Rajasthan Royals just received a $1.3 billion offer, potentially making it cricket’s first billion-dollar franchise. But here’s the puzzle: the team generates just $17 million in annual profit and ranks seventh in revenue among IPL franchises.

So why would Blackstone, Carlyle, and Times Internet Chairman Satyan Gajwani bid aggressively for a mid-tier team? The answer lies in how sports franchises are actually valued, a methodology that looks radically different from traditional business valuation.

In this deep dive, we break down the three valuation approaches (DCF, comparable transactions, and brand value) that justify the $1.3 billion price tag, explain terminal value’s outsized influence on sports asset pricing, and reveal what this deal signals about institutional capital’s conviction in India’s media rights explosion.

Markets are moving faster than ever — but so is the noise. Between clickbait headlines, empty hot takes, and AI-fueled hype cycles, it’s harder than ever to separate what matters from what doesn’t.

That’s where The Daily Upside comes in. Written by former bankers and veteran journalists, it brings sharp, actionable insights on markets, business, and the economy — the stories that actually move money and shape decisions.

That’s why over 1 million readers, including CFOs, portfolio managers, and executives from Wall Street to Main Street, rely on The Daily Upside to cut through the noise.

No fluff. No filler. Just clarity that helps you stay ahead.

Subscribe free today.

In a transaction that could redefine cricket economics, Rajasthan Royals has received a preliminary bid of $1.3 billion (~₹11,956 crore) from a consortium led by U.S.-based entrepreneur Kal Somani. If consummated, the deal would mark the Indian Premier League's first billion-dollar franchise sale and value the 2008 champions at nearly 20 times their original $67 million franchise fee.

The bid arrives at a paradoxical moment. IPL's ecosystem valuation contracted 20% in 2025 amid geopolitical tensions and India's real-money gaming ban, yet institutional capital, including Times Internet Chairman Satyan Gajwani, Blackstone, and Carlyle Group continues circling the league's marquee assets. Four consortiums advanced in a competitive process orchestrated by The Raine Group, the investment bank that brokered Chelsea FC's £4.25 billion sale.

Rajasthan Royals' FY2024 financials reveal a franchise operating well below its valuation. The team generated $79 million (₹662 crore) in revenue and $17 million (₹142 crore) in profit, respectable figures but placing seventh among ten franchises.

The $1.3 billion bid implies a 76x price-to-earnings multiple and 16.5x revenue multiple, valuations that would make hypergrowth technology companies blush. Punjab Kings, the IPL's most profitable franchise with $30 million (₹252 crore) in FY2024 profit, would theoretically command $2.3 billion at Rajasthan's P/E multiple.

More concerning is revenue concentration: Rajasthan derives 84% of income from the IPL's central pool, the highest dependence ratio among established teams. This leaves minimal pricing power and limited control over its primary revenue driver.

Professional appraisers employ three primary methodologies.

DCF values a franchise based on all the cash it will generate over time. For IPL teams, the primary cash source is the BCCI’s central pool distribution, approximately $60-72 million (₹500-600 crore) annually per franchise.

Years 1-5: Project cash flows based on the current media rights cycle. Each franchise receives approximately $66 million (₹553.6 crore) from the central pool plus sponsorship revenue, growing at 5-8% annually.

Years 6-10: Model the next media rights cycle (2028-2032). Industry experts project 65-105% growth, potentially reaching $9.6-12 billion (₹80,000-100,000 crore) total, versus $5.8 billion (₹48,390 crore) today.

Terminal Value (Years 11+): You can’t model cash flows forever, so valuers calculate “terminal value” - what the franchise is worth as a perpetual cash-generating asset from Year 11 onwards.

The formula: Terminal Value = [Year 10 Cash × (1 + growth rate)] / (Discount Rate - Growth Rate)

Assume $120 million (₹1,000 crore) Year 10 cash flow, 3% long-term growth, and 10% discount rate. Terminal value = $1.76 billion (₹14,714 crore).

This explains why a team making $17 million (₹142 crore) profit today is valued at $1.3 billion, buyers are betting on decades of sustained growth.

Look at comparable recent sales. The key example is Gujarat Titans' February 2025 transaction.

CVC Capital bought Gujarat Titans in 2021 for $675 million (₹5,625 crore). Three years later, Torrent Group acquired 67% for $600 million (₹5,000 crore), valuing the entire franchise at $858 million (₹7,500 crore).

This generated a 3.5x return in 36 months, proving IPL franchises appreciate independent of team performance. Gujarat finished last in 2024, yet the valuation jumped 33%.

Rajasthan's bid is 51% higher than Gujarat despite similar financials. The premium reflects:

This isolates the franchise's brand as a standalone asset. Sports brands typically generate 8-12% of revenue as royalty value.

Rajasthan's $79 million (₹662 crore) revenue at 8% generates approximately $6.4 million ($53 million crore equivalent) annually in brand value, yielding about $53-64 million when discounted forward, matching Brand Finance's $53 million valuation.

The entire valuation rests on one assumption: sustained media rights growth. The 2023-2027 cycle generated $6.2 billion (₹48,390 crore), a 196% increase over the previous period. At $14.61 million (₹118 crore) per match, IPL became the world's second-most valuable sports property on a per-game basis, trailing only the NFL.

Industry projections for 2028-2032 range from $9.6-12 billion (₹80,000-100,000 crore) representing 65-105% growth. This base-case scenario likely underpins Somani’s $1.3 billion valuation. IPL Chairman Arun Dhumal projects media rights reaching $50 billion by 2043, implying 10-12% CAGR.

However, structural headwinds threaten growth. The JioStar merger (Disney + Reliance) unified TV and digital rights under one entity, eliminating competitive tension that drove 2022’s auction frenzy. Real-money gaming companies, which sponsored 25% of IPL revenue, face permanent bans post-2025, creating a $480 million (₹4,000 crore) sponsorship gap.

Despite risks, sophisticated investors see compelling logic. Only ten IPL franchises exist with no expansion planned, creating artificial scarcity that mirrors the NFL and Premier League model. This concentrates value among existing stakeholders, generating monopoly-like economics.

Satyan Gajwani's Times Internet consortium exemplifies strategic buying. The company's portfolio creates synergies unavailable to pure financial buyers: Cricbuzz's 100+ million monthly active users generate proprietary fan data; Willow TV provides media distribution across international markets; cross-league holdings in London Spirit and Major League Cricket position Times Internet as a global cricket platform.

Blackstone and Carlyle's participation signals institutional validation. These global private equity giants deploy capital based on risk-adjusted returns, not emotion. Their interest indicates IPL franchises have crossed into legitimate alternative investments.

CVC Capital's Gujarat Titans playbook provides empirical validation: 44% CAGR with structural downside protection, guaranteed central pool distributions from Year 1, no relegation risk, and interest-free payment terms allowing buyers to finance acquisitions with operating cash flows.

Sophisticated investors view franchises as portfolios of embedded options: season extension (expanding from 60 to 94 matches), international expansion (games in Dubai, London, New York), digital monetisation (streaming, NFTs, fantasy platforms), and India's demographic tailwinds (500 million new internet users by 2030).

Each option has uncertain probability but meaningful upside if realised. Venture capital logic applies: pay premium prices for high-variance assets where the mean outcome justifies entry valuation.

Rajasthan's 35% brand value decline in 2025 occurred while the team remained competitive, suggesting structural sponsor issues. Unlike American franchises controlling stadiums, IPL teams are tenants paying per game, without capturing ancillary revenue.

BCCI dictates schedules, formats, and expansion decisions, subordinating $1.3 billion investments to a governing body's whims. Royal Challengers Bengaluru's concurrent $2 billion sale discussions create pressure: RCB's superior metrics suggest Rajasthan's fair value may lie closer to $900 million-$1.1 billion.

The $1.3 billion bid should not be interpreted as precise fair value but rather as a negotiating starting point anchored by aggressive growth assumptions. The IPL's 2028-2032 media rights auction, scheduled for 2027, will provide the ultimate verdict.

Until then, bidders are placing billion-dollar wagers on whether cricket's most commercialised league can convert India's population boom into sustained media rights growth. Whether that conviction proves prescient or delusional depends entirely on variables outside any franchise's control: BCCI governance, media consolidation, and macroeconomic trajectory.

The Rajasthan Royals deal offers a masterclass in how qualitative factors including scarcity, prestige and option value justify valuations disconnected from traditional metrics. The $1.3 billion isn't just a price. It's a statement of conviction that India's attention economy will compound faster than even aggressive models predict.