IPL franchises aim for controlling stakes in The Hundred teams - Cricket Winner

Is it wise or profitable to buy the minority (49%) stake offered by the ECB to own one of the eight franchises in The Hundred? That’s the question being asked by owners of almost all of the 10 IPL teams. While many are keen to invest in The Hundred, they are hesitant about being “passive” investors.

An integral part of the ECB’s privatization of The Hundred, which launched its fourth season on Tuesday, involves running the eight teams as a joint venture. The ECB has finalized a model where 51% of the stakes will remain with the eight Hundred ‘hosts’—seven counties and, in the case of London Spirit, Marylebone Cricket Club (MCC). The remaining 49% will be sold to private investors, coordinated by the ECB and the hosts. The hosts also have the option to divest some or all of their stakes before the formal bidding process begins in mid-September.

However, several IPL franchise owners have expressed reservations, particularly concerning the controlling stake. Control, along with trust, are critical factors that determine the success and longevity of any joint venture, including The Hundred.

“This is going to be new for anyone coming in because in all other franchise investments, we are 100% owners,” said the head of one IPL-winning franchise. “The dynamics are very different here. This will be a joint venture. Issues like valuation, ownership, and operational matters will immediately come to the forefront.”

The official, who declined to be named, noted that having another partner, whether they have a minority or majority stake, presents a “stumbling block” and “a huge difference” compared to how their franchises operate elsewhere. “If it is 49%, who’s in charge? Would you want to come in as a pure investor? Probably not. I don’t know the answer to that yet.”

“But we have been told that control and other aspects could be negotiated for the incoming investor. I don’t think there will be a great deal of appetite and interest to simply say, ‘OK, here’s a cheque. I would like to be a passive investor. Let it run as it is and we’ll contribute to the extent we can.’ No.”

Addressing investor concerns and future opportunities

Vikram Banerjee, head of business operations at the ECB, addressed investors’ concerns during his trip to India for IPL 2024, where he met with various franchise owners and management teams.

“For many investors, the issue revolves around brand and control,” Banerjee said. “A lot of them are focused on the cricket aspect and want to control the cricket side of things, while others are interested in majority stakes from an equity perspective. We understand their positions and have incorporated their feedback into our process.”Across our eight teams, there will be different options available when we go to market in September. We will provide clarity then, offering a range of opportunities to suit different types of investors.

As conversations progress through October, November, and December, more details will emerge, and we’ll reach a good place by the end of the process.”Among the eight franchises, the MCC has announced it will consider selling part or all of its 51% stake, subject to approval from its membership, which will vote on the matter by mid-September. Surrey, which owns the other London-based franchise—Oval Invincibles—has stated it has no plans to divest any of its 51% stake.Richard Gould, the ECB’s chief executive, didn’t rule out the possibility of investors holding a 100% stake, contingent on fulfilling various criteria. “There is certainly the opportunity for people to have, potentially, 100% ownership.

It depends on their capabilities in terms of finance and operational delivery. Those opportunities do exist.”The ECB has made it clear that the highest bid will not necessarily win. Banerjee emphasized that while money is important, the board also seeks partners who are committed to supporting the growth of the game at all levels.

Long-Term strategy and incremental investment

“Speaking for ourselves, we think about the long haul. So with something like The Hundred, you approach it with a long-term perspective and recognize it’s a joint venture. For it to work, the people and the chemistry are critical factors. Those are the inherent risks of joint ventures.”However, not everyone is pursuing a majority stake.

A CEO of a third IPL team told ESPNcricinfo that, since they are just exploring The Hundred and don’t fully understand the business model, they prefer to start with a smaller stake and build on it gradually.”49% is good enough to begin with,” the CEO said. “The key question is how much that 49% constitutes of the overall value. If that number is too high and I’m unsure about the returns, I’d rather start with a small share, with the option to increase my stake gradually over the years, or every five years.”