From December 2009, when IPL commissioner Lalit Modi announced the creation of two new franchises, we’ve been waiting for this particular shoe to drop — and it dropped with a resounding clang Sunday, when the IPL management postponed the announcement of the two latest entrants.
There was an interesting conversation on Twitter shortly after the postponement:
@LalitKModi why cancelled
@iamsrk We got letters from many companies saying they wanted to bid. But could not due to 1 billion net worth criteria.
Not reflected in Lalit Modi’s response to Shah Rukh Khan are the real reasons for the postponement: the original terms were completely unrealistic.
The $1 billion net worth clause for potential bidders has been dropped, yes — but significantly, that is not the only clause that has been scaled back or modified. The real keys are, the IPL has reduced the clause demanding advance deposit of $100 million as ‘performance guarantee’ — the new requirement is just $10 million.
Similarly, and even more ludicrously, the IPL had demanded that the winning bidder deposit the full bid amount with IPL; the scaled back clause says 10 per cent of the bid has to be paid down within 48 hours of the announcement.
The $1 billion net worth clause clearly was intended to exclude, not include, and to slant the auction in favor of certain interested parties. Similarly, the other two clauses were thinly disguised attempts by the IPL to get its hands on substantial sums of money under the guise of ‘guarantees’ that it could park in its bank, or invest. If it meant that would be franchises were saddled with crippling bank charges, and further were forced to lock in those sums of money which otherwise could have been invested in the franchise’s core business, that was not the IPL’s concern.
Clearly, Modi over-reached; as clearly, he has ended up with a bit of egg on his face and the consequent need to scale back dramatically. Meanwhile, if events leading up to this weekend’s auction are any indication, the next few days promise considerable interest: already, MPs of various stripes have been active behind the scenes in pushing the case for this or that franchise; some media houses and their high-flying heads have also taken a hand, largely playing go-between roles. With the clauses having been scaled back and consequently, there being more entities in the fray, expect the back-room games to get incrementally dirtier between now and March 21.