Business

What Is CVC Capital, And How Will It Make Money From The Ahmedabad Franchise?

  • CVC Capital Partners’ bagged the Ahmedabad franchise for Rs 5,625 crore in the latest BCCI's auction for the IPL.
  • The investment company also has stakes in Spanish football league La Liga, and is involved in the rugby segment as well, through Premiership Rugby, Pro 14 Rugby, and Six Nations Rugby.
  • The company is further looking to invest in South African Rugby, World Rugby and Tennis.

Sourav DattaOct 26, 2021, 03:44 PM | Updated 03:50 PM IST
CVC Partners bagged Ahmedabad franchise.

CVC Partners bagged Ahmedabad franchise.


The Board of Control for Cricket in India (BCCI) has begun auctioning new franchises for the Indian Premier League (IPL).

The Lucknow and Ahmedabad franchise were sold to the Sanjiv Goenka-led RPSG Group and CVC Capital respectively. The Lucknow franchise was bought by RPSG Group for Rs 7,090 crore, while CVC Capital Partners’ Irelia Company Pte Limited bagged the Ahmedabad franchise for Rs 5,625 crore.

In recent years, the IPL franchises have seen growing interest from India’s largest business houses. The current auction had initially seen interest from the Aurobindo Group, Adani Group, Kotak Group, Jindal group, Ronnie Screwala, Hindustan Times group, Torrent Group and several others.

The Adani Group was a bidder for both the Ahmedabad and Lucknow franchises, but it did not win either. Apart from domestic entities, several international groups are looking to buy franchises. For instance, the IPL bidding saw the Glazer Family, which owns Manchester United, bid unsuccessfully for two franchises.

What is CVC Capital Partners?

Another international entity, CVC Capital Partners, a European private-equity group, is now the owner of the Ahmedabad franchise. The company’s history can be traced back to the United States when American banking behemoth, Citicorp, established a venture capital arm in 1968.

The investment arm was known as Citicorp Venture Capital that was focused on investing in early stage start-ups. Citicorp Venture Capital established CVC Capital Partners as its European arm, which was spun-out as a separate entity on the insistence of its management. The deal allowed CVC Capital Partners to operate as a separate independent entity.

Consequently, the company shifted away from venture capital investments into private equity and leveraged buy-outs. In layman’s terms, leveraged buy-outs are acquisitions where the acquirer takes up a significant amount of debt to buy another company. The assets and cash flows of the acquired company are then used to pay back the debt.

Since then it has made several investments in various sectors in including multiple major investments in the sports sector. At one point, CVC was the largest stakeholder in the Formula One Group that owns and operates the Formula One racing championship.

In addition, it had acquired Dorna Sport, which operates the motorcycling MotoGP — an investment that it sold for $474 million in 2006 after investing $80 million in 1998.


The group is involved in the rugby segment as well, through Premiership Rugby, Pro 14 Rugby, and Six Nations Rugby, with a combined investment of almost a billion dollars in the three franchises. In addition, the Group is looking to invest in South African Rugby, World Rugby and Tennis.

How Will it Make Money from the Franchise?

CVC, being an investment company, expects a certain rate of return on its money to cover the cost of capital. IPL franchises have multiple streams of revenue — brand sponsorships, grant of central rights, ticket sales, prize money, and merchandise sales.

The annual report of Chennai Super Kings Cricket Limited shows that the largest source of revenues was the Grant of Central Rights. The BCCI pays teams a certain amount based on the number of matches played.

When BCCI sells digital and media rights, it retains 50 per cent of the money while the remaining money is distributed among the franchises. Around 45 per cent of the payment to franchises is fixed, while the balance five per cent depends on the team’s performance during the games.

The addition of two new teams would imply lower grant revenue as the revenue gets distributed between ten teams instead of eight. However, the franchises are probably betting on higher digital and media rights revenues in 2023, as more people join digital platforms and the number of matches increase.

The second-largest source of revenue is sponsorship revenue, including title sponsorship and brand partnerships. Sponsorships also include jersey partnerships, and deals to run co-branded advertisement campaigns with the franchise logo and player images.

Mumbai Indians, for instance, has sponsorship deals with Samsung, DHL Express, Reliance Jio, Colgate, Dream11, Kotak, Boat Speakers, Amul Kool, and several others.

The remaining revenues come from ticket sales, merchandise sales, prize money, and other revenue streams. However, these revenues sources are relatively small. For instance, despite no ticket sales due to the pandemic, the franchises have continued operating profitably.

Over the years, IPL has turned into an unstoppable force that has consistently generated money for BCCI, franchise owners, the government, and other stakeholders. The interest from international sports investors like CVC and the Glazer family is clearly a sign that the cricket ecosystem in India is maturing.

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