings then went on to buy more players at IPL auction 2014 as well as in 2015. And then they spent crores on building their bench strength. READ: Chennai Super Kings (CSK) must be disqualified, says Supreme Court
The base price for any player in the IPL is Rs 10 lakh, double that of the price CSK valued themselves at. So, a team worth Rs 5 lakhs can still afford a roster that is more than hundred times its value? Wow, some emerging business would want to know the magical formula to procure something more than their own price.
Apart from that, they also have roped in world-class coaching staff in Stephen Fleming and Andy Bichel to name a few. Surely, their collective value would be a lot more that just Rs 5 lakhs. You cannot put a price to the wealth of their knowledge, but of course it would be more expensive that what CSK have been valued. WATCH: Chennai Super Kings’ fate in doubt as SC comes down hard on N Srinivasan
Not to forget, the number of fans who buy tickets for each game, which supplements the gate money. For a team like the CSK, the gate money over the season would be considerable. And of course, there is merchandise. If you have a huge fan following, they will certainly buy jerseys and other merchandise to keep the passion going.
Even if 500 fans buy jerseys priced over Rs 1,000, you easily have Rs 5 lakhs over there. Unless, they hand it out for free? Oh wait, even to manufacture those free merchandise would cost them? How much out of those Rs 5 lakhs would they spend on making free merchandise for the fans? READ: Supreme Court: Chennai Super Kings, Rajasthan Royals’ future to be decided by separate committee
Let’s talk about prize money. Last year, CSK won the Champions League (CLT20) 2014, which got them USD 2.5 million. When converted to Indian rupees, it is over Rs 15 crore (Rs 150 million). Unless, of course, they agreed to hand that amount to charity.
Again, it is another laughable proposition put forward by the CSK and the IPL Governing Council did the right thing to reject it, as India Today reported. Somehow, it brings back memories of the risible and yet astonishing claim back in 2013, when Gurunath Meiyappan was labelled an “enthusiast” even when his Twitter bio had said he was Chennai Super Kings’ team principal. READ: Chennai Super Kings and Rajasthan Royals stay on
The reports further stated that if a team is sold, then five per cent of the sale price goes to the BCCI. So, was that valuation put forth to avoid that payment to the BCCI? Transferring the franchise to a subsidiary may not have cost them much on paper, but it has certainly bought CSK another controversy at a time when they are trying to stay out of them.
(Nishad Pai Vaidya is a Correspondent with CricketCountry and anchor for the site’s YouTube Channel. His Twitter handle is @nishad_45)
