Wednesday, August 29, 2012

IPL and Sirens

Sirens are seductive female creatures in Greek mythology who lured nearby sailors with their enchanting music and voices to shipwreck on the rocky coast of their island.  The sirens are probably best known for their part in the Odyssey where their song lured sailors to their death.  Odysseus ordered his crew to plug their ears with wax (on the advice of Circe) so as not to be lured by the Sirens' song. In another story from Greek myth, the story of the Argonauts, Orpheus sang sweetly enough to keep the men from succumbing to the Sirens.
There were either two or three Sirens, who were the daughters of the sea god Phorcys or the river god Achelous.  The Seirenes were depicted as birds with either the heads, or the entire upper bodies of women.  In mosaic art they were depicted with just bird legs.
The IPL in many ways is proving to be the new Sirens for the people associated with it.  The IPL was conceived by Lalit Modi, the then IPL commissioner and vice president of BCCI.  The commercial success of the IPL and Modi’s total control over the league had made him a superhero in India and the world of cricket.  In 2010, it was Modi who oversaw the bidding process and creation for the creation of 2 new teams in the IPL.  Sahara won the Pune franchise whereas Kochi was won by a consortium of investors.  A Twitter entry by Modi declaring the stakeholders of the Kochi IPL Team allegedly breaching confidentiality agreements led to the resignation of the then Indian Minister of State for External Affairs Dr. Shashi Tharoor.  Modi was then suspended as Chairman and Commissioner of the IPL in April 2010.  The sirens had their first victims.
On September 19, 2011, the BCCI announced that the Kochi Tuskers Kerala IPL franchise was terminated for breaching its terms of agreement.  This meant that the 2011 IPL season was the only season in which the Kochi team participated.
Vijay Mallya, in early 2008, paid in excess of $100 million to buy the Bangalore franchise.  At that point, his businesses were roaring and his net worth was in excess of $1.2 billion.  His liquor businesses were riding high and his Kingfisher Airlines was the only 5 star airlines in the Indian skies and was showing promises.   Today, 4 years later, the king of good times, is facing the worst times ever and is down to his knickers (just like the models in his Kingfisher calendar).

Mukesh Ambani, Asia’s second richest person in 2008 with a $43 billion fortune, paid $112 million for the Mumbai franchise of IPL.  Today Ambani’s net worth has more than halved though he still remains the second richest Asian.  Reliance Industries is no longer the darling of the Indian stock markets and is having continuous spats with the government over some blocks or other.  His new ventures Reliance Retail is yet to show the money.

G. M. Rao of GMR owns the Delhi Daredevils team has seen his net worth erode with the falling stock price of his GMR infrastructure.  His fortune, which was over $5 billion when bought IPL franchise in 2008, is now down to less than one-fifth of that value.

T. Venkattram Reddy, a newspaper baron and chairman of the Deccan Chronicle, bought the Hyderabad franchise, Deccan Chargers, $107 million in the IPL team auction in 2008.  The Reddy’s are now in the middle of a financial mess and their net worth (considering the loans and over pledging of their shares) are in the negative.
The owners of the franchises of Punjab and Rajasthan have had their share of ill luck with their franchises being cancelled and then subsequently keeping their franchises through court orders and are going through arbitration.  Film actors, who partly own these franchises, have all but finished their career in the acting arena.

The owners of the Kolkata franchise are perhaps are the only ones who have been largely unaffected by the enchanting music of the sirens as they are largely going around with their other business as smoothly as ever (apart from the minor hiccup of Ra-One).

Subrata Roy of the Sahara Group bought the Pune franchise for $370 million.  Sahara being closely held, not much is known about its financials, although some of his flagship deposit-taking schemes have been banned by SEBI.  Subrata Roy at one time did threaten to pull out of the IPL though he did not do so.  Roy is still in asset buying mode having bought a couple of iconic hotels in the west.

Although primarily none of the owners have lost heavily on their cricket teams (Kolkata in fact is in the green), IPL seems to have uncanny similarities with the Greek Sirens.  Only time will tell how long the owners of the Kolkata and Pune franchises can keep their ears plugged with wax and escape the siren song.