e sale of two new franchises and 50-plus players – including those from Chennai Super Kings and Rajasthan Royals will take place in New Delhi in a unique auction process during the IPL governing council meeting. TOI sports breaks down the first of its kind bidding process.
The two franchises will be sold only for a period of two years, following which they will have to exit IPL, when Super Kings and Rajasthan Royals are eligible to return to the tournament’s fold.
Every cricket venue across the country, barring the existing six franchise venues, will be available for the bidders to pick from. Bidders can choose from Chennai, Dharamsala, Rajkot, Nagpur, Cuttack, Kanpur, Indore, Pune, Ranchi and Visakhapatnam.
There will be a base price set for potential bidders to buy the interim franchises, where the idea of ‘reverse bidding’ will come into effect.
Interested parties will have to pay INR 1 crore to be part of the auction and the two winning bidders are to to furnish a bank guarantee of INR 66 crore.
In a normal auction, interested parties bid the highest amount to acquire a team, but with the two new franchises set to exist for a period of only two years, buying of teams will be done through reverse bidding.
How does reverse bidding work?
The base price for the reverse bid is set at INR 40 crore and bidders will be allowed to quote an amount lesser than INR 40 crore. The lowest bidder will be given the franchise. BCCI will pay the winning party the bid amount that will partly cover for the franchise’s operational costs heading into the tournament.
The bidder can also quote a figure running into negative, and in that case, the party will have to pay that (negative) amount to BCCI. The board expects potential bidders to like this idea if they have a specific two-year marketing or branding initiative in mind for which they won’t mind spending from their pockets.
The interim franchises will not receive a share of the central revenue pool unlike the other six existing teams but will be eligible for a substantial amount in terms of prize money (for players) and additional performance-based incentives from the central revenue pool if they make it to the top-four in the tournament.
Interim franchises will be allowed to participate in a draft to first retain their share of players (number not specified yet) after which all eight franchises will participate in the auction process.
The players from CSK and RR will be divided in to two groups of capped and uncapped players and the top players from each team and will be sold through a draft system
Each team will have an expected salary cap of approximately Rs 66 crore.
There is a lot of interest in buying the two teams and it is learned Chennai-based tycoon AC Muthiah, head of the The Chettinad Group which is a rival to N Srinivasan’s India Cements. Sources say representatives of the group, whose flagship firms include Chettinad Cement Corporation Pvt Ltd, will arrive here on Tuesday to submit a walk-in bid to buy a Chennai-based franchise.