The business behind CSK's success as an IPL franchise
Indian Premier League (IPL) franchise Chennai Super Kings (CSK) made headlines by becoming the first Indian sports venture to achieve unicorn status. It has a market capitalization of more than INR 7,600 crore and share prices ranging from INR 210 to 225.
Chennai Super Kings is one of the most engaged unlisted counters, dealing with a large number of shareholders in recent years. Since its divestiture with India Cements in November 2018, the sporting franchise has been trading at INR 12 in the pre-IPO markets. The scrip increased by 1,500% to INR 180 in January 2022. In the previous year, it delivered a return of 165%.
Chennai Super Kings become India's first Sports Unicorn.
CSK's market cap has now crossed 7,600 Crores
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Among the reasons cited are CSK's recent IPL victory and the addition of two franchises to the league, which have caused the Chennai team's market cap to skyrocket. MS Dhoni and CSK are strongly associated and exclusive brands for millions of CSK and Indian cricket fans.
The Sanjiv Goenka-led RPSG Group bought the Lucknow franchise (Lucknow Super Giants) for INR 7,090 crore, while CVC Capital acquired the rights for the Ahmedabad franchise for INR 5,625 crore.
CSK is the only IPL cricket franchisee whose shares are on offer in the unlisted market. Life Insurance Corporation of India (LIC) holds a 6.04 percent stake in the company, while ace investor Radhakishan Damani holds 2.39 percent in the entity.
N. Srinivasan, the managing director of India Cements and former president of the Board of Control for Cricket in India (BCCI), was quoted as saying:
“Brand CSK will outgrow Brand India Cements. If you look at the history of franchise-based leagues in the US, it will outgrow everything. Passion for cricket is so much in India. The road between countries will see franchise-based leagues getting the precedence as we go along.”
Going forward: The biz of CSK's success and how it can aid the IPL in elevating the Indian sports industry
Following its fourth IPL title with a decisive victory over KKR, the Chennai-based franchise became India's first sports unicorn, with a market cap of INR 7,600 crores, far exceeding that of its parent company India Cements (6,879 crores).
CSK is expected to generate significant revenue from merchandise sales, sponsorships, prize money, and digital viewership in FY22. Heading forward, profit and revenue growth can be expected with strong management on and off the field, as well as a recovery in the sports industry and CSK's brand popularity.
Unlistedkart deputy CEO Krishna Raghavan said:
"CSK has proven to be one of the favorite picks in the unlisted space based on the performance of the franchise in the league and also being backed by promising investors."
The time has come to expedite investment mobility so that corporate houses already involved in sports can transition to for-profit sporting ventures. Sports spending has increased, franchisees have built teams around them, and sponsors want to collaborate with teams to activate their brands.
Many digital companies and big enterprises have invested since it offered them access to players and tickets.
IPL Teams are on a multi-year sponsorship signing spree this year. Brands are swooping in for multi-million dollar deals. The Chennai-based outfit has signed a three-year deal with TVS as its primary jersey sponsor, worth between INR 70-75 crore.
How MS Dhoni drives CSK's success on and off the field
For millions of Indian cricket fans, Dhoni and CSK are symbiotic and exclusive brands. To a large extent, the brand revolves around MS Dhoni, their "Thala" (Head). This is exactly what will drive CSK's valuation higher.
Dhoni is still one of the highest-paid sports figures, having ranked in the top ten of all Forbes India Celebrity 100 lists since 2012. In 2019, he had 26 brand endorsements on his profile, including India Cements, Colgate, Gulf Oil, Indigo Paints and Cars24. He also has his own lifestyle brand, SEVEN, as well as his own production company, Dhoni Entertainment.
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MSD remains a popular brand in his own right. His leadership has already refined the structure in the IPL camp and he provides invaluable lessons to managers at all levels and in all fields – from business to the fraternity of sports.