Bidding for new IPL teams on hold

Published: Sunday, March 7, 2010, 13:46 [IST]
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Bidding for new IPL teams on hold

Mumbai: The Indian Premier League (IPL) will unveil its two new franchises today in what is expected to be the latest indication of the league"s financial strength and marketing savvy.

All existing tenders have been returned to the bidders. However minimum bid amount remains the same at $225 million.

That base price is more than four times the value set in January 2008, when the original eight franchises were auctioned, and reflects the IPL"s appeal to business investors. Other terms and conditions are similarly stringent-all bidders have to stump up a returnable deposit of US$100 million before the bid, as against the US$5 million (approximately) stipulated in 2008.

That is intended to keep out frivolous bidding, Lalit Modi, the IPL"s chairman, said.

A few changes have been made in the conditions that will be out on March 9. The IPL has removed net worth clause of $1 billion, advance guarantee of $ 100 million.

"We put a high-end clause for entry to people, asking them to give US$100 million guarantee in advance because we need to get solid companies," Modi said. "This business requires a long gestation period and that is the reason we want to secure ourselves. The BCCI always secures itself."

The decision was taken after a meeting held at Four Seasons in Mumbai which was attended by Bollywood stars Saif Ali Khan and Kareena Kapoor along with Videocon Industries' Venugopal Dhoot

Another reported condition became the subject of controversy on Friday when Priyadarshan, an award-winning film director, claimed bidders had been asked to furnish a bank guarantee of US$1 billion.

The IPL has softened its stance a little by retaining the discretion to change the bank guarantee amount for the winning bidder. But people already in the IPL business back the organisers" decision to set steep conditions.

"It is a stiff condition and maybe the intention is to get only a certain number of bids since only two franchises are up for stake," an official of an existing franchise said.

The willingness of investors to invest big money, especially in the current economic climate, is all the more surprising given that, as franchise owners, they get no fixed assets. The costs are high, as one cricket-related businessman explained.

Also, the franchises will almost certainly be based in relatively small markets-the metros and bigger cities already have teams. The favourites to be host cities for the two new franchises are Ahmedabad, Lucknow, Pune and Nagpur.

Read more about: indian premier league, ipl 2010, ipl 3
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