Following Royal Challengers Bengaluru’s (RCB) first Indian Premier League (IPL) title win, British distilling giant Diageo Plc is reportedly considering selling a portion or all of its ownership in the franchise.
According to Bloomberg, Diageo has begun negotiations with financial advisers to explore various options, including a partial or complete disposal of RCB. The franchise, held by Diageo’s Indian unit, United Spirits Ltd., could fetch up to USD 2 billion. While no final decision has been made, the examination of a sale follows the growing financial appeal of IPL teams.
Royal Challengers Bengaluru, established in 2008 as one of the original IPL franchises, was initially owned by business magnate Vijay Mallya. Following Mallya’s financial collapse, Diageo took over the squad as part of its purchase of his drinks empire.
After years of underachievement and near-misses, RCB eventually won their first IPL trophy this year,
snapping an 18-year drought by defeating the Punjab Kings in a thrilling final at the Narendra Modi Stadium. The franchise’s brand value has improved following its recent title win.
With Virat Kohli, one of the most popular players in the world, still leading the club, RCB is a hot asset in the sports investing market. Diageo’s move comes after India’s Union Health Ministry increased laws for advertising, particularly those related to alcohol and tobacco, during big sporting events such as the IPL. Although alcohol advertising is prohibited in India, corporations such as Diageo have traditionally marketed soda and non-alcoholic alternatives through surrogate advertising involving famous cricketers.
However, with the Health Ministry pressing for a complete ban on such indirect advertisements, Diageo’s ability to use RCB for brand recognition may be severely hampered. This has most certainly contributed to the corporation rethinking the future of its IPL partnership. Furthermore, Diageo is facing issues in its main regions, particularly the United States, where declining consumer demand and tariffs are reducing premium spirits sales.
India
