A private equity and investment advisory firm with market commitments in excess of US$100 billion across Europe and Asian equity, credit and growth funds, CVC Capital is one of the biggest global players in the sports industry.
In August this year, Spain’s top football league La Liga agreed, in principle, to sell 10% of its commercial business to CVC Capital for around US$3bn. Their arrival into the IPL puts the Indian T20 league in global spotlight and is a shot in the arm for the Indian cricket administration. In 2006, and in one of the riskiest sports investments ever, CVC had paid a boggling US$2bn to buy Formula One.
It was a time when a number of racing teams were entangled in pay disputes and at a time when F1 founder Bernie Ecclestone dominated the league. A year later, Formula One turned into one of CVC’s most profitable investments and is estimated to have made close to US$4.5bn on its initial US$1bn stake, marking a 450% return. “They’ve been phenomenal the way they’ve gone about with their sports businesses. They own the rugby league, they’re into MotoGP,” says BCCI treasurer Arun Dhumal. This is not the first time CVC has eyed an IPL franchise. Some years ago, the PE firm was in discussions, first with Rajasthan Royals and then with Delhi Daredevils (now Delhi Capitals), for a buyout – deals that did not work out.
The company, based out of Mumbai, has been eyeing investments in India’s fast-growing sports industry for a while now and those tracking developments say, “they were gearing up for something like this”.
The IPL is the pie in India’s sporting landscape that everyone wants a piece of. “However, the thing is – most investments have been either family owned or backed by individuals who have their own unique brand value. The third kind have been consortiums that have blown hot and cold.
An investment like this one (from CVC) is a first of its kind. Yes, Rajasthan Royals recently did a deal with US-based investors Redbird Capital. But nothing comes close to this,” say sources tracking this space.
In 2008, when the Indian Premier League was a fledgling venture and investing in it was something of a leap of faith, eight victorious bidders collectively pumped in around Rs 3,000 crore to bag eight franchises. Thirteen years on, with the IPL firmly enthroned as one of the premier sports properties in the world, one company, RP-Sanjiv Goenka Group, bid Rs 7,090 crore—more than double the collective figure raised in 2008—to walk away with the Lucknow franchise.
Private equity firm CVC Capital Partners was the other winner, bagging Ahmedabad for Rs 5,625 crore.
BCCI began the bid process at 12.30pm IST in Dubai (11am local time) and spent the first six hours technically evaluating all bids to see if they met the eligibility criteria. It’s only from 6.30pm IST onwards that the board began to look at the financial bids.
Adani Sportsline, considered a frontrunner for the Ahmedabad franchise, submitted a bid of Rs 5,100 crore for Ahmedabad as well as Lucknow. CVC bid Rs 5,625 crore for Ahmedabad and Rs 5,166 crore for Lucknow.
RPSG Group bid the same amount (Rs 7,090) for both Ahmedabad and Lucknow. BCCI gave RPSG the choice of picking a city first, by virtue of being the top bidder, and the group settled for Lucknow. The Ahmedabad franchise thus automatically went to CVC.
As one of the world’s largest private equity players, CVC comes with a deep knowledge of sports franchises and businesses. The PE player has been a very successful partner and business-builder for global sports platforms such as La Liga, Formula One, the rugby league and Moto-GP.
A world leader in private equity and credit with $117.8 billion of assets under management, CVC will not just put the IPL under a global spotlight but is also expected to add serious value to the T20 league.