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

 

[Sachin fan]

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 companies need hard cash. Look at Diageo shares, they haven't been doing well lately because of Trump sanctions on Canada etc. so they need cash now urgently, nothing to do with IPL peak or not

And you keep confusing IPL valuation with team valuation

You don't even understand basics of finances or valuation and keep making these brain dead assertions

 

[cricketjoshila]

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

Their skills are the appeal for eyeballs, that's relevant in sports

 

[Josh]

IPL valuation has temporarily gone down due to betting apps ban. Still a very solid value

 

[cricketjoshila]

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

This is why Pakistani sports is struggling, you think looks are more important than skills

 

[Major]

The valuation is done on the basis of revenue and EBITDA. These values are only known to the public if the company is public limited. Since IPL is private, so these values are not known so we cant judge the actual value, and have to use an estimated value with estimated figures.

The recent sale of Rajistan Royals does act as a good indicator though. As the price it was sold will reset the value of all teams, as it will become the bench mark.

IPL's valuation is still in control. People go gaga over it, but their numbers are not that crazy. The growth they have resonates with their valuation.

IPL valuation will explode to crazy numbers when the media rights are no more league based, but shifted to team base. Teams holding and selling their own media rights at regional levels.

For that to happen, its important for the teams have proper presence in their region, where people own their team. I dont know if that is the case in India or not. Because thats how north american sports franchises operate and have very large valuation.

 

[Major]

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.

Reason to sell could be anything. The team wasnt sold for a low price, it got sold for a higher price.

No one knows their finance statements, so you cant say it was in losses.

 

[BDfanforever]

Reason to sell could be anything. The team wasnt sold for a low price, it got sold for a higher price.

No one knows their finance statements, so you cant say it was in losses.

I am not saying they sold at a loss. They cashed out as much as they could. When someone sells you their business like restaurant, gas stations, whatever, it could be for any reason. However, usually the owner is projecting they won't see significant gains like in the past.

 

[neonoir]

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.

I think Fadderland and Madderland have a big role to play in it

 

[Savak]

When it comes to cricket we are defeated nation and our mousey response to Indian cricket;s rise makes us look worse. Its time we were brave and acknowledged the good things in Indian cricket and how they are growing. Rather than that many of our people continue to hold a grudge and try the most silly ways to undermine Indian cricket's success. It only makes us look backward, low IQ and jealous as Pakistanis and i cannot stand that. We are better than that.

To be honest the way Indian Cricket has grown commercially, financially and even from a Cricketing point of view. Every cricket country in the world looks a failure against it. You take out an Indian tour from the likes of Australia, England, New Zealand and South Africa and even these countries will collapse and will struggle to financially support and sustain their cricketing success. During Covid, the likes of Australia, South Africa, England were desperate for India to tour to bail them out from bankruptcy.

Pakistan sadly feels the pinch worse because of India's boycott isolation of Pakistan and the simultaneous drop in our cricketing quality and output at the same time.

 

[Hitman]

https://twitter.com/x/status/2036698021174374689

 

[Bhaijaan]

To be honest the way Indian Cricket has grown commercially, financially and even from a Cricketing point of view. Every cricket country in the world looks a failure against it. You take out an Indian tour from the likes of Australia, England, New Zealand and South Africa and even these countries will collapse and will struggle to financially support and sustain their cricketing success. During Covid, the likes of Australia, South Africa, England were desperate for India to tour to bail them out from bankruptcy.

Pakistan sadly feels the pinch worse because of India's boycott isolation of Pakistan and the simultaneous drop in our cricketing quality and output at the same time.

We never needed India. We were a cricketing powerhouse ourselves. We are in this position because we were very casual about our cricket. Our administrators were the worst. Arrogant old men who did nothing to improve our cricket, maintain its sanctity and take it to the next level. We must look inwards , I know you always do that and you’re not a Rondu like some of our other fans I don’t wanna name and shame them but they know who they are, chomus who cry over the success of our neighbours and criticize them for everything wrong in cricket supposedly. These people bring a bad name to our country and it’s unacceptable to me. I want the word respect to be associated with Pakistan cricket once again, the kind of legitimacy and seriousness Imran brought to our cricket.

 

[U$ofA]

We never needed India. We were a cricketing powerhouse ourselves. We are in this position because we were very casual about our cricket. Our administrators were the worst. Arrogant old men who did nothing to improve our cricket, maintain its sanctity and take it to the next level. We must look inwards , I know you always do that and you’re not a Rondu like some of our other fans I don’t wanna name and shame them but they know who they are, chomus who cry over the success of our neighbours and criticize them for everything wrong in cricket supposedly. These people bring a bad name to our country and it’s unacceptable to me. I want the word respect to be associated with Pakistan cricket once again, the kind of legitimacy and seriousness Imran brought to our cricket.

Spot on. Pak. cricket has so much potential. But all is being wasted by mismangement, corruption, greed, short sitedness, et. al.

Not sure how, when, where, who will turn the course and right the ship? It is a tall order. But can be done. Will it is the big question.

 

[Bhaijaan]

Spot on. Pak. cricket has so much potential. But all is being wasted by mismangement, corruption, greed, short sitedness, et. al.

Not sure how, when, where, who will turn the course and right the ship? It is a tall order. But can be done. Will it is the big question.

We need honest men in Pakistan. Those whose heart beats for Pakistan.

 

[Sachin fan]

I am not saying they sold at a loss. They cashed out as much as they could. When someone sells you their business like restaurant, gas stations, whatever, it could be for any reason. However, usually the owner is projecting they won't see significant gains like in the past.

You have been corrected on this multiple times.

We don't need to know about "usually" because we know the details of the companies who sold. Diageo has sold off multiple assets even bigger that RCB in the last couple of years alone.

But you can continue spreading misinformation if you want.

 

[Theanonymousone]

I am not saying they sold at a loss. They cashed out as much as they could. When someone sells you their business like restaurant, gas stations, whatever, it could be for any reason. However, usually the owner is projecting they won't see significant gains like in the past.

What stupid logic is this??

Exit strategies in businesses are based on their expertises and capabilities to run businesses in the long term and most importantly their vision.

And you do understand that RCB is brought by Private Equity (PE) firms right??
PE as an asset class generally has the highest return expectations.

If they don't expect significant returns, they wont even venture into it.

In 10-15 years, they must be looking to make RCB 3-4X to make atleast 30-40% ROI / year. If not, they would be least bothers to invest here for a paltry 10-15% ROI.