| And dazzling RCB is. Among the most recognisable IPL teams with a fanbase of over 40 million across platforms and Virat Kohli as its long-time face, its reported valuation of over a billion dollars is more than 15 times its annual revenue, a clear indicator that investor appetite is being driven less by present-day cash flows and more by brand strength. Diageo’s willingness to walk away is telling. For one, the fit has always been awkward. Diageo is a beverage company, and in India, the restrictions on alcohol advertising make it difficult to leverage sports franchises for direct brand visibility. From a financial standpoint, RCB contributed very little to United Spirits sales and profits. Against that background, raising over a billion dollars by selling a non-core asset looks like a smart exit. Globally, the record of corporate ownership in sports has been mixed. European football clubs Paris Saint-Germain and Manchester City have notched up titles, built global fanbases, and grown revenues into hundreds of millions. But with cost structures dominated by inflated wage bills, profitability has been elusive. The logic for owning sports teams then hinges on indirect benefits like influence, branding, and soft power. While individual billionaires and sovereign funds may prioritise such rewards, they mean little to the average shareholder of a publicly-listed company. In India, corporate ownership of sports has taken different shapes, with varying results. One notable example is Reliance Industries’ long-term investment in the Indian Super League (ISL) which was meant to be Indian football’s answer to the IPL. Twelve years after it began, ISL has struggled to match the IPL’s commercial firepower and nearly collapsed some months ago. Despite its laudable aim to revive Indian football, Reliance gained very little from its involvement. Data about market reactions to sports success confirms that gains from such partnerships are iffy for companies. A 2019 study found that companies sponsoring IPL teams experienced short-term stock price gains when their teams performed well. However, the effect dissipated quickly and had little bearing on long-term stock performance. There is, of course, another model that makes corporate ownership of sports teams work: the private equity playbook as exemplified by Elliott Management's acquisition of Italian football club AC Milan in 2018. The US hedge fund took control of the struggling club, implemented financial discipline and restructured operations. In 2022, Milan won the Serie A title, allowing Elliott to sell off most of its stake to RedBird Capital for €1.2 billion, nearly double what it had invested. That model may be the real economics of premium sports franchises: they operate on the Greater Fool Theory that drives much of private equity and venture capital. The bet isn't on sustainable cash flows or strategic synergies, but on finding a buyer willing to pay more tomorrow than you did today. In a market where IPL franchise valuations have tripled in just three years, and where new money keeps flowing in, that strategy can work, provided the exit is timed right. Consider Chennai Super Kings: after five title wins, the team finished last this year and lost its ranking as the most valuable IPL team. With UltraTech buying team owner India Cements last year, its future looks uncertain. As Indian billionaires and corporates line up to bid for RCB, they would do well to ask themselves not just what the team is worth, but whom they expect to sell it to. If ownership is seen as a turnaround play with a clear exit horizon, the deal may work. But if it's expected to deliver strategic value or sustained returns, they may find themselves holding an expensive trophy with no one left to pass it to. | 
