Sahara India, owners of the Pune Warriors franchise, have pulled out of
the IPL over financial differences with the BCCI stemming from the
valuation of the annual franchise fee it has to pay. The decision, the
latest crisis to hit the IPL, comes three years after it bought the Pune
franchise for $370 million - the highest price paid for any of the IPL
franchises.
It seems the immediate cause was the BCCI's decision to cash the bank
guarantee from Sahara that that it was obliged, under its contract, to
furnish at the start of each season. The guarantee is equivalent to the
amount to be paid annually to the BCCI and can be cashed in case a
franchise fails to honour its commitments.
In this case, Sahara had furnished a bank guarantee worth Rs 170.2 crore
(approximately $30 million). Since the deadline for paying the
franchise fees was May 2, the BCCI waited till Sahara's IPL 6
commitments were over and cashed the guarantee on May 20.
Reacting to the development, IPL chairman Rajiv Shukla said the board
cashed the bank guarantee according to the rules. "Yes, it (Pune
Warriors) has pulled out. As per the rules and procedure of the BCCI if a
franchise fails to pay the fee then we cash the franchise's bank
guarantee. We are extremely sad by their decision to pull out. This
should not have happened," Shukla said.
Pune Warriors coach Allan Donald was caught off-guard by the decision.
"This is a massive surprise to me," Donald told ESPNcricinfo. "I'm
shocked because we had spoken, not in great detail but loosely, about
prospects for next year. The owners were really upbeat for next season
and the next three years because next year we'd have new contracts, new
players. We spoke about the possibility of building a culture within the
team."
Pune Warriors finished eighth in the current IPL season, winning four
out of their 16 matches.
This is the second time Sahara have pulled out of the IPL; they quit on the day of the 2012 auction and withdrew from sponsorship of the Indian team.
This time, though, Sahara will continue its sponsorship of the Indian
team until the end of December 2013, when their present contract
expires. "We share an excellent relationship with the players and will
not want such dedicated and good human beings who serve the country so
committed to get harmed financially due to unsporting attitude of BCCI.
So we have given time to BCCI to get the new sponsorship in place from
January 2014."
Sahara's actual franchise fee has been a contentious issue ever since
they bought the Pune franchise for Rs 1702 crore ($370 million) in March
2010. Sahara had been demanding that the franchise fee from their
original agreement should be recalculated since the minimum matches per
year have been reduced to 14 from the 18 promised to them.
In a lengthy statement,
Sahara detailed its dispute with the BCCI ov
er franchise fees. It said
it was "disgusted" by the BCCI's attitude towards it and would not
rejoin the league even if the entire franchise fee was waived.
"In 2010, Sahara had bid Rs 1700 crore for the IPL franchise on the
basis of revenue calculation on 94 matches. But we got 64 matches only,"
it added.
"We and the Kochi team [also bought at the 2010 auction] immediately
protested and requested the BCCI to reduce the bid price proportionately
for viable IPL proposition. Nothing was heard. We waited with
confidence that such a sports body should have sportsmanship spirit," it
said.
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