Ahmedabad is likely to have an Indian Premier League (IPL) team of its own from the 2011 season, as industrialist Gautam Adani, CMD of the diversified Adani Group, has decided to bid for ‘the Manchester of the East’ franchise.
“We have decided to bid for the Ahmedabad team of IPL,” a source from the group said.
Pune, Nagpur, Kanpur, Dharamsala, Vizag, Rajkot, Cuttack, Baroda, Cochin, Indore and Gwalior are the other cities offered as home location for the two franchises that IPL wants to add in 2011.
ICICI Ventures, Jaypee Associates, Hero Honda and Sahara have each picked up an ITT (invitation to tender) for Rs 5 lakh. ICICI Venture could not be reached for comment, but a source in the board of the company confirmed they had not bid for a franchise. While a Jaypee source said they had decided not to bid, Hero Honda said they had not submitted the bid. Sahara could not be reached.
According to a TV news channel, UAE’s Sheikh Mansour, Videocon, Prince Al-Waleed of UAE are among the bidders for the two new franchises. However, IPL CEO Sundar Raman did not confirm the names of the bidders.
Investors are cautious about the auction, as the minimum bid price is fixed at a staggering $225 million (Rs 1,042 crore), compared to a $50-million (over Rs 230 crore) base price during the first auction held in 2008. Financing terms for bidders are also stiff, as bidders have to provide two bank guarantees, including a performance bank guarantee of $100 million (Rs 463.5 crore) before the bid opening date on March 7. The money will be returned only a month after the auction, if the prospective bidder is not successful. In contrast, during the first auction, bidders had to give only Rs 20 crore.
And, in the case of a winning bidder, another annual bank guarantee for the entire amount of the winning bid (the franchise rights are for 10 years) needs to be paid within seven days. In the earlier auction, the winners had to give a bank guarantee that was around 10 per cent.
“The cost of acquiring a team is working out be too expensive, as the investment of minimum Rs 1,550 crore for buying a team does not look attractive,” said an executive of a corporate house that had picked up an ITT document, but did not place its bid.