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In terms of brand valuation, the IPL, the franchises that are part of it, has taken a giant leap. A group led by US-based entrepreneur Kai Somani is in the process of acquiring Rajasthan Royals for $1.63 billion, while a consortium including the Aditya Birla Group, the Times Group, and US-based firms Bolt Ventures and Blackstone have bought Royal Challengers Bengaluru for $1.78 billion. The numbers are staggering.

On the face of it, the IPL is recession-proof. In fact, it gives a bloody nose to recession. The exponential rise in brand valuation actually defies every market logic. It's understandable for the leagues like NFL, NBA and the Premier League. But in a country like India, this is a tad surprising. India has the sheer volume of numbers/consumers, and that is a valid counter logic. Then again, China’s sports leagues haven't followed this pattern. So in India or the IPL's case, is it an investment bubble that might burst going ahead?

Santosh N, managing partner at D&P Advisory, has spoken about how it is “difficult to understand” the valuations of the two teams, averaging $1.7 billion. To put things in perspective, not many moons ago, the Torrent Group had acquired Gujarat Titans for less than a billion dollars.

So in a year, it is almost like a double valuation. And what has happened in that one year is actually only negative for the IPL  the real-money gaming ban, the broadcasting rights renewal has not happened in this one-year window, no new title sponsorship deals, none of the marquee deals have happened for IPL. And in spite of that, we have seen this double valuation. That is something that is very, very difficult to understand.

Rs 500 crore comes from central pool revenue, which is the broadcast money. And each team has anywhere around Rs 200 to 300 crore of sponsorship, ticketing and merchandise revenue. So we are talking about a (Rs) 700 to 800 crore sort of revenue, which is less than a hundred million dollars and yet these teams are getting valued at around 1.7 billion dollars, which is almost 20x revenue.

Simon Chadwick, professor of Afro-Eurasian Sport at Emlyon Business School, meanwhile, warned about an investment bubble that might be looming. “Cricket needs a sustainable, long-term future, hence the sport’s governors must ensure that it doesn’t succumb to the short-termism of investment opportunists,” he told the paper. “The Indian market already has volume, inclusion at the Olympics will bring global exposure, and interest from the Gulf adds to the optimistic picture. But cricket must ensure that money and commercial gain benefit the sport as a whole and not just a select few wealthy global investors.

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