Overview of Chennai Super Kings: The Chennai Super Kings CSK is a franchise cricket team based in Chennai, Tamil Nadu which plays in the Indian Premier League (IPL) since its inception. The team is captained by Mahendra Singh Dhoni. CSK has won the IPL Tournament thrice and won the Champions League T20 Tournament twice.
The franchise has served a two-year suspension from the IPL starting July 2015 for the alleged involvement of their owners in the 2013 IPL betting case.
The brand value of the Chennai Super Kings in 2020 was estimated at Rs 611 Crores, making them the second most valuable franchise in the IPL as per the Brand Finance Report.
The overview & outlook of IPL:
- According to Duff & Phelps, global valuation and corporate finance advisors, IPL’s brand value was pegged at $6.8 billion or Rs 47,500 crore at the end of its 12th season last September. This is more than twice the $3.2 billion it was worth at the end of its seventh season in 2014.
- IPL witnessed a major milestone on September 4th, 2017, with Star TV winning the media rights for (2018-2022) five-year period, for a staggering Rs 16,347.50 crore. By virtue of these rights, the revenue share of franchises over the next 5-year period will be 50% of the above amount after deducting the production expenses incurred during the season.
- The league also signed a major title deal with VIVO for Rs, 2199 crore for the same period. ( 2018-2022)
- A combination of sponsorship and media rights ensures, your franchise will receive over Rs 1000 crore in the form of central revenue over the next five years from the BCCI-IPL.
- However, the Franchisees have to share 20% of the income with BCCI.
- The much-anticipated women’s Indian Premier League (IPL) has also been approved by the IPL’s governing council earlier this month. So Women’s IPL will most likely include the same teams as in the men’s tournament, providing a strong brand extension opportunity for the existing IPL franchisees.
Shareholding Pattern:
| Shareholder’s Name | % of Total Shares of the Company |
| Trustees, India Cements | 30.86% |
| Life Insurance Corporation | 6.04% |
| Sri Saradha Logistics Private Limited | 5.69% |
| Reliance Capital Trustee | 2.51% |
| Radhakishan S Damani | 2.39% |
| The Boston Company | 1.68% |
N Srinivasan-owned India Cements, India’s leading cement maker, bought the CSK franchise rights for Rs 346 crore, to be paid in ten equal instalments over as many years until 2017-18.
It was initially run as a strategic business unit of India Cements, but was later demerged to become a wholly-owned subsidiary—Chennai Super Kings Cricket Ltd—in early 2015. In 2018, India Cements transferred its entire holding in CSK to a shareholders’ trust
Current Situation:
Even as the pandemic led to a decline in the IPL ecosystem value, it led to an increase in IPL television viewership. As per the data, the 2020 IPL edition turned out to be a great success for broadcasters; it broke viewership and advertising revenue records.
As the economy opens up, there is an expectation that sponsorship deals may go back to their pre-Covid levels. Having been around for 13 seasons, the IPL franchise is seen to be entering a more stable phase in terms of the overall ecosystem’s value.
But according to a recently launched IPL Brand Valuation Report 2020 by Duff & Phelps, the value of the IPL media ecosystem dropped by 3.6% in 2020.
Financials of Chennai Super Kings: (Figures in Crores)
| Year | Revenue | EBITDA | PAT | EBITDA Margins | Profit Margins | EPS |
| FY 18 | 4.07 | 0.23 | -51.49 | 6% | NA | -1.67 |
| FY 19 | 417.83 | 163 | 111.2 | 39% | 27% | 3.61 |
| FY 20 | 356 | 72 | 50 | 21% | 14% | 1.63 |
| Year | Net Worth | Debt | D/E |
| FY 18 | 14.31 | 65 | 4.54 |
| FY 19 | 125.51 | 65 | 0.52 |
| FY 20 | 175.85 | 65 | 0.36 |
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Revenue Break up: (Figures in Crores)
| Particulars | 2018-19 | 2019-20 |
| Income from Grant of Central Rights | 294 | 240 |
| Sponsorship Income | 54 | 67 |
| Revenue from Operations | 410 | 350 |
| Other Income | 7.26 | 6.26 |
This year the revenue has reduced from 417 Crores to 356 Crores mainly on account of reduction of income from grant of central rights from Board of Control for Cricket in India (BCCI). Accordingly, the PAT has also gone down from 110 Crores to 50 Crores.
How to value such a Franchise?
Valuations for such companies tend to be governed by private transactions instead of business nitty-gritty. Largely considered as “trophy assets” for billionaires, the valuation of such teams is additionally determined by who the potential future buyer might be , rather than being a function of the topline or bottom line. This is often further accentuated by the very fact that there can only be a limited number of teams and that they remain largely static, whilst the magnates eager to own such an asset changes.
As a consequence, a sports team’s reputation is extremely important. CSK has performed well thereon account, considering its sponsorship revenue was up 24 per cent to Rs 68 crore. “Increase in sponsorship income may be a very positive sign because it is directly linked to the brand image of the franchise,” said N Santosh, Director at Duff & Phelps.
Things forward for CSK
The much-anticipated women’s Indian Premier League (IPL) has also been approved by the IPL’s governing council earlier this month. So Women’s IPL will most likely include the same teams as in the men’s tournament, providing a strong brand extension opportunity for the existing IPL franchisees.
2 new teams will be included in the Tournament, as a result a new rule pertaining to player retention will be floated. It will be very important to see which players are retained by CSK.
Chennai Super Kings is the only squad in IPL 2021 with an average age of more than 30. So they will be looking out for young players who can come in and help the franchise not just on the field but also off the field by starring in various commercials and advertisements.
MS Dhoni (39 years old) has retired from International Cricket and will soon retire from playing the domestic tournament, so it will be very important for the franchise to search for a new leader who can carry forward the legacy’s franchise.
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