By Sanjay Jha

It may be hugely difficult  but we must take a momentary pause from the interminable madness of the repugnant IPL-Lalit Modi mess and its vicious ugly  confrontation with Congressman Shashi Tharoor to briefly reflect on an event simultaneously playing out, which we may be cursorily overlooking; just why is the franchise owners of Kings XI Punjab selling out now? It seems prodigiously peculiar. Let us see why.

1)      IPL Commissioner and his so-called “ Governing Council” sold new franchises for up to USD 333 million ( Kochi) and USD 370 million ( Sahara ) just a few weeks ago on the sanguine if not sacred belief of their “ recession –proof”“ theory  that all IPL franchises will be hugely profitable in a short period . No sane rational businessman usually invests large cash upfront unless they see massive revenue/profits down the line, right?  Buying Lalit Modi’s logic , if Kochi and Sahara could be profitable in a few years, imagine the humongous success chances of Kings XI Punjab ( and others) on a significantly lower cost base of just USD 76 million, approximately only  one fifth of the cost of Sahara, for instance. They ( IPL Round 1 owners) also have a first mover advantage.  Since finally it is profit numbers and operating margins that determine valuations, Kings XI Punjab would get a massive financial windfall  if they sold later, borrowing the Modi-IPL argument.  So why are they selling now in such tearing hurry especially as everyone is celebrating the “IPL 3 success” ? ? Please remember that commercial value  has nothing to do with cricketing performance in IPL; SRK’s KKR remains a huge draw irrespective of a mediocre to average show. So Kings XI Punjab’s last spot in IPL 3 may just be a convenient subterfuge.

2)      Curiously, three of the four promoters of Kings XI Punjab have a strong corporate base, own large cash surpluses and are also asset rich. Mohit Burman ( Dabur),  Ness Wadia ( Wadia Group- Bombay Dyeing ) and  Karan Paul ( Apeejay-Surendra) have such deep pockets they could sweep the floor through them.  And from the look of it even Ms Preity Zinta, Bollywood actress  is likely to get a whopping consideration in late director Kamal Amrohi’s real estate legacy. So prima facie none of them needs cash or monies at all.  So why are they dramatically disappearing now? Together? All of them in one pack? Why is not even one of them remotely bullish about Modi’s great IPL business model?

3)      What makes things even more strikingly  perplexing  is  therefore the extraordinarily unusual price that seemingly the new purchaser Videocon Group is willing to pay , rumored to be in the range of USD  275 million which is almost 4 times the original acquisition price? Why ? .It is virtually  impossible that Kings XI Punjab even broke-even leave aside making a nominal profit . But let us be generous in our charitable intent and assume that they did that in just two years, but yet who would pay Rs  780-Rs 800 crore extra for the same property within  just 2 years ? Why ? What motivates a big group like Videocon to take such a mammoth risk?

There is much more to it than meets the eye;

Is  Kings XI Punjab aware of some inside information that others don’t?

Is this a manipulated platform to sell stake before the bubble bursts , which is known to key IPL functionaries who have created the “ valuation” hype over Kochi and Sahara to create that artificial benchmark pricing?

Is the IPL franchise investment like the junk bonds of Wall Street that has found willing suckers and therefore the early birds are leaving surreptitiously  having made their targeted fast buck while others may be left holding dud stocks?

Is the IPL cartel doing the famous “ insider-trading” with kind blessings from the powers-that-be?

And pray, who could be silently guiding this entire transaction?

Who will be the biggest beneficiaries from this summer sale?

Too many unanswered questions.

All we know is that looming large over the Kings XI Punjab ( latest rumors even indicate a betting syndicate and match-fixing ) is the omnipresent shadow of the IPL chief Lalit Modi , whose son-in-law Gaurav Burman is one of the key promoters, who also owns valuable digital and media rights. Whew—IPL is the ultimate in family business! But the sanctimonious Modi is terribly upset about Shashi Tharoor’s impropriety ? LOL!

Enjoy your IPL match this Sunday !

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