Private equity firm CVC Capital Partners, a major player in international sport, were announced as the owners of the new Ahmedabad-based Indian Premier League (IPL) franchise on Monday, with a winning bid of Rs 5,625 crore – an amount they’ll pay the BCCI over the next 10 years.

It might seem an eye-watering figure but sports economics experts believe this is ‘not just some random punt’ by CVC, who have a reputation of ruthlessly pursuing profit in their other sporting ventures, especially Formula One. CVC’s investment, they added, is evidence that they are ‘attracted by the potential of the Indian market’, an ‘affirmation of the IPL’s commercial trajectory’, and ‘a prelude to them seeking to establish a first-mover advantage in US cricket’.

At the same time, Monday’s announcements by the cricket board regarding the two new IPL franchises could also be a pointer towards the direction Indian, and by extension, world cricket will be taking in the coming decade. “Sooner rather than later, we could see an expanded IPL, which could last up to four-to-six months and thus impact 50-over cricket. There’s an inevitability about it,” an industry observer said.

Simon Chadwick, director of the Centre for Eurasian Sport Industry at Lyon-based Emlyon Business School, pointed out that CVC’s investment comes at a time when ‘other global sports investors – such as Silver Lake and Mubadala – are already investing into Indian sport and the Indian digital economy.’

Apart from the obvious and lucrative commercial reasons, CVC’s other motivation to invest in Indian cricket, Chadwick added, would be to gain a foothold in US cricket as well. “It is important as well to note that cricket is showing signs that it is gaining traction in the United States,” Chadwick said. “CVC’s investment into Indian cricket may serve as a prelude to them seeking to establish a first-mover advantage in US cricket.”

🚨 NEWS 🚨: BCCI announces the successful bidders for two new Indian Premier League Franchises

More Details 🔽https://t.co/FSU4LsAxzj

— BCCI (@BCCI) October 25, 2021

But primarily, he added, the move makes “clear sense to CVC” in terms of commercial potential. “India’s annual economic growth is heading towards 10 per cent, almost 50 per cent of its population can be labelled as being middle class, and there are more than two hundred billionaires in the country,” Chadwick said. “Economically, the numbers appear to add up, especially when the country’s digital economy is forecast to be worth $800 billion by 2030. This is not just some random punt on CVC’s part.”

Show me the money

By 2030, CVC “might look for an exit” from the IPL, sports lawyer Nandan Kamath added, unlike the owner of the new Lucknow franchise RPSG, who he added appear to be in for a long term. This implies high growth from the sale of IPL’s media rights and sponsorship in the coming cycles, a portion of which is shared with the franchises. It is speculated that IPL’s media rights auction for the next five-year cycle, from 2023 to 2027, could fetch the cricket board up to $5 billion.

“With the US sports market being mature, private equity portfolios are diversifying to sports with different audiences such as rugby and cricket,” Kamath said. “These are perhaps seen as having higher growth potential in 7-10-year periods when CVC might look for an exit.”

The 10-year cycle is also in sync with other CVC sporting ventures, most famously Formula One. CVC owned F1 between 2006 and 2017, paying roughly £1.4 billion for a majority stake. According to The Guardian, they made up to £3.5 billion in 10 years.

The report added that the then deputy team principal of Force India, Bob Fernley, accused CVC during that time of “raping the sport”. “All their actions have been taken to extract as much money from the sport as possible and put as little in as possible,” Fernley was quoted as saying.

The Financial Times reported there was similar wariness in Germany and Italy as well recently after the top football leagues of both countries turned down an investment from CVC. In August, the sports investors purchased a 10 per cent stake in the Spanish league for close to $3 billion. The move was opposed by four clubs, including Real Madrid and Barcelona, who opted out of it, as per The New York Times. CVC has also made a total investment of approximately $800 million in professional rugby.

Chadwick, however, believed CVC’s entry into the Indian sporting market could propel a “commercially mature” IPL into the “commercial stratosphere”.

“The IPL was a response to our time-impoverished, instant-hit consumption culture. If anything, its format and staging is even more relevant now than it was when first introduced. Its high-octane pace and celebrity associations are helping to render other cricket formats obsolete, especially the 50-over game,” Chadwick said. “The IPL is already commercially mature, but with digital developments now giving it new impetus, the arrival of CVC suggests that it is about to enter the commercial stratosphere.”