Investing in IPL a proxy for India consumption story: RCB co-owner Aryaman Birla
MUMBAI: Aryaman Birla, co-owner of Royal Challengers Bengaluru, sees the Indian Premier League (IPL) as more than just cricket; this is a mirror of India’s consumption story.
“As the Indian middle class grows and wages rise, this goes into advertising and publishing and touches most people. It goes into revenue and we saw it as a story of consumption, media, entertainment and sports,” Birla’s scion said at the Mint India Investment Summit in Mumbai.
Earlier this week, a consortium comprising the Aditya Birla Group, US sports investor David Blitzer, private equity giant Blackstone and Satyan Gajwani of family office Times Group bought the reigning IPL champion from liquor giant United Spirits Ltd for $1.78 billion, or approx. ₹16,600 crore.
Birla said the group is more optimistic about the next media cycle, which will start in 2033, than the current one. “What we believe is really important is not this media cycle, but the next one… and we believe this cycle is more bullish than the current cycle,” he said.
According to a Media Partners Asia report, IPL media rights have increased sixfold since the 2008 auction, from $0.9 billion to $5.4 billion in 2023-27. Despite this growth, the report estimates that beneficiaries could record cumulative losses of $1.8-2.0 billion in the current cycle.
At the summit, Birla described cricket and IPL as a new investment class in India. “The fact that private equity firms are willing and able to leverage this asset proves that it is investment grade,” he said.
Center of strategy
The former professional cricketer said owning an IPL team is central to the group’s consumption strategy. “We are investing deeper in India’s consumption story and looking at sports as an opportunity. Having an IPL team was core to our strategy,” he said.
Aditya Birla Group has a broad footprint across consumer businesses spanning telecom (Vodafone Idea), fashion and retail (including Aditya Birla Fashion and Retail, Pantaloons and Van Heusen), chemicals (Birla Carbon, Aditya Birla Chemicals), renewables (Aditya Birla Renewables), paints (Birla Opus) and real estate (Birla Estates).
The group has also invested in a number of consumer companies in 2021 through Aditya Birla Ventures, the venture capital arm founded by Aryaman Birla. The portfolio includes Giva, Mokobara, Moofarm and Firstclub.
Profitability and nationwide interest also guided this acquisition. “IPL franchise P&L is very profitable compared to other sports. It is culturally relevant. IPL and cricket will be relevant and they are recession and AI proof,” Birla said.
RCB reported the following revenue: ₹634.7 crore and net profit in FY24 ₹221.8 crore, reversing the loss from the previous year.
Birla previously played for rival team Rajasthan Royals, which was bought for $1.63 billion ( ₹15,286 crore) by a consortium led by Arizona-based tech entrepreneur Kal Somani, American businessman Rob Walton of the Walmart family and the Hamp family, majority owner of NFL side Detroit Lions.
He pointed out the rapid increase in value of IPL. “The BCCI and the government have managed to formalize this amazing IP (intellectual property). It is the second most valuable league per game after the NFL (National Football League) and is only 18 years old,” he said, pointing to the league’s limited number of franchises (32 teams as against 10 in the NFL) as a scarcity and value creation factor.
