Lachlan Murdoch enjoys windfall on Indian cricket investment

Lachlan Murdoch’s investments in DMG Radio, Prime Media Group and toymaker Funtastic might not be setting the world on fire, but he has enjoyed great success with one buy – his stake in Indian Premier League Cricket team, the Rajasthan Royals.

Yesterday the value of his 5.5% stake in the team skyrocketed after the auction of licenses to run two new teams in next year’s IPL tournament.

Conglomerate Sahara purchased the rights to operate a team in Pune for $U370 million, while Rendezvous Sports purchased the license for a team in Kochi for $US333 million.

The prices have surprised Indian commentators (the base for the auction was $US225 million) but will thrill the owners of the original eight IPL teams.

While those teams sold for an average price of about $US70 million, it appears those existing franchises are worth as much as $US300 million.

Even on a conservative valuation, Murdoch’s stake in Rajasthan, which cost the equivalent of about $US3.6 million in June 20008, could now be worth up to $16.5 million.

While the Indian IPL has often made headlines in Australia for the wrong reasons – some cricket commentators fear that the huge salaries offered to players could cause some stars to turn their backs on representing their country – the third IPL series is incredibly popular in India.

Hours of news coverage are dedicated to every game and the Times of India has nine separate celebrity columnists – including former Australian test stars Brett Lee and Steve Waugh – writing on the tournament.

The new license holders appear to have taken something of a punt on the plan to expand the IPL concept aggressively in the coming years.

There have been suggestions that the tournament could be taken to England and even the United States in the future, and the idea of holding two tournaments each year has also been floated.

If the competition can continue to grow sustainably, then the value of Murdoch’s investment should also rise.