Diageo Plc is exploring options regarding its ownership of the Royal Challengers Bengaluru (RCB), the Indian Premier League cricket franchise, according to individuals knowledgeable about the situation. RCB achieved their maiden IPL victory recently. RCB, an original IPL franchise with Virat Kohli as one of its key players, was first owned by Vijay Mallya, who ran the now-defunct Kingfisher Airlines Ltd. that ceased operations in 2012. The team subsequently came under Diageo’s ownership following their acquisition of Mallya’s spirits operations.Diageo, the UK-based spirits company, has initiated consultations with potential advisers to evaluate various options, including the possible stake sale of a portion or the entirety of the club, according to a Bloomberg report. Through its Indian subsidiary, United Spirits Ltd., Diageo could value the franchise at approximately $2 billion, according to these individuals quoted in the report.The sources indicated that the final decision remains pending and the company might opt to retain ownership.On Tuesday morning, United Spirits’ shares rose by up to 3.3% in Mumbai trading, reaching a five-month peak following reports of the potential transaction.These developments coincide with the Indian health ministry’s efforts to prohibit the promotion of tobacco and alcohol brands in the IPL, alongside restricting sports personalities from indirect endorsement of other unhealthy products, the report said.
In India, direct advertising of tobacco and alcohol products is forbidden, although companies like Diageo have marketed alternative products such as soda using prominent cricket players.The increasing value of IPL teams has transformed them into highly desirable sports investments. A potential sale could establish new pricing standards for future transactions in this rapidly expanding sports league.The IPL has developed into a significant entertainment and advertising platform, comparable to the National Football League and English Premier League in commercial value. Its condensed, three-hour matches attract vast audiences across India and internationally.Diageo faces challenges in its primary market, the US, where tariffs and reduced consumer spending affect premium spirits sales. A potential sale could provide capital whilst the company focuses on core operations and evaluates its global asset portfolio, the report said.
