RedBird Capital Buys Rajasthan Royals Stake as Cricket Streaming Booms

RedBird Capital is buying a 15% stake in the Rajasthan Royals, a founding club of the India Premier League of Twenty20 cricket. The deal is believed to be the first in which an institutional investor has been approved to buy into the IPL, giving RedBird a stake in a sport booming in popularity ahead of a media rights deal expected to generate billions of dollars for the league.

“The IPL is a dynamic league with a global audience and forward-thinking mindset regarding fan and player engagement,” RedBird founder Gerry Cardinale said in a release. “The Royals have contributed to this progressive approach, and we look forward to further supporting its on-field sporting performance, business operations and contributions to its community.”

The majority owner of the Royals, Manoj Badale, is also increasing his ownership stake in the club to 65%, from 51%. The transaction by both parties buys out some small minority owners and leaves a group consisting of Badale, RedBird, Lachlan Murdoch and a domestic India investor. The deal values the club at an enterprise value—debt plus equity value—at around $250 million.

T20 cricket is a slimmed-down version of the classic game, played in about three hours rather than over days. Developed in 2003 in the U.K., the game swiftly became popular and has spread across the globe, including the U.S. The IPL, established in 2008, is believed to be the only pro league, besides the National Football League, wherein every franchise is profitable. Also like the NFL, the eight-team IPL has a salary cap and shares media revenue, which amounted to $30 million last year for the Royals.

In 2017, Disney subsidiary Hotstar, an Indian subscription video streaming service, won the broadcast rights to the IPL for $2.55 billion over five years, about five-times the value of the league’s prior media contract. In a sign of just how powerful cricket fandom is, Hotstar, now part of Disney+, accounts for one-third of all subscribers worldwide—some 34 million people out of 104 million Disney+ subscribers as of the end of 2020. Without Hotstar, Disney+ had about one million first-time downloads in Asia in April and early May. With Hotstar included, Disney had 25 million first-time streaming app downloads in Asia, according to a May 13 Credit Suisse report. The IPL season began on April 9. The IPL media rights package is up for competitive bidding again next year, and it’s expected the league may add more teams to broaden its footprint.

Badale in the press release said the RedBird investment “is a testament to the global standing of the IPL and India as an attractive investment destination. Gerry Cardinale and his team at RedBird are leaders in sports business, and we look forward to all that can be achieved through this truly strategic partnership.”

The addition of RedBird could bring a more analytical bent to the running of the Royals, who finished last in the league last season and currently stand in fifth place in the eight-team league. RedBird has experience in European football, where it is owner of Toulouse FC, as well as a recently acquired stake in Fenway Sports, the owners of Liverpool FC of the English Premier League. RedBird also has a background in sponsorship and licensing, as well as sports-related hospitality and experiential ventures. Overall, the U.S.-based investment firm manages $5 billion in assets.

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