Unique auction for two new IPL teams | The Daily Star
10:57 AM, October 31, 2015 / LAST MODIFIED: 11:06 AM, October 31, 2015

Unique auction for two new IPL teams

The hammer is likely to go down on the new Indian Premier League (IPL) auctions - franchises and players - very soon in a manner very different from the pattern that the tournament has followed these last eight seasons, keeping the long-term valuation game in mind.

The blueprint for the sale of two new franchises and 50-plus players - including those from Chennai Super Kings and Rajasthan Royals - is ready, waiting to receive the required ratification at the BCCI's Annual General Meeting (AGM) next month.

On Friday (30 October), TOI gathered exclusive details from those in the know of developments on how these processes are likely to work.

The two franchises will be sold only for a period of two years, following which they will have to exit IPL, when Super Kings and Rajasthan Royals are eligible to return to the tournament's fold.

Every cricket venue across the country, barring the existing six franchise venues, will be available for the bidders to pick from.

That in turn will allow the interim franchises the choice of picking Chennai and Jaipur too, given their exhaustive fan base.

There will be a base price set for potential bidders to buy the interim franchises, where the idea of 'reverse bidding' will come into effect.

If the BCCI, for example, sets the base price of the franchise at Rs 100, bidders will be allowed to quote an amount lesser than Rs 100.

The lowest bidder will be given the franchise. BCCI will pay the winning party the bid amount that will partly cover for the franchise's operational costs heading into the tournament.

The bidder can also quote a figure running into negative.

For instance, if the bidder quotes a figure of Rs -10 or Rs -5, he she will have to pay that (negative) amount to BCCI.

The board expects potential bidders to like this idea if they have a specific two-year marketing or branding initiative in mind for which they won't mind spending from their pockets.

The interim franchises will not receive a share of the central revenue pool unlike the other six existing teams but will be eligible for a substantial amount in terms of prize money (for players) and additional performance-based incentives from the central revenue pool if they make it to the top-four in the tournament.

In turn, these interim franchises can earn from local revenue pools - ­ gate money, sponsorships, merchandising and hospitality management ­ - to further cover their operational costs.

The 50-odd players from CSK and RR, who'll be up for sale at the auction, will first be part of a draft for the new franchises to retain.

The number of players that could be allowed for retention through draft hasn't been finalised yet. After the draft, once all franchises are on a level playing field, an auction will take place for the remaining players.

The interim franchises could opt for the spending pattern set by Rajasthan Royals over the years, where the franchise would invest heavily in just one or two potentially big names (cricketers) and then buy lesser-known cricketers to form the core of their team.

The new franchises could come into IPL keeping only their balance sheets in mind ­ in terms of P&L ­ or use the platform for a two-year marketing initiative.

In the future, if BCCI-IPL decides to float tenders to expand to 10 teams, these interim franchises could be allowed to retain their team names if they bid and win.

HOW THIS PLAN COULD WORK...

FRANCHISE AUCTION (FIGURES ONLY FOR EXPLANATION):

-If base price is set at Rs 100 and four interested parties bid Rs 80, Rs 50, Rs 30 and Rs -10, franchise rights will be awarded to parties bidding Rs 30 (BCCI to pay franchise) and Rs -10 (franchise to pay BCCI).

-Negative bidding is a possibility if potential bidders are eager to bag a franchise purely for their own marketing or branding initiatives, say BCCI sources.

-The franchises can recover part of these costs from their respective local-revenue pools.Performance-based incentives are likely to be an additional income of the franchise does well.

PLAYER AUCTION:

Interim franchises will be allowed to participate in a draft to first retain their share of players (number not specified yet) after which all eight franchises will participate in the auction process.

VENUES:

Interim franchises can bid for any venue including Chennai & Jaipur, barring six cities that already host IPL franchises.

TIME PERIOD:

The interim franchises will have to quit IPL after two years once CSK and RR are eligible to return.

TEN-TEAM IPL?

BCCI does not rule out IPL expanding to 10 teams in future but not in the next two years.Interim franchises will also not have any rights of refusal if BCCI decides to bring in two new teams in the future.

 

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