Since Lachlan Murdoch left the safety of News Corporation five years ago, he has slowly and steadily built a collection of assets that can only be described as eclectic. There are the radio stations (via a 50% stake in DMG Radio), the media company (Prime Media), the online retailer (Quickflix) and even a toy maker (listed company Funtastic).
But his more unusual asset — and, until last weekend, his best performing — was a stake in Indian Premier League, the Rajasthan Royals. Murdoch was part of a conglomerate that purchased the team for $US67 million in 2007, but it soon looked like he and his fellow investors had got a bargain.
New investment in the team in 2009 valued it at $US145 million, while the sale of two new IPL franchises in March this year put the market value of an average IPL team at about $US300 million. At those prices, Murdoch’s original investment of about $US8 million is now worth around $US28 million.
However, last night the Board of Control for Cricket in India confirmed that it was essentially banning the Royals and another team, the King XI Punjab, from the IPL competition for what it calls “irregularities” regarding the company’s shareholdings and ownership structure.
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“It was unanimously decided that franchise agreements with Punjab and Rajasthan be terminated forthwith based on legal opinions obtained by the BCCI in the matters,” a statement from the cricket board said.
According to a report from the Indian Express, BCCI Shashank Manohar said the Royals had different bidders during auctions. The agreement was entered in the name of a different company. The share-holding patterns were different and then the shares were transferred to different people without the permission of the governing council.”
There are no suggestions Murdoch had a role in or any knowledge of the “breaches” that the BCCI has accused the team of.
The Royals have also been quick to issue a statement defending their position: “Rajasthan Royals are shocked and surprised by the termination notice today, particularly without issuance of the show cause notice [summons] described to the media 10 days ago, which was never received.
“We have always conducted ourselves transparently in accordance with our contract terms and only desire fair and unbiased treatment from the BCCI. If the only way to achieve this is through legal recourse, then that is a shame for those that seek to invest in sport in India.”
It does seem like an extraordinary decision the BCCI has taken and given the amount of money involved in the IPL, there is a strong feeling that this story might have a few more chapters yet.
While the current Murdoch’s stake remains up in the air, it is understood that Murdoch has at least recouped the value of his initial investment in dividends from the Royals. A spokesman for Murdoch’s investment vehicle Illyria said the company was surprised by the BCCI’s action and watch the situation closely.