How does the IPL and the franchises get back their money they have invested?

Few Days Back I had posted an Article, “Are IPL Cricket Teams Really making Losses?”

I have shown in the article in very detail that, How IPL Cricket Teams can never make losses even though they are right now posting losses “On Paper”.

After reading my Article, “Online Cricket” has put a Comment.

“How does the IPL & the franchises get back their money they have invested?”

Well, This is really a nice question. How does the IPL (Indian Premiere League) means Indian Cricket Board & Franchises (8 IPL Cricket Teams are known as Franchises) get back their money they have Invested?

Well, This one Question is basically a Combination of 2 Questions.

01) How IPL (Indian Premiere League) / Indian Cricket Board get back their money it has invested?

02) How the Business Tycoons who have invested in IPL Teams get back their money they have Invested?

Answer –1): Well, Our Indian Cricket Board has not invested any money behind creating any franchisees. The IPL Franchisees were born out of an idea only. So there is no question of getting back any money invested.

Indian Cricket Board has not invested a single rupee behind these franchisees. They have just use their brain and created a great idea.

Now you will ask that, How Indian Cricket Board (IPL) will make money out of these Franchisees?

Well, It will make money by 2 ways.

Way: 01) IPL has created 8 franchisees and sold them to Business Tycoons from various Business backgrounds for millions of dollars and made money. Say for Example, IPL has sold “Mumbai Indians” to Mukesh Ambani, The chairman of Reliance Industries for Whooping US $ 111 Millions.

So by selling 8 Franchisees to Business Tycoons, IPL had made US $ 750-800 Millions.

Not only this But IPL is planning to create 2 more franchises in 2010 for Anil Ambani (Ahmedabad Team) & for Sahara Group. And by year 2012, IPL will launch 4 more Franchisees.

So one way of making money for IPL is create Assets (IPL Teams) and sell them to Business Tycoons & make money.

Way: 02) Another way by which IPL earns huge money is, by collecting Franchisee Fees every year from these 8 Franchisees. IPL collects anywhere between Rs. 30-45 Crores from each Franchisees every year.

Last year it has collected Rs.45 Crores from Mumbai Indians & Rs. 27 Crores from Rajasthan Royals.

Answer –2): Now Let us discuss the most unanswered and most hot favourite Question. So many Indian Business Tycoons from various Business Backgrounds have invested literally millions of Dollars in acquiring (take over) these franchises. How will they get back their money they have invested?

You will find the answer of this question on this blog (in particular this article) only. Because I have been studying the life of Billionaires & how they think while Investing since I was in 10th Standard (Year 1998).

Well, Business Tycoons who have invested their millions of dollars in buying IPL Franchisees will get their money back in the following 2 ways.

01) Cash Flow – It is as simple. “Owning a Cricket Franchisee is like owning a Rental Property”. Think in this manner and you will understand how these business tycoons get back their money. Again, Remember, “Owning a Cricket Franchisee is like owning a Rental Property”. Means as long as you hold it, it will provide you a Franchisee Income (Rental Income) & When you Sell it, you will get huge Capital Gains (Both in case of Real Estate & Indian Cricket Franchisees).

As long as the Business Tycoons hold these franchisees, they can enjoy a lot with the Income generated by their franchisees. They can show their own expenses in the name of franchisees expenses.

02) Capital Gains – The main profit in holding Franchisees for a couple of years is a Huge Capital Gains. Say for Example, Mukesh Ambani has invested US $ 111 Millions in buying “Mumbai Indians”. Now again, Buying a Franchisee is like buying a Rental Property. So now think that, if you buy a Residential Apartment worth Rs.1 Crore and Sell it after 5 years than what it will cost after 5 years? More than 3-4 Crores right?…..

So the same is true for Cricket Franchisees. If Mukesh Ambani or any other Business Tycoon sells his Franchisee after holding it for couple of years than within less than 5 years it will be worth anywhere between US $ 800 Millions to US $ 1.5 Billions.

Yes, This is true. I am not drunk or I am not kidding. This is the Fact. Each Franchisee will be worth more than US $ 800 Millions before next 5 years. Because of the popularity of it and Buyers are waiting in queue outside to buy these franchisees.

So US $ 100 Millions Invested today will become US $ 800 M to $ 1.5 B is a 8X to 15X profit in less than 5 years. And that is 60% per Annum Compounded Annual Growth……….!!!!!!

Now tell me, which Investment in this world give you 8X to 15X times profits in less than 5 years?….

The Answer is – IPL Franchisees (Cricket Teams).

So Now you understand? How these Billionaires will make money? They will sell these Franchisees after couple of years to some other Business Tycoons for literally 10-15X Profit & they will make Millions & Billions of money from it…….!!!!!!!!

So now you understand how IPL & the Franchises get back their invested money?