Scheduled tournaments in India are being cancelled or postponed, the Indian Premier League (IPL) is still waiting for the go ahead and as a result cricketers, the Board of Cricket Control India (BCCI) and all the other stakeholders are staring at big losses, but the IPL’s marquee team Chennai Super Kings (CSK) has already felt the pinch.
At the start of the year 2020, the shares for CSK were being traded at Rs. 30 on the grey market. On the day it was announced that IPL 2020 was being suspended until 15th April 2020, their shares fell to Rs. 24 according to a report published in Economic Times.
InsideSport sources now suggest the shares are being traded at Rs. 21 level per share in the grey market. It is worth noting that in year 2018 the shares of the team led by Mahender Singh Dhoni were traded at Rs. 13-14 price band at a face value of 10 paisa.
Backed by an extremely loyal fan base, CSK has been able to monetize its commercial assets much better than most of the other IPL teams. CSK’S revenues in 2019 stood at 418 Crore with a profit of 110 Crore (In 2018 it had reported a loss of 52 crore for the same period). This led to the increase in the share price and valuations of CSK. But the IPL 2020 uncertainty is hitting the CSK franchise hard.
According to the 2019 IPL Brand Valuation report by Duffs and Phelps, IPL carried a valuation of Rs. 48,000 Crore (USD$ 6.8 Billion). Most of the teams including CSK improved their brand value. CSK was valued at 732 crores according to the report, an increase of 13.1% from 647 crore. Mumbai Indians was the only IPL team ahead than CSK in brand valuation at 809 crores, up 8.5% from 746 crores in 2018
The industry experts believe that if the IPL 2020 is cancelled, this valuation may take a minimum 10 to 15% hit.
“We feel the situation is precarious for brand IPL and the franchises. IPL or its franchises does not have any other source of revenues than what they make through the 60-day season. All of its revenues are dependent on cricket being played. If the season does not happen, the balance sheets will have nothing to show. This will lead to erosion in the brand value of IPL and its biggest stakeholders i.e. franchises” said one of the brand valuation experts wishing to remain anonymous.
Under the current circumstances it is unlikely IPL 2020 will start anytime soon. And the value erosion for brand IPL and the franchises is more or less certain.
John Stephenson
john@cricketinvestor.co.uk
