CVC Capital is a betting company, but in Europe, not in Asia. Even as CVC’s European fund is linked to betting companies, the Asian fund is clean and thus can be safely used for cricket promotion in India.
And when this comes from none other than a former Supreme Court judge, Justice K.S Radhakrishnan - who led a three-member independent external panel - the Indian Cricket Board (BCCI) is ready to happily accept CVC Capital as the new owners (during IPL) of Ahmedabad's Narendra Modi stadium for the next 10 years. Going by an insider in the BCCI, a “Letter of Intent'' is likely to be issued in this regard any time soon.
25 October, 2021 Press conference by the BCCI on the announcement of the successful bidders for the two new IPL franchises | Video courtesy: www.bcci.tv
To put it more simply, even though betting and gambling are still banned in India, if you invest in a company called the ‘Board of Control for Cricket in India’, the law may be interpreted in a different way to allow you to do so. Not to forget that CVC was the second-highest bidder when the two new IPL teams were auctioned in October. CVC had won the rights to own the Ahmedabad franchise for Rs 5,625 crores, while Sanjiv Goenka’s RPSG Group bagged the Lucknow franchise for Rs 7,090 crores.
Brijesh Patel, Chairman, IPL
We had nine bidders. All of them were qualified. The highest bidder was the Goenka Group which quoted 7090 crores and they were the highest for both Ahmedabad and Lucknow and they preferred to take Lucknow as their franchise. So, CVC was second highest and they got Ahmedabad for 5625 crores.
25 October, 2021
Soon after the two new teams’ auction in October, it was none other than the former IPL Commissioner and Chairman Lalit Modi who questioned the entry of a private equity firm into the IPL due to its investments in companies linked to betting activities. And if you visit the CVC’s website, there are mentions of investments in companies like “Tipico” and “Sisal” that are involved in sports betting. However, the company has also invested in Formula One in the past and now has stakes in Premiership Rugby.
Lalit Modi, Former Commissioner, IPL
I guess betting companies can buy an IPL team. Must be a new rule. Apparently one qualified bidder also owns a big betting company. What next? Does the BCCI not do their homework? What can anti corruption do in such a case?
26 October, 2021 Tweet
BCCI’s prior groundwork
Going by how BCCI had already opened the gates for betting companies like “My11Circle” and “Mobile Premier League (MPL)” and “Dream11” during the COVID-19 pandemic times, the entry of CVC is hardly a surprise to many in the circles.
And the entire process of allowing such companies into the game of cricket was carried out in such a way that those who questioned such entrants were seen to be siding with the brand. And the liberal BCCI allowed its president, Sourav Ganguly, skipper Virat Kohli, and former captain Mahendra Singh Dhoni to endorse these brands that are in the business of online betting (or gaming, as it’s popularly known).
While the companies in the online betting business were using disclaimers like “this game involves an element of financial risk and may be addictive”, the world’s richest cricket board had no such slogans written on its gates.
The result was there for everyone to see. On October 25, 2021, an IPL team auction that was only expected to fetch somewhere around Rs 3,000 crore per team suddenly got almost three times the amount. That comes at a time when all eight earlier teams in the IPL have never gone public with their revenue sheets to show any substantial gains in the last 14 seasons.
Rajeev Shukla, Vice President, BCCI
Well, I am delighted. Actually I am flabbergasted. It is such a high valuation for an IPL team. When we started in 2008, it was very difficult to even bring in a franchisee and today it has grown to this extent. So, I am delighted and very happy. Congratulations to all the cricket fans and IPL fans.
25 October, 2021
Questions that need answers
There is little doubt about what the CVC Capital has been up to. A simple online search can show how the company has heavily invested in sports betting and gambling worldwide.
In 1999, CVC acquired William Hill, one of the largest British bookmakers. Four years later, in 2003, it acquired IG Group, the UK’s leading provider of speculative investments such as spread bets. A decade later, in 2013, CVC tried to acquire Betfair, the world's largest internet betting exchange company, but the deal didn’t go through for some reason.
But it was in 2015 that CVC bought a 10 per cent stake in the Spanish football league, La Liga, in a $117.3 million deal. The company was investing big in La Liga with an eye on 11 percent of lucrative media revenues for the next 50 years. This also included a clause that CVC would provide $2.9 billion to league clubs as an interest-free loan. But top clubs like Real Madrid, Barcelona, and Atletico Madrid opposed CVC’s entry into the La Liga, and eventually the decision was reversed.
The company didn’t stop there.
Sourav Ganguly, President BCCI
We were not surprised actually. This is a big brand and we are extremely happy that Indian cricket is going forward. That is what is important for us. Congratulations to Sanjiv and CVC Group for being the number one and number two. We look at Indian cricket. The more Indian cricket prospers, the better it is. IPL as a brand has grown, which is a great sign. We all do honorary jobs. All the money goes back into Indian cricket. We want Indian cricket to go forward and it has gone a long way forward in the last few years. This is the fourteenth season of the IPL and the brand has grown. It has been a fantastic spectacle year after year.
25 October, 2021
It was earlier in 2021 that 38 of the total 42 clubs in the Spanish league voted in favour of a major investment from CVC, which will inject 2.7 billion euros into La Liga. However, the Barcelona and Real Madrid clubs once again went public against such a deal. Subsequently, the Royal Spanish Football Federation (the governing body of football in Spain) described the deal as ‘shameful’.
According to the Spanish website laligalowdown.com, CVC purchased Moto GP brand Dorna in 1998 for 71.5 million euros and sold it in 2006 for a 700 percent profit of 525 million euros. They also invested in Formula One, selling their stake to Liberty Media in 2017. In 2020, they acquired a 27 percent holding in Premiership Rugby, the first division of English clubs, and then in 2021, they added 14 percent of the rights for the Six Nations and 28 percent of the Pro14 tournament, taking their investment total in the sport to as much as 800 million euros.
In 2020, the company also tied up with the FIVB (International Volleyball Federation) to launch ‘Volleyball World’ to tap into commercial activities around the sport related to “event hosting, fan experience, media, data/digital opportunities, and sponsorship”.
There are also talks that CVC is interested in acquiring a 15 percent stake in the National Basketball Association (NBA) franchise, the San Antonio Spurs.
Jay Shah, Honorary Secretary, BCCI
It is definitely a value addition. When a foreign brand comes into the fray, it will be a value addition to the BCCI.
25 October, 2021
Not for love of the game
Coming back to IPL bidding, given CVC’s history and the fact that sports betting is still prohibited in India, the big question is why was there no one inside the BCCI raising a red flag about it while evaluating the bid papers?
It has been learnt that at a walk-in bidding event in Dubai in late October, BCCI President Sourav Ganguly, Secretary Jay Shah, Treasurer Arun Singh Dhumal, and IPL Chairman Brijesh Patel were the ones who evaluated all nine bids before finally approving the two new teams.
It is learnt that the BCCI’s understanding was based on its legal team’s due diligence on CVC Capital Partners’ investments. Both Tipico and Sisal companies (betting gaming and payments, consumer and retail) listed as ‘portfolio companies’ on the CVC Capital Partners’ website are found to be linked to their European fund. However, there are many questions that people involved in the cricket business have been asking the two new owners.
One, why would Goenka’s RPSG group pay Rs 7,090 crore for a team based in Lucknow? Especially in a place where there are hardly any big corporate houses to offer sizable amounts for corporate boxes inside the stadium.
Dr Sanjiv Goenka, Chairman, RPSG Group
We are also pleased with Lucknow as the city of choice. I specifically wanted Lucknow not only because we have business interests there but also because we see it as an opportunity to harness the massive interest in cricket there.
28 October 2021 statement by Dr Sanjiv Goenka on winning the bid for Lucknow IPL team
The simple answer then is that having previous experience of running an IPL team (Rising Pune Supergiant) for two seasons (2016 & 2017), the RPSG group has all this while understanding the nitty-gritty of cricket’s inside business that was heatedly debated inside the Supreme Court during the 2013 spot-fixing case.
In 2014, while hearing the IPL spot-fixing case, the apex court came down heavily on Chennai Super Kings owner N Srinivasan’s son-in-law, Gurunath Meiyappan, for placing bets on his own team’s performances. The court compared it with the practice of ‘insider trading’ in the stock market.
It must be mentioned here that the reputation of the cash-rich IPL league was severely tarnished after the 2013 match-fixing and betting scandal, as an aftermath of which Chennai Super Kings (CSK) and Rajasthan Royals (RR) were suspended for two seasons as some of their top officials were charged by the Supreme Court for their involving in the corruption.
Two, with CVC Capital Partners entering the IPL, what is the guarantee that these owners --- who run betting and gambling businesses worldwide --- would not use their resources and insider information to make money?
This is also in the public domain that, until 2018, most IPL franchise holders were cribbing to the BCCI about making losses. It was only after a decade since the IPL was launched in 2008 that most teams made profits for the first time. According to estimates, the BCCI will earn Rs 1,200 crore per year over the next 10 years (including Rs 709 crore and Rs 560 crore paid by the two new teams) in 2021-22.
2020 VIVO IPL player auction | Video courtesy: www.iplt20.com
And going by the past records, which show that teams could earn around Rs 200 crore per year from central revenue and about Rs 100 crore more from gate collections, sponsorship and merchandising, the two new team owners could be in the red soon, with Goenka’s RPSG group losing in the range of Rs 350 crore and CVC Capital Partners losing approximately Rs 260 crore a year.
Going by the same logic, there is hardly a chance that both these teams will be able to break even in the next 10 seasons of the IPL.
Past imperfect, future tense
It has been reliably learnt that it was brought to BCCI’s notice that “CVC Capital Partners were heavily fined by the Dutch competition authority for breaking the competition rules for price-fixing”. An insider within the BCCI has told The Probe that “CVC Capital Partners (a group company of Irelia Company PTE LTD) had even failed to comply with the terms and conditions laid down by the BCCI under the ITT document”.
ITT document refers to the invitation to tender for the right to own or operate a new team. However, no one has to date answered the question “how was this company chosen as a successful bidder instead of being blacklisted during the evaluation process?”
People familiar with developments at CVC Capital are saying that “this was not an overnight decision”.
The company has been discussing IPL at the highest level for over five years now. The leadership held the view that “IPL is genuinely an exciting proposition and it offers excellent and enduring engagement”.
The CVC top brass feels that “investing in India in a game like cricket is an opportunity too good to resist and that the investment would roll out returns in due time”.
What’s at stake?
There has been no doubt that, with two new teams in the kitty, the 2022 season of the world’s most lucrative cricket league will be a 10-team affair.
A total of 74 matches will be played in the upcoming edition of the T20 league, wherein each team will play seven home and seven away matches. But before that, the mega auction has been planned for the middle of February. Though the host city has not been announced because of COVID-19 related issues, Bengaluru could well be the chosen city for this two-day-long event if everything goes as per plans.
The BCCI had given the IPL teams the option of keeping no more than four players before the mega auction.
But before all that, all eyes will be on the report submitted by a three-member independent external panel led by former SC judge Justice Radhakrishnan. If top sources in the BCCI are to be believed, then the commission has not given a straight verdict on CVC Capital. “The commission also understands that their report may be questioned in public and that’s why they have put the ball in the BCCI’s court to accept it or reject it,” a senior BCCI official told The Probe.
The BCCI could find itself in a similar situation to that of the 2013 IPL spot-fixing episode when a two-member panel, comprised of retired judges T Jayaram Chouta and R Balasubramanian, gave a clean chit to the then BCCI president N Srinivasan for any wrongdoing related to his son-in-law’s involvement in running the Chennai Super Kings team.
The report mentioned that no concrete evidence was found against CSK, Rajasthan Royals, Gurunath Meiyappan and Royals co-owner Raj Kundra as far as their involvement in fixing was concerned, a report which was immediately rejected by following inquiry panels formed by the apex court.
With the BCCI case still being heard in the Supreme Court, no one inside the Board would be willing to take any decision in haste.
On the other hand, the moves of CVC Capital, a private equity firm in the business of buying and selling, will also be keenly watched by not just its investors but also cricket lovers around the world!
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