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Chennai Super Kings worth only Rs 5 lakh? BCCI doesn't think so

Board's working committee to ask IPL franchise to revise valuation before approving transfer of shares

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Chennai Super Kings’ transfer was necessitated after the SC ruled that Srinivasan would have to choose between his franchise and BCCI post
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The new dispensation of the Board of Control for Cricket in India (BCCI) is least impressed with troubled IPL franchise Chennai Super Kings (CSK), owned by former board president and India Cements Limited (ICL) vice-chairman and managing director N Srinivasan.

The franchise, which has been in the news for all the wrong reasons, "tried to hoodwink" the board by valuing itself at a paltry Rs 5 lakh. Seeking the BCCI's approval to transfer the shares of CSK Limited to a trust comprising three independent directors of ICL, the franchise submitted that it would pay five per cent of the sale price to the BCCI. That's what Clause 10.4 of the franchise agreement says. In other words, the BCCI would stand to earn Rs 25,000 from the transfer.

A section of the BCCI is livid with the CSK management for "such a fraudulent valuation". And they have a point.

According to American Appraisal Associates Inc, a consulting firm, the brand value of CSK is $72 million (approximately Rs 455 crore). According to industry standards, the brand value of an entity is only 40 per cent of its market value. By that calculation, CSK is worth nearly Rs 1,000 crore. That's not surprising for a team comprising players like MS Dhoni, Brendon McCullum, Suresh Raina, Ravindra Jadeja and R Ashwin, and which pays the BCCI a whopping Rs 40 crore as franchise fee every year.

"Going by the franchise agreement, CSK would have to pay the BCCI five per cent of the team's 'real' market value. That's five per cent of Rs 1,000 crore. And they were trying to get away by paying the board five per cent of Rs 5 lakh. This is not acceptable," a member of the new governing council (GC) said on condition of anonymity.

A top BCCI official revealed that the previous GC, headed by Srinivasan confidante Ranjib Biswal, did not raise an objection to this proposal in its meeting on February 27, 2015 (Chennai). "I wonder what prompted them to accept this valuation," he said. When contacted, Biswal said his committee did nothing wrong. "We sought legal opinion and our lawyers told us CSK were in the right. Their valuation is Rs 5 lakh. How can you or I dispute it?" he reasoned.

In fact, the new GC, which met on Monday (New Delhi), refused to pass the minutes of the previous meeting. "Jyotiraditya Scindia and Ajay Shirke raised objections. And the house decided to refer the matter to the working committee," the GC official said.

It is reliably learnt that bigwigs like Sharad Pawar (Mumbai Cricket Association) and Shashank Manohar (Vidarbha Cricket Association) will attend the all-powerful working committee meeting in Kolkata on Sunday. The two former presidents are expected to advise the house to direct CSK to revise their valuation. The house has also decided to summon a few members of the previous GC, like Chetan Desai (Goa Cricket Association), to explain why they didn't raise an objection to the "weird" undervaluation.

dna also spoke to Kasi Viswanathan, secretary, Tamil Nadu Cricket Association (TNCA), about the issue. Viswanathan is a close associate of Srinivasan and a key member of the CSK set-up. Viswanathan confirmed that he will represent TNCA at Sunday's meeting. "As far CSK is concerned, we haven't heard anything from the BCCI (regarding the valuation). If and when we do, we will send them our reply," he said.

IPL chief operating officer Sundar Raman also brushed aside concerns over the "gross" undervaluation. "Let's wait for the working committee to take a call on the issue," he said.

The transfer was necessitated after the Supreme Court ruled that Srinivasan would have to choose between his franchise and BCCI post. Given that the cement baron's interests were found to be conflicting, the court order prompted him to transfer the ownership of his franchise to a wholly-owned subsidiary of ICL.

IN A NUTSHELL
CSK tells the IPL governing council that it values the franchise at Rs 5 lakh
In an attempt to transfer the shares of CSK to a trust owned comprising three independent directors of ICL, the franchise offers to pay the BCCI five per cent of the sale price (Rs 25,000)
Previous GC, headed by Ranjib Biswal, accepts the valuation on February 27. But the new GC, headed by Rajeev Shukla, raises objections on April 20
Industry figures reveal CSK is worth Rs 1,000 crore. That means the franchise would have to pay the BCCI five per cent of that sum
All-powerful working committee to discuss issue threadbare in Kolkata on Sunday

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