What is the reason behind the IPL Valuation dip?

[cricketjoshila]

I expect IPL to lose value again this year.

IPL bubble is collapsing.

Investors like kkr Walmart are investin g in ipl teams and IPL is collapsing, this isnt Bangladeshi economy

 

[Rana]

Skills are important to run the league not looks, this isn't a fashion show.

Maybe pakistan selects teams on the basis of looks, that translates into not very fortunate looking performance

Well at least you accepted majority Indian cricketers are lacking the appeal for eyeballs

 

[Sachin fan]

Well at least you accepted majority Indian cricketers are lacking the appeal for eyeballs

No one more handsome in world cricket today, than Rizbar

 

[jnaveen1980]

There will be valuation dips due to various reasons.

Also stagnations etc.

The impending retirement of marketable stars could be one reason there are valuation dips.

I do think IPL will lose a bit more valuation but so will all the t20 leagues. It will however still be extremely viable and stable after that. The league has stood the test of time , steadily increased valuation even with various upheaveals like covid etc etc.

The only challenge with IPL is that the league is too long. It runs for too long a time and the fans end up being burnt out towards the end.

NFL lost a bit of value in 2020 then boosted by 25% last year. They go through cycles.

 

[Red-Indian]

There will be valuation dips due to various reasons.

Also stagnations etc.

The impending retirement of marketable stars could be one reason there are valuation dips.

I do think IPL will lose a bit more valuation but so will all the t20 leagues. It will however still be extremely viable and stable after that. The league has stood the test of time , steadily increased valuation even with various upheaveals like covid etc etc.

The only challenge with IPL is that the league is too long. It runs for too long a time and the fans end up being burnt out towards the end.

On the face of it, the team valuations are definitely too high.

Typical revenue in FY'25 for an IPL team was in the $60m to $100m range. Profits in the $10 to $25m range. If I were valuing from a normal buyer's perspective, even aggressively, I would hesitate to go over $1B especially given the media scenario (only Jio remaining as the major buyer) and the general projections for revenue growth.

Both the buyer groups seem to have bet on the more distant future i.e. India is the fastest growing major economy and it's virtually a solo sport country. Cricket is almost a religion and there's plenty of scope for growth yet.

What's interesting is that there are hardheaded PE funds etc. involved. Usually when unrealistic exorbitant valuations are paid, they are prestige buys...some billionaire who wants a toy and wants to be seen owning a sports team.

 

[Vikram1989]

On the face of it, the team valuations are definitely too high.

Good one. As per google, owners have few options. Its year around sponsor deals than seasonal ones with so many global leagues.They are getting 70 to i0 percent from the common fund before the first ball.Fan parks, Vip tickets, Stadium Tours , Merchandise sales have clearly outmatched ticket sales.owners are not going to pay 1.7B rt away. They have 10 years time to.pay to Bcci.so at the end of 9th year, 170 mn usd in far economically developed india is peanuts.There is a clear price cap on players unlik Epl which gives much standard projections .Even cyclists got 350 % returns in 4 years.Thereafter they sold the profitable stake while holding the remaining stake equating to their original investment.

 

[Red-Indian]

Good one. As per google, owners have few options. Its year around sponsor deals than seasonal ones with so many global leagues.They are getting 70 to i0 percent from the common fund before the first ball.Fan parks, Vip tickets, Stadium Tours , Merchandise sales have clearly outmatched ticket sales.owners are not going to pay 1.7B rt away. They have 10 years time to.pay to Bcci.so at the end of 9th year, 170 mn usd in far economically developed india is peanuts.There is a clear price cap on players unlik Epl which gives much standard projections .Even cyclists got 350 % returns in 4 years.Thereafter they sold the profitable stake while holding the remaining stake equating to their original investment.

I'm not privy to the actual valuation methodologies used in this case but I've spent years in M&A in an earlier life and I'm quite familiar with building models to account for most of this stuff.

We can be very concrete on revenues and profitability for the next 5-6 years.
- There is probably a small growth in the TV deal but it's not going to see a massive jump. Jio is essentially competing against itself and it would be stupid to inflate the value. This allows you to easily project ~60% of Revenues
- The remaining ~40% are more flexible but still not impossible to project. A big market team like Bangalore has obviously more potential to grow that side than a team like Rajasthan which has a natural limit
- Cost side is also reasonably predictable. Player salaries are going to steadily grow and they are the largest component

There are plenty of example of sports team valuations which show this was overvalued. Whether you look at Football (Manchester United), Basketball (Boston Celtics) or NFL (Commanders) - 10-12 X Revenue and/or 40-50 X Net Income seems a typical valuation. In this case, close to 18 X Revenue and 85-80 X Income seems to have been paid.

So clearly, overpaid on the face of it. Whether it'll eventually be justified, that's dependant on a lot of factors - India's economic trajectory, competition emerging in the Indian media space, BCCI revenue sharing model etc. I can't pass definitive judgement since I don't know all the assumptions.

 

[Vikram1989]

I'm not privy to the actual valuation methodologies used in this case but I've spent years in M&A in an earlier life and I'm quite familiar with building models to account for most of this stuff.


So clearly, overpaid on the face of it. Whether it'll eventually be justified, that's dependant on a lot of factors - India's economic trajectory, competition emerging in the Indian media space, BCCI revenue sharing model etc. I can't pass definitive judgement since I don't know all the assumptions.

I'm quite familiar with building models to account for most of this stuff.

As I know that already , so did a reasonable homework

So clearly, overpaid on the face of it.

Definitely over priced but can they escape unhurt will be the question of India's economic/ipl progress.

 

[U$ofA]

There will be valuation dips due to various reasons.

Also stagnations etc.

The impending retirement of marketable stars could be one reason there are valuation dips.

I do think IPL will lose a bit more valuation but so will all the t20 leagues. It will however still be extremely viable and stable after that. The league has stood the test of time , steadily increased valuation even with various upheaveals like covid etc etc.

The only challenge with IPL is that the league is too long. It runs for too long a time and the fans end up being burnt out towards the end.

It is only going to get longer. It is very likely that IPL will end up with 15-16 teams in the next 15 years.

There is an existing market already to accommodate 3 more teams. In future the market will grow to accomodate more.

This could put the IPL at close to 4 months. Now, how does that impact the cricket calendar?

 

[Cricfan8920]

What is the reason behind the IPL Valuation dip?​

The answer is quite straightforward. The absence of Pakistani players. Sanghis' fascism is coming back to haunt them.

 

[jnaveen1980]

What is the reason behind the IPL Valuation dip?​

The answer is quite straightforward. The absence of Pakistani players. Sanghis' fascism is coming back to haunt them.

correct. yes that is the missing piece

 

[sithb]

correct. yes that is the missing piece

Absolutely. Give that guy an award.

 

[BDfanforever]

Another thing. Why are some of these franchise selling? I don't see anyone asking this question. Because they are cashing out on huge gains. They already lost like 20% or 300 to 500 million from its peak. So cashing out definitely was the better choice for existing owners.

Zen Z is more into Tiktok. No one watches cable or satellite TV anymore. Highlights are on YouTube.

 

[sithb]

Another thing. Why are some of these franchise selling? I don't see anyone asking this question. Because they are cashing out on huge gains. They already lost like 20% or 300 to 500 million from its peak. So cashing out definitely was the better choice for existing owners.

Zen Z is more into Tiktok. No one watches cable or satellite TV anymore. Highlights are on YouTube.

The franchises who've sold out are the original ones who want to cash out.

 

[shaz619]

Has the quality of the cheerleaders gone downhill

 

[Cricfan8920]

Has the quality of the cheerleaders gone downhill

You are right. They are planning to have some burqa-clad cheerleaders to attract another section of the crowd.