How Private Equity Fell in Love With Indian Cricket [View all]

During his stint at Duke, Lalit Modi immersed himself in U.S. sports, noting how the major leagues generated huge revenue by selling themselves as entertainment. As he worked his way up the ladder within the Indian cricket administration, Modi realized that a new, three-hour, broadcast-friendly format of the game—Twenty20—was the perfect vehicle to monetize the sport.

With the backing of the all-powerful local governing body, the Board of Control for Cricket in India (BCCI), Modi created a domestic T20 league from scratch. He succeeded in selling the eight teams—which had no players, identities, or home grounds—to prominent local businessmen and rich celebrities for a combined $620 million in 2007.

The jaws of players, fans, and administrators hit the floor. Cricket had never seen that kind of cash.

Nearly two decades out, the big bets on the Indian Premier League have paid off. One of the original franchises, Royal Challengers Bengaluru (RCB), was originally purchased for $112 million by United Spirits, the local subsidiary of global drinks manufacturer Diageo. This April, it sold RCB to the Aditya Birla Group, a multinational Indian conglomerate backed by Blackstone. The investor group also included David Blitzer, who has stakes in teams in the four major U.S. men’s pro sports leagues, as well as the English Premier League, MLS, and the WNBA. The price tag: $1.8 billion.




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