The news that two Indian Premier League (IPL) teams, Royal Challengers Bengaluru (RCB) and Rajasthan Royals (RR), have both changed hands for over $1.6 billion each has obviously made headlines. Both buyouts involved consortiums, and ownership will formally change only after the upcoming 2026 season.
Sports team buyouts are hardly new. But these two deals set new standards for the IPL with top-line numbers that hit, as Sourav Ganguly pointed out, National Basketball Association (NBA) levels. Considering English football as a benchmark, only the “Big Six” of Manchester United, Liverpool, Arsenal, Chelsea, Manchester City and Tottenham Hotspur are valued higher than RCB and RR.
All sorts of people buy sports teams. Saudi Arabia’s Public Investment Fund paid GBP 305 million in 2021, for example, to buy 80 per cent of English football club Newcastle United. Back in 2003, Russian oligarch Roman Abramovich bought Chelsea for GBP 140 million. He was forced to sell it after the Ukraine invasion when he came under sanctions. Real Madrid – probably the world’s richest club – by contrast is set up as a non-profit owned by some 90,000 “socios”, or individuals. Barcelona has a similar socio ownership structure.
The concept of club ownership would be incomprehensible for traditional value investors seeking concrete returns on investment (RoI). For example, RCB declared profits of ₹140 crore on revenues of ₹550 crore in financial year 2024–25 (FY25). The consortium led by the Aditya Birla Group, which bought it, paid $1.78 billion, or around ₹16,600 crore, for a 100 per cent stake.
Kal Somani, Walmart and co-investors paid roughly ₹15,300 crore for the RR franchise, which reportedly had an operating income (earnings before interest and tax, or EBIT) of ₹54 crore in FY25. Given the numbers, RoI at the valuations paid is very low. Even if optimistic growth multiples are assigned to the two franchises, the RoI would remain lower than parking that money in Government of India debt.
Every IPL franchise receives an equal payout every season – approximately ₹484 crore in 2025 – from the Board of Control for Cricket in India’s (BCCI’s) central media rights pool. This is the largest chunk of franchise revenue. The rest of the income comes from ticket sales, merchandise and, above all, sponsorships.
As many people have pointed out, the valuations have expanded a lot over the two-decade timeframe. In 2007, RR was auctioned for $67 million in the original IPL auction. The $1.63 billion sale works out to a compound annual growth rate (CAGR) of around 18.5 per cent for the valuation. Similarly, the initial RCB auction price was $111.6 million, which means the $1.78 billion exit reflects a CAGR of 16.5 per cent. (There have been interim sales and transfers of ownership.)
The financials are similar for many other sports teams. RoI tends to be low because valuations are very high, and in many cases, teams operate at a loss.
So why would hard-headed businessmen and investors buy sports teams? There are several answers to that question, and most of them are perhaps partially correct. In some cases, this is out of sheer passion. The new owners happen to be deeply interested in the sport in question, and they have the money to indulge their “hobby”.
Second, there’s optimism. “Brand value”, however you define it, has obviously grown by leaps and bounds for all IPL outfits in the last 20 years. Maybe brand value will continue growing at similar rates in future, especially if a smart, highly connected owner (or a consortium of highly connected owners) is in charge. Hope springs eternal.
There’s also the “greater fool theory”, which is often cited by market traders. This can be roughly defined as: “It’s fine to buy something at an inflated value if you reckon you can find a greater fool who will buy it off you at an even higher value.” That attitude has triggered all sorts of financial bubbles over the centuries.
And, of course, if valuation does continue to inflate indefinitely, you may not even need to exit for a profit. The valuation can be monetised in other ways. For example, the stock market boosted the share price of United Spirits instantly when RCB won the 2025 IPL. There are already advisories out referencing the positive stock market impact of these buyouts.
The killer application with sports and sports investments, however, is something that is hard to accurately quantify. Organised sports is all about politics and influence, and having seats at the high table. The heads of the Fédération Internationale de Football Association (FIFA) and the International Olympic Committee (IOC), for example, can meet any global head of state, pretty much whenever they please. The leadership of the International Cricket Council (ICC) and the BCCI have similar privileges where cricket-playing nations are concerned. That influence may be hard to quantify, but it is easy to monetise, and it is something hard-headed investors will pay for.
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