MUMBAI: Global private equity investors such as KKR and Blackstone are setting up a new investment hotspot in India: Cricket.
The world’s richest cricket league, the Indian Premier League, whose backers include Bollywood stars, Indian conglomerates and spirits maker Diageo, is now attracting major private equity firms with the promise of rapidly increasing revenues and profits and a huge global audience.
The business value of the league, commonly referred to as the IPL, soared to a record $18.5 billion last year, according to U.S.-based investment bank Houlihan Lokey.
This is far less than the $227 billion worth of America’s National Football League (NFL) or the $165 billion worth of the National Basketball Association (NBA), but on a per-game basis, the IPL is now the second most valuable sports league in the world after the NFL.
KKR and Blackstone are eyeing a stake in last season’s winners Royal Challengers Bangalore (RCB), two bankers said. KKR is also considering the possibility of investing in the Rajasthan Royals team, and Switzerland-based private equity firm Partners Group is also considering investing in at least one team, people familiar with the matter said.
Bankers said it was a blockbuster IPL deal by European private equity firm CVC Capital, sparking a new wave of interest among investors. CVC sold a majority stake in Gujarat Titans, making a dollar gain of over 350% in just four years. The deal valued the team at $900 million.
“India’s structural economic growth should continue to support long-term value creation,” said Sidharth Patel, managing partner at CVC Capital.
“Combined with the scarcity of IPL franchises, it is clear why there is such strong investment interest from both industry bodies, family offices and private equity investors.”
Harsh Talikoti, a sports trading specialist at Houlihan Lokey in Mumbai, said he has received several inquiries for IPL shares from private equity clients in the US and Europe since the deal with CVC.
“The IPL model has proven that it can generate significant profits,” he said.
Blackstone, KKR, Partners Group and Royal Challengers Bengaluru declined to comment, while Rajasthan Royals did not respond to Reuters’ requests for comment. Officials declined to be named as the talks were private.
Centralized pool and broadcast rights bounties
In a country where top cricketers are often revered, the IPL reshaped the game. Last year, IPL had a combined digital and television audience of 1.19 billion viewers, far surpassing the NFL.
Every year, after a global player auction, IPL teams compete in a 20-over format match. The next season begins on March 26th.
Key factors driving investor interest in the league include the doubling of the value of broadcast rights to more than $6 billion in the most recent auction in 2022, increased franchise revenue and Indian cricket board BCCI’s pooled revenue-sharing model to increase team revenue.
The board pools the media rights and league sponsorship funds, keeping half and dividing the rest evenly among the teams. It’s a much more centralized and evenly shared structure than, say, the NBA.
CVC’s Patel said the model ensures each team has sufficient funds to acquire players, and regular player auctions allow any team to compete for the title during the season. This will help “maintain strong audience engagement and provide predictable economics for franchises throughout the media rights cycle.”
Mohit Burman, an Indian businessman who co-owns the Punjab Kings team with Bollywood star Preity Zinta, said sponsorship revenue had increased by 30% a year, but the biggest attraction for private equity firms was the revenue-sharing model.
“Even if the absolute size is different, the IPL could rival and in some cases exceed the US leagues in terms of investor returns,” Berman told Reuters.
He said each IPL franchise earns about $55 million annually from board funds alone. This is in addition to ticket sales and other sponsorship revenue.
“The asset class is clearly coming of age,” Berman said.
The BCCI and other IPL teams did not respond to Reuters’ queries.
investment risk
Reliance and Disney merged their India operations in 2024 and now jointly own the streaming and television rights to the $6.2 billion IPL until 2027. Jefferies analysts say the per-game value of these rights alone would make the IPL the second most valuable in the world after the NFL.
But there are also risks for investors.
Similar leagues are gaining momentum in South Africa, the UAE and Australia, with cricketers having to navigate an increasingly crowded franchise calendar alongside their international commitments.
The biggest concern is that the Disney-Reliance merger could reduce competition and reduce the amount of money available to teams in the 2027 broadcast auction.
Indian billionaire Sanjiv Goenka disagrees. He said in an interview last year that buying an IPL team for $781 million in 2021 was “trophy business” and that broadcast rights would be even more expensive.
A number of investors, including Goenka’s group and Mukesh Ambani’s Reliance, bet a total of 500 million pounds on the England and Wales Cricket Board’s Hundred Ball League last year.
Increased team income
The NFL will open its teams to private equity investors in 2024, and the NBA also allows such investments, but there are strict caps on ownership. IPL has no such restrictions, allowing greater access to private capital.
Team revenue, increased revenue, and a limited number of teams are big draws. The IPL has 10 teams while the NFL has 32 teams.
At least five IPL teams have more than doubled their revenue in absolute terms since 2022, and two of them have also doubled their profits, a Reuters analysis of regulatory disclosures showed. Three other franchises also posted double profits over the same period, but their revenue did not.
Kolkata Knight Riders, co-owned by Bollywood star Shah Rukh Khan, reported revenue of $76.8 million in 2023-24, an increase of 119% year-on-year. Net profit increased six times to $19.4 million.
Sumat Chopra, head of private equity at consultancy Kearney, which advises clients on the IPL, said there was further upside potential with marquee players increasing revenue for their teams. Top players like Virat Kohli of India and Pat Cummins of Australia will play in the IPL.
“Supported by the rising media economy, IPL franchise valuations are likely to rise steadily over time.” ($1 = 90.7500 Indian Rupees)
(Reporting by Vibhuti Sharma in Mumbai; Additional reporting by Amlan Chakraborty; Editing by Aditya Kalra and Sonali Paul)
