Following a two-year ban on Chennai Super Kings and Rajasthan Royals, the Board of Control for Cricket in India (BCCI) on 8 December announced two new teams from the cities of Pune and Rajkot for the 2016 and 2017 edition of the Indian Premier League (IPL).
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The Sanjeev Goenka-owned New Rising consortium and mobile phone manufacturer, Intex, have won the ownership rights of the two new franchises in the IPL. While New Rising have picked Pune as their home base, the Intex mobile group have opted for Rajkot.
The two franchises were selected after a reverse bidding process wherein a franchise that claims the least from the BCCI's coffers (including broadcast and sponsorship fees), wins. New Rising bid (-) Rs 16 crore to get Pune, while the Intex mobile group quoted (-) Rs 10 crore for the franchise.
A total of five bids were finally submitted after 21 corporates and large business houses bought the bid documents from the BCCI.
What is reverse bidding
According to the BCCI's policy of reverse bidding, an investor who bids the lowest price - lower than the Rs 40 crore base price - will eventually win the ownership rights of the new franchise. This means that the BCCI will have to pay a maximum of Rs 40 crore from the central revenue pool to the new owner.
In case a potential owner furnishes a bid price of Rs 25 crore, the Indian cricket board will save Rs 15 crore. The BCCI will not charge the two new owners any franchise fee - unlike the other six teams that have been paying a fee since the inaugural season in 2008.
Companies who expressed interest
A total of 21 companies bought the invitation to tender (ITT) document worth Rs 2 lakh from the BCCI.
Star India, Vodafone, Chettinad Cement, Videocon, RPG Group, RP-Sanjiv Goenka Group, NDTV, Wadhwa Group, Cycle Brand Agarbatti and Set Max were among the prominent companies that purchased the bid documents.
Perks of owning a team for two years
The owners of the two new franchises will enjoy publicity, marketing, image and brand-building as well as win new sponsors, to name some of the perks they will receive over the next two years. Business dealings in cricket are seldom governed by economics. A business group can use its IPL franchise for social standing, networking and profiling.
It's also about being a part of the elite group of owners in the IPL. Apart from earning the bragging rights of being an IPL team owner, it is also a move that could be used in future endeavours related to the IPL and cricket.
After getting a taste of the IPL over the next two years, the owners of the two new franchises can decide whether or not to buy the team.
What happens to the players from Chennai, Rajasthan
Due to a two-year ban on Chennai Super Kings and Rajasthan Royals, the players from the two franchises will be made available for selection for the two new teams - who can pick five players from each of the two suspended teams. The ten players will be picked through a draft system from a pool of 50, with the remaining names going into the IPL auction.
According to the original retention rule, the two new teams will also be able to select a maximum of four capped Indian players. The players' draft will be held on 15 December with some the biggest name in cricket - including MS Dhoni, Ravichandran Ashwin and Brendon McCullum - being up for grabs.
Price band for the shortlisted players
Each of the two new teams will have a purse of Rs 66 crore to assemble their respective squads. As far as the price band for picking five players each from the two suspended teams is concerned, the Indian cricket board has applied the same money brackets that were put in two years ago.
The first player gets Rs 12.5 crore, the second Rs 9.5 crore, third Rs 7.5 crore, fourth Rs 5.5 crore and the fifth player will get Rs 4 crore. An uncapped player, if picked by either of the two new franchises, will stand to earn Rs 4 crore.
Ban on Chennai, Rajasthan
Chennai Super Kings and Rajasthan Royals have been banned for two years after former BCCI president N Srinivasan's son-in-law Gurunath Meiyappan and Raj Kundra (co-owner Rajasthan) were found guilty for their involvement in spot-fixing and betting scandal.
Both have been banned for life on recommendations of the Supreme Court-appointed Justice RM Lodha Committee.