On the night of October 16, when Chennai Super Kings (CSK) defeated Kolkata Knight Riders (KKR) to lift the Indian Premier League (IPL) trophy for the fourth time, the attention on the field quickly shifted from the match-winning exploits of CSK opener and former South African captain Faf du Plessis and West Indian white-ball veteran Dwayne Bravo to that of ‘Thala’—the franchise’s record-breaking captain Mahendra Singh Dhoni. Was the iconic player going to announce his retirement from the IPL, a year after he had quit international cricket?
A month after that win, Dhoni has broken his silence, saying his “last T20" will be in Chennai, CSK’s headquarters. “Whether it’s next year or in five years’ time, I don’t know," he said at a felicitation ceremony in the Southern city, which was attended by Tamil Nadu Chief Minister MK Stalin.
For millions of CSK, and Indian cricket, fans, Dhoni and CSK are symbiotic and almost synonymous brands. The World Cup-winning captain has led CSK to nine finals since IPL’s inception 13 years ago and has won four titles. He is CSK’s most-capped player with 172 games, and has the most runs and fifties. It is no surprise that the CSK management has indicated that Dhoni, 41, will be the first player it will retain for IPL 2022, scheduled to be played in India in April-May. “The ship needs its captain and rest assured he will be back next year," a CSK official was quoted as saying in October.
The CSK team, and Dhoni himself, have been to hell and back in the past four or five years. The franchise had been suspended for two years till 2017 due to the betting activity of its key official Gurunath Meiyappan in 2013. CSK came back from the suspension and won the T20 championship in 2018 and were runners-up in 2019. In 2020, they did not qualify for the playoffs for the first time in IPL history. Last year, the IPL was held in the UAE due to the Covid-19 pandemic, and with low sponsorship and without crowds, revenues of all IPL teams fell.
Dhoni’s future as a player had come under greater scrutiny after he quit all international cricket in 2020. Duff & Phelps India’s external advisor Santosh N wrote: “CSK’s worst ever on-field performance and the concerns of an ageing roster have negatively impacted the brand credibility, and a correction was inevitable," he said in their 2020 IPL valuation report.
But the bounce back of Dhoni and CSK is extraordinary, refuelling interest in the unlisted CSK stock, brand Dhoni and brand CSK. The introduction of two new teams into the IPL franchise—Ahmedabad (led by CVC Capital) and Lucknow (led by Sanjiv Goenka’s RG-SG Group)—is likely to boost valuations for the top performing teams in the coming years, including CSK, Mumbai Indians, KKR and Rajasthan Royals.
“The CSK and Dhoni brand go hand-in-hand, having gone through rough patches after which they bounced back. There can be no CSK without Dhoni… his leadership and consistency have been the key," says Bhairav Shanth, managing director and co-founder of ITW Consulting, which specialises in sports, media and entertainment consulting and management. CSK has the highest winning percentage (59.69 percent) among all IPL teams, ahead of Mumbai Indians (58.82 percent) and KKR (51.67 percent).
2. Future growth prospects of the franchise, its ability to attract more sponsorships and the kind of fan loyalty the brand commands. Valuation and pricing are not necessarily the same for a sports franchise. Ashwath Damodaran, in a presentation at the MIT Sports Analytics conference in 2015, spoke of "mood and momentum"—behavioural factors from investors—as drivers of price or value of the franchise. Currently, both mood and momentum are very much with CSK. Damodaran also spoke about how one tells the story plays an outsize role as well. CSK has done that as a team. That is on the back of its efforts of building a community of dedicated “Yellow Army" fans—which is how most iconic teams internationally have built their legacy (and their value), ITW Core says.
The sustained presence of institutional investors has made retail investors confident about CSK, despite a certain amount of volatility in the stock. CSK’s scrip had risen to Rs190-200 levels in October-end. From there, the stock has edged down a bit due to profit booking.
Chennai-based chartered accountant Pranay Shah made his first investment—in the form of CSK stocks—after being mainly focussed on listed large cap stocks in previous years, being bullish in the areas of health care (labs), commodity-focussed infrastructure, building materials and packaging.
Krishna Raghavan, deputy CEO at Unlistedkart, a market-making and research platform for unlisted stocks, says “CSK has proven to be one of the favorite picks in the unlisted space based on the performance of the franchise in the league and also being backed by promising investors."
“IPL is the most-valued cricketing league across the world and CSK is the only franchise to have seen such high valuations," adds Raghavan. Dhoni’s semi-final cameo winning runs (18 not out off six balls) versus Delhi Capitals helped drive social media interest. Wavemaker India’s IPL 2021 report said the IPL’s social media chatter grew by 33 percent over last year and crossed over 80 million mentions this season. CSK was the most popular IPL team with 13.8 million mentions.
Raghavan says considering the factors “contributing to CSK"s performance and valuations, one player"s [Dhoni] retirement would not have great impact on the franchise’s valuations".
“CSK is estimated to continue generating strong revenues from merchandise sales, sponsorships, portions of prize money and digital viewership revenues for FY22. Going forward, with a strong management on and off field, coupled with recovery in the sports industry and CSK’s popularity, one can expect profit and revenue growth," says 5paisa.com research, in a note to clients.
Dhoni himself remains an equally strong brand. He not only drove India to the top of the International Cricket Council (ICC) rankings in December 2009 but is also the only cricket captain in the history of the game to have won all ICC trophies—the World Twenty20 (2007), the 2010 and 2016 Asia Cups, the 2011 World Cup (2011) and the Champions Trophy (2013).
ITW’s Bhairav is confident that both the brands—CSK and Dhoni—will continue to grow. “The IPL is a matured franchise over the past 14 years. Its journey will be like the football leagues, where the players command the value of the franchise. In all likelihood, Dhoni will start to play the role of a mentor or a playing coach, which will be larger than just a player or the captain of a team."
But what happens when Dhoni finally retires from the IPL? Santosh N of Duff & Phelps says: “CSK must find a new marquee player to attract sponsors post Dhoni’s retirement, to maintain its brand value otherwise, there might be further value correction." Bhairav believes otherwise. “CSK’s enterprise and brand values will continue to increase with or without Dhoni playing in the team. Good leadership is about finding a replacement and being replaceable. Dhoni is already creating this structure. He will not leave CSK without a clear succession plan and bench strength."
After CSK’s IPL victory this year, Dhoni said it was not about him being there in the top three or four [positions]. “It"s about making a strong core to ensure the franchise doesn"t suffer." The core group, he said, will have to have a hard look to see who can contribute for the next 10 years." As CSK plans bidding for players towards the 2022 season, Dhoni reportedly does not want to be the first player to be retained. He wants the CSK management to identify other players who can be the top-earners and emerge as top performers for the franchise. That is proof that he is already ensuring that there is a clear succession plan where the team goes beyond people who just fill up slots. Dhoni is also thinking about a franchise which grows into the next decade. This is exactly what will drive CSK and its valuation higher.
First Published: Nov 26, 2021, 10:04
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