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British global alcoholic beverages giant Diageo is considering selling its interest in Royal Challengers Bengaluru (RCB), the Indian Premier League (IPL) franchise, according to reports. As the FTSE 100 firm tries to simplify its portfolio in light of falling alcohol sales and shareholder pressure to raise margins, the possible transaction valuing the franchise at up to $2 billion comes.
As part of a larger foray into India's fast growing sports and entertainment industry, Diageo—which owns RCB via its Indian Subsidiary United Spirits Ltd (USL)— acquired the franchise in 2014. Following a 3.4% year-on-year drop in net sales in its Asia-Pacific region for the first half of 2024, the corporation seems to be switching towards its main spirit products, including Johnnie Walker and Guinness. The sale fits with CEO Debra Crews' plan to sell off non-core assets, which included last departures from wind-down companies in Ethiopia and Nigeria.
Though it has never won an IPL title, RCB has become among the most valued franchises in the league because of its large fan base and renowned past, which includes cricket stars like Virat Kohli. Duff & Phelps saw the teams' brand value rise to $69.8 million in 2023; however, the quoted $2 billion valuation reflects the IPL's explosive corporate appeal. While title sponsorship agreements with Tata Group and others have increased team earnings, leagues media rights for 20232027 raked a record $6.2 billion.
Experts recommend RCBs social media dominance25 million followers across platformsand devoted RCBians fanbase make it an appealing investment. Said Santosh N, a sports economist at ESPNcricinfo, premium values are justified given the IPLs growth trajectory and RCBs digital involvement.
Indian companies, private equity companies, and worldwide sports investors are expected to show RCB interest. Should they make offers, the Adani Group, which owns the Gujarat Titans, and Mukesh Ambani's Reliance Industries (Mumbai Indians) could run into antitrust problems. Otherwise, tech behemoths or Bollywood stars might enter the fray, replicating Shah Rukh Khan's ownership of Kolkata Knight Riders.
Still, the $2 billion pricing raises doubt. While buyers will carefully consider RCBs on-field performance and profitability, this statistic probably includes future revenue projections and intangible brand equity, said K. Shriniwas Rao of The Times of India. Risks include RCBs' operational costs, including player earnings (Kohli makes $2.1 million per year), and erratic performance.
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Fans of RCB have voiced worries about the possible sale; social media arguments have erupted about whether fresh ownership might at last provide a maiden IPL title. The IPL ecosystem, meantime, prepares for ripple effects. A lucrative sale could reset franchise values, therefore affecting future negotiations on media rights.
Although Diageo hasn't officially confirmed the sale talks, analysts predict a deal could emerge post-2025, coinciding with the next IPL expansion phase. RCB's travel both on and off the field is still a fascinating subplot in India's changing sports-business environment.
