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| Of intrigue and arm-twisting in high places |
| Aditi Phadnis / New Delhi Apr 14, 2010, 00:03 IST |
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Told to take money and withdraw, the successful but frightened Kochi franchise winners seek Sonia’s protection.
Harassed and bullied, the Kochi franchisees of cricket’s Indian Premier League have sought the protection of Congress president Sonia Gandhi from two Union cabinet ministers, who allegedly wanted them out of IPL.
At least two of the seven investors of Rendezvous Sports World (RSW), that won the franchise for Kochi, were last week summoned to the Mumbai residence of a Union cabinet minister and told to back off from bidding for Kochi or else. “We have many ways to take care of the likes of you,” the two now-scared investors were told at the end of a conversation with the minister that began at 10 pm and went on till 4 am. They were told to go to Delhi to meet another minister from the same party, who apologised for his colleague’s conduct but repeated: “Get out of IPL. Sell the team.”
The two investors are not helpless individuals. One of them runs an industry. Another owns a broking firm and deals in precious gems. They are millionaires. But, they say, when they decided to invest in cricket, they did not think they were putting their lives in their hands.
The story begins a year ago, when a group of seven high net worth individuals decided that in the next one year, IPL would be ready to launch two new teams and this could be a good investment opportunity.
The group of seven was led by a banker. As Kochi was one of the venues, the group decided it would be helpful if an elected representative from Kerala were to support the venture. They approached Shashi Tharoor, who recognised the political spin-off and supported the holding of his companion, Sunanda Pushkar. Pushkar has five per cent holding in the team, not 20 per cent as widely reported, a member of the consortium said.
RSW was a group of sport lovers which had been doing some charity sports events, but was not well known. The stakes for bidding were high – the company was required to have a net worth of $1 billion (Rs 4,500 crore).The group decided it needed some financial ballast and managed to rope in J P Gaur of the Gaur group. “We thought that if we have to compete with groups like Hero Honda and the Jaypee group, we needed someone with deep pockets and an appetite for risk,” said one of the RSW members.
At that point, it was clear that there were at least two other venues for which bidding was on aggressively — Ahmedabad, sought by the Adani group and Pune, sought by Videocon and Sahara. Gaur decided he wanted to compete independently and walked out. The financial ballast was gone.
Then, RSW realised they were being edged out of the game. They pulled strings in the Board of Control for Cricket in India (BCCI) and got the threshold lowered to 10 per cent of the original figure: Rs 46 crore. The first lot of bids was cancelled and rebidding was scheduled in Chennai two weeks later.
It was a Sunday morning. A cricket match was on in Chennai. Five companies were in the fray: Adani, Videocon, RSW, Cyrus Poonawalla with builder Ajay Shirke, and the Sahara group.
RSW got the first inkling that something was not quite kosher when they got a message that their bid should be below $300 million. They consulted among themselves and kept the bid at $333 million (Rs 1,533 crore). Sahara bid $370 million (Rs 1,702 crore). Videocon’s bid was $320 million, Adani bid $315 million. Theirs was the closest and they got the franchise.
The members wanted to pop the cork. Too early, cautioned their leader. Get the letter of franchise first. They met IPL Commissioner Lalit Modi in Delhi. The daughter of one of the ministers was present in the room. This was when suggestions were made that they should take $50 million and walk away.
The group was first amused, then flummoxed. “Suppose we walk,” asked one, “who is going to give us $50 million?”
An investment banker, was the laconic reply.
“Come on,” said the leader. “I am an investment banker. I know no one will pay this order of money.”
“A client of an investment banker,” they were told.
The group conferred among themselves and said prestige was involved. “We won’t go,” they said.
That was not the end. The letter of franchise was delayed on one or other pretext: Contingent liability, declaration of shareholding pattern, finally, a 10 per cent bank guarantee. The message at the end always was: “Why get into this ? Sell the team.”
The last straw was the meeting at the minister’s bungalow.
The group has finally decided that if political power is what will get them justice, they, too, will knock at the door of politicians. Meanwhile, although the consortium is not breaking up, the strain is telling on it. Shashi Tharoor has confided in friends that he may have to put off wedding plans. Sunanda Pushkar is close to a breakdown. The two Gujarati investors have hired additional personal protection for themselves and their families.
“The game was to get us out and give the franchise to the next bidder,” said a member of the consortium.
This is when a franchisee has to look at 40 to 50 per cent losses in the first two years. “We are looking at a net loss of Rs 100 crore at least, for the first two years,” one of them said.
Neutral observers say the episode is a clash between two groups of “very clever people”. “The conflict of interest in Lalit Modi’s case is clear: His son-in-law has been given web advertising rights and his brother-in-law has a team. And, in Shashi Tharoor’s case, the woman whom he is going to marry has been given free equity worth Rs 75 crore today but it could be worth Rs 500 crore a few years from now. And, when you look at it, the minister of state in charge of the Middle East also has 100 per cent of his business in the Middle East: does that sound like propriety?” asked a member of the BCCI governing council.
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