IPL delays new franchises after financial demands deter bidders

The Indian Premier League has delayed the announcement of its two new franchises by two weeks and scrapped the existing tender procedure after bidders objected to stringent financial clauses. The new tenders, which were due to be revealed today, will be floated on 9 March and opened on 21 March, and will drop a clause requiring the bidder to have a net worth of $1bn. The new process will also amend two existing clauses. One will be to reduce the advance deposit from $100m to a $10m "performance guarantee", to be submitted 24 hours in advance of the bid being opened. Another gave the IPL's governing council the discretion to seek from the winning bidder 100% of the amount within a minimum time-frame; under the new process, the winning bids will be expected to pay 10% of their bid within 48 hours. The minimum bid amount, however, remains $22m. The existing tenders were not opened at the IPL governing council meeting in Mumbai and were returned to the bidders. "The relaxation [of the clauses] was because we received letters from many, many companies who had expressed interest but said that the $1bn net worth criterion [was one] which owners of the existing franchises were not asked for earlier," the IPL commissioner Lalit Modi told a press conference. "So they asked why they were asked for the new criteria, which eliminates them from bidding, hence the clause has been amended to give more people the opportunity to bid." Under the stringent criteria initially introduced this year, only three bidders showed interest: a consortium of the Bollywood stars Saif Ali Khan, Kareena Kappor and her sister Karisma, Pune's Panchshil group of industries and Venugopal Dhoot, the owner of electronics manufacturer Videocon, who were bidding from Pune; the Adani Group for Ahmedabad and the Jaypee Group from an undisclosed venue. The cities in the fray were Pune, Ahmedabad, Nagpur, Kanpur, Dharamsala, Vizag, Rajkot, Cuttack, Baroda, Kochi, Indore and Gwalior. The base price for the bid is more than four times the value set in January 2008, when the original eight franchises were auctioned. Other terms and conditions were similarly stringent - all bidders had to stump up a returnable deposit of $100 million before the bid, as against the $5 million (approximately) stipulated in 2008.