Melbourne Renegades Sale: Inside the Privatization Process for the Big Bash Club

The initial phase of the Melbourne Renegades sale commences this week, with Cricket Australia (CA), Cricket Victoria (CV), and consultant Raine Group formally inviting expressions of interest for 100% ownership of the club. A preferred buyer is expected to be identified before the men’s BBL season starts on December 12.

Despite recent debates surrounding BBL privatization—including calls from the Australian Cricketers’ Association (ACA) and several state associations to halt the process until four key requirements are met—CA, CV, and Raine Group have prepared a comprehensive due diligence document for prospective buyers.

What is the process and who is interested?

Prospective buyers will submit a formal expression of interest (EOI) to Raine Group, granting them access to the due diligence document and facilitating dialogue with the consultant.

“It’s not open to everyone,” Cummins told Cricinfo. “It’s for known high net worth individuals or investors. For the next four weeks or so that process will run through.”

It is understood there are 20 to 30 interested parties who could engage initially. Upwards of six IPL owners could be involved, including those with Hundred franchises. Not all will bid on Renegades; some will be invited to the initial phase to gauge the detail of BBL investment opportunities, potentially eyeing other clubs.

Sanjay Govil, owner of Washington Freedom in MLC and co-owner of Welsh Fire, may be one of those individuals, having already expressed strong interest in investing in Hobart Hurricanes. GMR group, part owners of Delhi Capitals, was also mentioned by Cricket Tasmania CEO Dominic Baker at a press conference last week.

Certain IPL owners are only interested in purchasing a BBL club at 100%, with possible MCG home games being a major drawcard. Only one Hundred franchise was sold at 100%, with Sun Group purchasing Northern Superchargers from Yorkshire and renaming them Sunrisers Leeds.

After the four-week EOI period—likely finishing in mid-to-late October—interested parties moving to the next phase will submit an indicative first bid. “From that point, we’ll assess the bids, the suitability of the bidders, and choose to take forward a small number of final buyers,” Cummins said. That number will likely be under five, possibly as few as two. These bidders will be invited to Melbourne for further discussions and due diligence, including conversations about training and administration facilities. The final bidding process will then take place, potentially as an online auction or silent auction, with a best-fit criteria rather than just the highest bid determining the winner.

“We’re confident that by around the start of the BBL, we’ll know who the buyer is,” Cummins said. “The deal may not be finalized by then, but at least we’ll know who the likely owner is.”

Melbourne Renegades have won two titles, one each for the men and women•Getty Images

What is for sale?

Clearly defining what is being sold is critical in the EOI phase. One lesson Raine Group learned from the Hundred was not detailing the terms of sale before agreeing to a price; those terms were discussed retroactively, creating complexities.

CA and CV are keen to clearly outline what is up for sale and the rights new owners or investors might have. For example, earlier this month, CA chief executive Todd Greenberg and chair Mike Baird insisted CA would retain control of the schedule.

“I think there’s a misconception that the Big Bash is for sale and that the Big Bash is being sold,” Cummins said. “What’s being sold is a team participation agreement (TPA). That is an agreement between Cricket Australia and Cricket Victoria to have a team that participates in the Big Bash. We are proposing to sell 100% of the Renegades’ team participation agreement and 49% of the team participation agreement with the Stars, although we would maintain control of the Stars.”

Currently, all eight TPAs in the Big Bash Leagues are owned by CA on 30-year leases to each of the states (Victoria and NSW each have two), with those leases having 15 years to run from the start of the coming season. Having a club come under a state’s ownership and fully onto their balance sheet has been a large part of the appeal for the three states pursuing privatization in Victoria, Tasmania, and Western Australia.

“Thinking about the Hundred, I think there are two main lessons—one derived by Cricket Australia and one for me,” Cummins said. “From Cricket Australia’s perspective, it’s making sure that upfront all the rules of engagement are agreed to before you go to sale. So an investor coming into the Big Bash understands what their decision-making rights are as it relates to fixturing, TV rights, share of commercial revenue—those rules are all in place so they know what they’re buying rather than trying to negotiate that after the sale price has been agreed.”

“From my perspective, talking to the teams that have gone through the process, it’s probably twofold. One is being really clear in your mind what the profile of the ideal investor is as it relates to the Stars because they’re going to be our partner going forward. But even with the Renegades, what kind of people would you like running a team in Victoria? The second part is the importance of having people on the ground. So even with Renegades, who we wouldn’t have an active management role with going forward, is impressing upon them the importance of having a Melbourne-based team [of administrators] who can continue to build that community connection throughout the year.”

Having matches at the MCG is a major selling point•Getty Images

The early part of the Hundred was marred by lower crowds, with the prevailing thought being that new owners underestimated the work required to build local engagement over a long period of time in the lead-up to the tournament.

There may also be opportunities with the Victorian government for the investor to build high-performance academies or facilities in Melbourne separate from CV’s training facility at the Junction Oval, something Rajasthan Royals have already done in Bundoora, about 35 minutes north of Melbourne’s CBD.

There will also be rules for the investor after the purchase. Teams will not be allowed to be on-sold within the first five years. If prospective investors want to sell beyond that period, the selling state and CA will have first rights to repurchase, although doing so at a higher price would defeat the purpose. CA will also have final veto rights on any future sales in the event of serious concerns around the investor involved.

The price, the final call and the ACA

The asking price has been carefully guarded. However, Hundred sales are certainly a guide, and CV, who will make the final call, won’t sell if they don’t get a minimum figure they are comfortable with. There is confidence they will get a price that makes the deal worthwhile.

The only 100% sale in the Hundred yielded AU$187.5 million for a club in Leeds that plays at Headingley. There is a thought that a BBL club in Melbourne, playing at the MCG, could hold equivalent global value. Those involved in the process are wary that the AU$272.8 million a US tech consortium paid for 49% of London Spirit, who play at Lord’s, is not a realistic reference point given it came on the back of a bidding war.

CV are comfortable with the division of the sales proceeds even if some other states have not been.

The ACA are still adamant that they have a right to 27.5% of whatever sale price comes in under the existing players’ pay deal, but CA are equally convinced the sale of an intangible asset such as a TPA does not get classified as revenue. The two sides are set to go to arbitration while the Renegades sales process goes on.

“We believe we’ve gone through all the due diligence,” Cummins said. “While there are some things that need to be ironed out around the MoU or with other states about whether they are going to sell, we’re very, very comfortable, and have been for some time, about our views around the Renegades.” “We’re not selling at any price. We’ve got a very clear financial ambition about what we want to achieve and if we don’t achieve that, we’re happy to retain ownership of the Renegades. But we’re conscious this is a project that’s been embarked upon to help Cricket Australia repair its balance sheet and put more investment back into Australian cricket and we want to help with that.”

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