Can you own a cricket club in IPL?
Published on: 30 March 2025
“Financially doped club”.
That was the accusation leveled against the club Chelsea.
These words came from Arsene Wenger, the manager of Arsenal – Chelsea’s rival club.
“Unlimited financial resources”.
For the longest time ever, Chelsea was considered a very average football club. They had not won a single trophy since 1955.
But in 2003, Chelsea was suddenly in the news.
A Russian billionaire – Roman Abramovich – had bought it for 140 million pounds.
Most people did not know who he was. And the 140 million pounds he spent was unheard of in the world of football clubs.
Until this 140 million pound purchase, most football clubs were bought and sold for double-digit million pounds. Mostly lower double-digit numbers.
After paying a price that many thought was absolutely unjustified, Abramovich opened up his wallet again. His view was that the club needed better players and a better manager.
How do you get better players and a manager? Well, you pay for them.
Roman spent 110 million pounds bidding and bringing home the best players immediately after spending 140 million pounds buying the club. A year later, he spent another 90 million pounds.
He was a rich, money-loaded billionaire who was willing to spend money. Other clubs did not have the kind of resources Chelsea had.
Other clubs’ owners and managers grew increasingly worried. They were being outbid left, right, and center.
It felt like cheating. Or, as they say in the world of sports – doping. Chelsea was a ‘financially doped club’.
It worked.
Just two years after Abramovich took over the club, Chelsea won their first Premier League title in 50 years. And that was just the start.
They won it in 2005, 2006, 2010, 2015, and 2017 — quite a streak for a club without a victory title in 50 years.
Abramovich was not done.
He continued to pour money into the club’s stadium, training facilities, managers, branding, sponsorship rights, and all other parts of the club.
He even paid off the debt the club had.
Some estimates suggest that Abramovich spent a total of about 2.1 billion pounds on the club in nearly 2 decades.
Unfortunately, Abramovich lost control of the club as a fallout of the Ukraine-Russia war. The club was sold for 4.25 billion pounds. But the money was kept in a frozen bank account.
That’s a different story by itself.
But Abramovich’s foray into sports started a chain reaction that has not stopped to this day.
Big Money and Sports Clubs
Abramovich brought the world of sports purchases to the limelight.
Others with deep pockets were interested in having their own teams. It seemed like an opportunity.
A sheik from the UAE bought Manchester City for 210 million pounds in 2008.
The Glazer family bought Manchester United for about 1.5 billion pounds in 2005.
The purchasing has not stopped since.
Not just individuals, but also consortiums of investors, and even private equity funds have dipped their hands into sports club ownership.
Business Model
Sports clubs are businesses too.
Yes, a lot of passion is involved. Fans often treat their favorite sports clubs like a cult. They do not see it as a ‘business’.
But they are businesses.
Sports clubs make huge amounts of revenue from broadcasting rights. When a match is shown to millions of fans across the world, revenue from that reaches the sports clubs.
This is often the biggest source of revenue for clubs. The more the viewers of a club’s match, the greater their revenue.
Similarly, ticket sales are another source of revenue for sports clubs. Even those have tiers – standard, premium, VIP, etc.
Every player’s dress is covered in brand logos. Sponsorship deals are visible at every interval. The boundary walls have logos.
All those spots are auctioned off to the highest bidder.
Merchandise – jerseys with the club’s logo, shoes, and other sports-related equipment – these are a huge source of recurring revenue for clubs. These would mostly be in collaboration with other brands – like a club might partner with a brand like Nike for shoes.
An emerging source of revenue is eSports. Computer and video games are licensed to use the club’s logos, players, etc.
There are many other sources of revenue for these clubs. The above are some of the main ones.
Owners List
This segment is starting to attract more people day by day.
Most of them say they are doing it for the love of the sport. And to a great extent, that does seem true. These sports club owners do seem to be very passionate about their clubs.
But there’s definitely good money in it too.
Mark Cuban, the tech billionaire based in the US, owns the Dallas Mavericks (basketball club). The club is estimated to be worth $4.5 billion.
Former Microsoft CEO Steve Ballmer owns the LA Clippers (basketball). The club is worth $5.5 billion.
Similarly, in India, the IPL or Indian Premier League also has a similar structure.
All the teams are owned by different individuals.
Mumbai Indians are famously associated with the Ambani family – they own the club.
Kolkata Knight Riders are owned by Shah Rukh Khan and a few other investors.
Preity Zinta and a few others own Punjab Kings.
It’s fun.
And also, good money.
Some images in this newsletter may have been generated using AI tools.
Quick Takes
+The central government is removing the export duty on onions from 1 April. Currently, there is a 20% export duty on onions.
+The government has eliminated the windfall tax on all oil companies (the proposal is yet to be signed by the President). A windfall tax is imposed on exceptional profits resulting from unforeseen scenarios.
+The Indian government will remove the tax on digital ads from 1 April 2025, as per the new Finance Bill 2025 passed in the Lok Sabha. Currently, the government charges a 6% tax on the digital ad revenue of foreign companies like Google, Meta, etc.
+Samsung has received a $601 million (approx Rs 5,000 crore) tax notice from the Indian government over import duty evasion: as per news reports.
+The UK’s annual inflation rate fell to 2.8% in Feb (from 3% in Jan). Core inflation, which excludes prices of volatile items, fell to 3.5% (from 3.7% in Jan).
+The Ministry of Defence has signed Rs 6,900 crore contracts with Bharat Forge and Tata Advanced System for advanced artillery systems and towing vehicles.
+The RBI announced its monetary policy meeting schedule for FY 2025-26. Its first meeting is scheduled from 7 April to 9 April.
+The US Fed kept its interest rates unchanged at 4.25% to 4.5% in its March meeting.
+The US President announced a 25% tax on imports of all automobiles in the US, starting from 2 April. The tax will eventually expand to imports of auto parts, the president added.
+The Defence Ministry signed contracts worth Rs 2,500 crore, including 5,000 light vehicles from Force Motors and Mahindra & Mahindra and anti-tank missile systems from Armoured Vehicle Nigam Ltd.
+The US GDP rose 2.4% year-on-year in the Oct-Dec 2024 quarter (vs 3.2% in the same quarter in 2023).
+India's infrastructure output increased by 2.9% year-on-year in Feb (compared to a 7.1% growth in Feb 2023). While coal, refinery products, fertilizers, steel, cement, and electricity production saw a rise, crude oil and natural gas production decreased: provisional data from Commerce Ministry.
+India’s forex reserves rose by $4.5 billion to $658.8 billion in the week that ended on 21 March.
+The Indian government approved the Electronics Component Manufacturing Scheme with Rs 22,919 crore funding. It includes incentives for manufacturing key components like display modules, PCBs, and batteries, with a 6-year tenure and employment-linked payouts.
+The Indian government will impose a 10% import duty on desi chana (bengal gram) from 1 April. Previously, the import taxes on chana were dropped in May 2024 to increase domestic supply and manage prices.
6-Day-Course
Theme of the week: biggest single-day falls
We’ve reached the end of this week’s course that started on Monday. Here’s a test you should take. Get pen and paper!
Question 1:
The biggest single-day fall in the Indian stock market was during _____________.
-2004 elections
-Great Recession of 2008
-Tech bubble
Question 2:
Covid-19 saw a single-day fall on 23rd March 2020 without spreading across days before and after it.
-True
-False
Question 3:
Why did markets fall 12.24% on 17 May 2004?
-Asian financial crisis
-Russian stock market crash
-Election result fears
Question 4:
Tech bubble burst caused the Nifty to fall around 7%.
-True
-False
Question 5:
Most of the time the biggest single-day falls are accompanied and followed by smaller falls on other days.
-True
-False
Answers:
Q1: Great Recession of 2008
Q2: False
Q3: Election result fears
Q4: True
Q5: True
The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.
Team Groww Digest