Oct 23 (Business Insider India) – Manchester United fans in India have one more thing to be excited about after getting back, Cristiano Ronaldo, this year – the club’s owners are getting excited about the world’s biggest cricket league, the Indian Premier League (IPL).
According to a report by The Times of India, Manchester United owners, Avram Glazer and Joel Glazer, have picked up the invitation-to-tender (ITT) document for bidding for a new IPL franchise. The Board of Control for Cricket in India (BCCI) floated tenders to invite bids for two new IPL teams.
Another report also suggests that BCCI extended the deadline for picking up the tender documents for the Glazer family, which could imply that the ManU (Manchester United) owners are serious about getting one of the two new IPL teams.
But why would the owners of a highly popular football club even want to bid for an IPL team in the first place? There could be multiple reasons.
For starters, even though Manchester United is financially one of the biggest clubs in the English Premier League (EPL), with a revenue of ₹5,107 crore in 2021, it has reported losses in three out of the past four years.
|2018||-£37.63 million (approx. -₹389 crore)|
|2019||£18.88 million (approx. ₹195 crore)|
|2020||-£23.23 million (approx. -₹240 crore)|
|2021||-£92.22 million (approx. -₹952 crore)|
Source: Company reports
That is a cumulative loss of nearly £134 million (approx. ₹1,400 crore) in the last four years.
In comparison, Chennai Super Kings (CSK) and Mumbai Indians (MI), two of the most profitable franchises in the IPL, have reported profits in three out of the past four years.
|2017-18||-₹0.5 crore||-₹2 crore|
|2018-19||₹111 crore||₹91 crore|
|2019-20||₹50 crore||₹57 crore|
|2020-21||₹40 crore||₹29 crore|
Source: Company reports
In the unlisted market, CSK is said to have a valuation of anywhere between ₹3,300 to ₹4,200 crore (approx. $0.4-0.6 billion) – which means it is halfway through the unicorn status.
Unicorn is a term used to refer to firms with a valuation of $1 billion or more.
ManU, on the other hand, is said to be valued at $4.2 billion in 2021. With new IPL franchises expected to cost between ₹2,000-3,500 crore, this would allow the Glazer brothers to scoop up what could be a value purchase.
Challenge for Glazers – money making in the EPL is different from the IPL
If ManU owners indeed buy an IPL franchise, they will have to change the way they think about money making.
For instance, while merchandise revenue accounts for nearly 19% of the club’s total revenue, it doesn’t even register as a separate item in CSK’s financial reports.
On the flip side, employee benefit expenses – the money that franchises pay to their players and staff, is slightly on the lower side for IPL franchises, when compared to ManU.
While employee benefit expenses accounted for 60% of ManU’s operating expenses, it stood at 54% for CSK.
With the kind of craze that cricket and IPL have in India, and the profitability of CSK and MI, this could prove to be a no-brainer even for a family that is invested in football.
According to BCCI, IPL’s television viewership stood at 380 million after the first 35 matches, with 21 more league matches left and the knockout matches and finals yet to be accounted for.