Diageo weighs RCB stake sale as IPL hits $2 bn valuation, ad norms tighten

Business Standard

19 hours ago

British spirits giant Diageo Plc is exploring the possibility of selling part or all of its stake in the Indian Premier League (IPL) cricket franchise Royal Challengers Bengaluru (RCB), Bloomberg reported on Tuesday. The company, which holds the team through its Indian subsidiary United Spirits Ltd, is in early discussions with potential advisers.
While no final decision has been made, the franchise could be valued at up to $2 billion.
Diageo and United Spirits have not issued any public statements regarding the potential divestment.
Health Ministry urges tighter ad rules on IPL ads
The move comes as Diageo faces mounting regulatory pressure from the Union Health Ministry to curb indirect advertising of alcohol during major sporting events like the IPL. The company has historically leveraged soda and non-alcoholic brand extensions to maintain visibility under existing restrictions, a strategy that could soon be curtailed under stricter advertising norms.
Valuation soars with RCB's commercial rise
RCB, one of the original teams in the IPL) was first owned by liquor tycoon Vijay Mallya. The team later came under the control of Diageo after it took over Mallya's beleaguered spirits empire.
RCB recently won its first IPL title, a major milestone that has boosted its visibility and commercial appeal. With Virat Kohli - one of the most followed athletes globally - in its ranks, RCB commands enormous market appeal, particularly across digital platforms.
The potential sale comes as IPL franchise values continue to soar, thanks to the league's rapid commercial growth, bringing it on par with the NFL and English Premier League in terms of global influence and ad revenue.
For Diageo, the timing may be strategic. The company is witnessing a decline in premium liquor sales in its largest market, the United States, and broader global cost pressures. Selling RCB, a non-core part of its business, could free up funds and help Diageo focus on its main operations.
Health Ministry pushes to ban surrogate promotions of alcohol, tobacco
The backdrop to this development includes a recent push by India's Union Health Ministry to ban all forms of alcohol and tobacco advertising, including surrogate promotions, during IPL broadcasts and related events. In March, the ministry wrote to IPL Chairperson Arun Singh Dhumal, urging a complete prohibition on such advertisements across all platforms, including television, stadiums, and affiliated venues.
'The Indian Premier League (IPL), being India's most viewed sporting event, sends a contradictory message to the public about health and fitness when it allows the direct or indirect promotion of tobacco and alcohol,' the ministry had said in a statement.
The ministry also called for a ban on the sale of tobacco and alcohol products at all IPL-related events and sports facilities.