IPL rights renewal should yield the biggest delta for SunTV, the owner of Sunrisers Hyderabad (SRH), as the team’s valuation may spike the most, even as the contribution to future market cap may look skewed should the broadcasting business likely grow at a faster clip, Elara Securities said in a report.
Mumbai Indians (MI) and Royal Challengers Bangalore (RCB) may contribute 0.7 per cent and 15.5 per cent to their owners’, Reliance Industry (RIL) and United Spirits (UNSP), market caps, respectively, the report said.
“We ascribe 14-15.5x market cap/sales valuation to IPL teams, implying a base-case valuation of at least $1.2 billion. This can be 15 per cent higher or lower than the base case, based on factors such as players’ profile in the team, higher sponsorship revenue and qualification in play-offs.
“The target valuation is hinged on factors such as franchise team’s revenue growth (led by increased yield from media rights) and benchmarking growth/global team franchises’ valuations (case in point, Manchester United),” the report said.
Digital/TV to see premiums of 100 per cent/40 per cent over the current base. Based on these premiums, the share of digital might rise to 50 per cent in IPL media rights.
“We anticipate 6 per cent/35 per cent revenue CAGR in FY23E-28E for TV/digital, respectively. This in turn should massively bolster India sports media rights market. And IPL’s share may grow to 74 per cent from 54 per cent currently, evincing its importance.”