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“The BCCI working committee on Saturday discussed the situation regarding the default by Sahara Adventure Sports in not submitting the bank guarantee of the Pune franchise of IPL for the 2014 season. According to the terms of its franchise agreement, this bank guarantee was due for delivery in March 2013, more than six months ago,” BCCI said in a statement.
In six years, Pune Warriors is the third team to be terminated from IPL, after Deccan Chargers (2012) and Kochi Tuskers (2011). In 2012, Deccan Chargers was bought by the Chennai-based Sun Group, and the new team is now called Sunrisers Hyderabad.
In August, Sahara had moved the Bombay High Court, seeking an injunction on BCCI’s right to terminate the franchise agreement in case of a default. In its order in September, the court said only if Sahara gave the bank guarantee, as required by the franchise agreement, could BCCI continue with the agreement.
BCCI officials had written to Sahara on five separate occasions (in April, May, June, August and October), requesting the bank guarantee be put in place. The final letter was sent on October 8. “In response, Sahara again refused to put in place the guarantee,” BCCI said.
To proceed with the preparations for the 2014 season, BCCI had to know whether the Pune franchise would comply with the terms of its agreement, BCCI said, adding considering Sahara’s refusal to provide the bank guarantee, the working committee unanimously reached this decision.
In a statement, Sahara said, “Despite assurances given at a meeting between Subrata Roy Sahara (Sahara chief) and N Srinivasan, president of BCCI, in February 2012, subsequent to which a joint media statement was issued, through both parties agreed to start the arbitration proceedings to address Sahara’s claim for a reduction in franchise fee for 74 matches, in contravention of the understanding reached, no steps were taken by BCCI to address our long-standing demand of the reduction of the franchise fee.”
It added, “In fact, far from starting the arbitration, BCCI has thwarted the process. This made it evidently clear BCCI didn’t want to honour their promises. Therefore, due to the non-fulfillment of reciprocal obligations of BCCI and the failure to keep its promises, as given in February 2012, Sahara was left with no option but to hold back the bank guarantee till promises and obligations were fulfilled. But instead of fulfilling its promises and obligations, BCCI went ahead and terminated the contract, though itself, it is in breach.”
The Sahara Group added the issue raised by BCCI in creating the grounds for termination—non-submission of the bank guarantee—seemed a desperate measure to cover for its non-compliance of promises and obligations. The company has paid over Rs 1,000 crore as sponsorship fee for the Indian team to BCCI, apart from the franchise fee for Pune Warriors, since 2001, without any default, it said.
In May this year, Sahara had issued a statement saying it was withdrawing from the IPL, as it was “disgusted by the lackadaisical” attitude towards arbitration to reduce the franchise fee and encash the bank guarantee. Sahara bought the team franchise for Rs 1,700 crore (to be paid through 10 years).
Sahara claims it had bid for a higher amount in 2010, on the basis of revenue calculation for 94 matches. However, the franchisee played only 64 matches.
“We and the Kochi team immediately protested and requested BCCI to reduce the bid price proportionately for a viable IPL proposition. Nothing was heard. We waited, confident such a sports body had sportsmanship spirit. We continuously requested BCCI for arbitration from June 2011. But BCCI is only concerned about money and not about the genuine interests of the franchisee. Thus, (when) we could not penetrate BCCI’s deaf ears, we announced our withdrawal in February 2012,” Sahara said.
However, the team promoter didn’t formally withdraw from IPL.
The termination of the Pune Warriors franchise means IPL would lose Rs 174 crore, which Sahara was to pay for the team, every year till 2020. Even if the team is bought in the re-bidding process, prices for acquisition have gone down considerably.
In 2012, when the Sun Group bought Deccan Chargers, the deal was struck at about Rs 85 crore a match, for five years. This is far less than what Sahara was paying for its Pune Warriors franchise.
