Updated below with a statement from the Rajasthan Royals

Earlier: In a stunning move yesterday, the Board of Control of Cricket in India (BCCI), the body which governs Cricket in India, terminated the license of two teams that founded the Indian Premier League – the Rajashtan Royals, which had won the tournament during the first year, and the  Kings Xi Punjab. The Kochi team, which won the bid for a new team earlier this year for $333 million, has been given time to sort its internal issues within 10 days, else it will be expelled, according to AIR. The IPL was expected to hold player auctions next month, and this will surely lead to a delay. And the franchises who have been expelled will probably seek legal options, which is likely to delay the IPL-4 tournament, which was set to begin after the World Cup ends on April 2nd 2011.

Grounds for Explusion

The grounds for explusion appear to be that the ownership structure of both entities was changed during the three years, and the entity which owns the shares of the franchise isn’t the same as the one that had won and signed the bid document. Cricinfo has details of the case against both the franchises, and the complete lowdown on what’s going on. The franchises are considering legal options too.

Deals & Impact

– IPL Digital Deals: Several digital companies have been involved with the IPL in the previous three editions – some of which have built their entire business around these rights – and this going to throw a spanner in the works, as far as their plans are concerned. Companies with digital rights in IPL 3 include: YouTube for Online Live Streaming ; Apalya for Mobile Live Streaming; VRock Mobile for SMS, MMS and IVR; July Systems for Mobile Portal and Mobile Video (and Global Cricket Ventures has a small stake in the company); Indiagames for Online and mobile games partner; Sigma Venture and DCI Mobile Studios for mobile apps; GoBindas as the IVVR partner in the UAE. Our coverage of IPL Digital Rights)

– Revenue Hit: Now, with these two teams being expelled, the total number of teams in IPL 4 has gone down from ten to eight. The number of matches will probably have to be reduced from 74, and this is going to impact live streaming revenues for YouTube and Apalya, TV revenues for MultiScreen Media, online ticketing revenues for ticketing partners, among others.

– Global Cricket Ventures: It still isn’t clear whether Global Cricket Ventures, which has the Internet and Mobile licenses (and splits and licenses rights to these companies), still has these digital rights to license forward. While the reasons for the expulsion of the two teams appear to be on grounds of not adhering to the franchise agreement (details below), the former IPL Chairman Lalit Modi is alleging personal agendas, and sees this as vengeance. Members of Modi’s extended family allegedly own stakes in the Rajasthan Royals and Kings XI Punjab. No action has been taken yet against GCV, which has investments from Elephant Capital, which has Modi’s step daughters husband Gaurav Burman as its Managing Director. Burman’s elder brother Mohit, is involved in the consortium that owns the Kings XI Punjab.

– Franchise Deals: Franchises have used the digital medium to promote themselves and build fan bases. Kings XI Punjab worked with Mig33 on mobile chats with fans, and lists Aroma Mobiles has its official handset partner and DigiCable as its Official Cable TV Network; Rajasthan Royals has a premium community with SMS Gupshup, and lists Musafir.com as its official ticketing partner, and Suvidhaa as its retailing (m-commerce) partner.

You haven’t heard the last of this yet. I wonder if this decision would have been taken if we had only a month for IPL 4 to begin. Probably not.

Update: An official statement from the Rajasthan Royals:
10th Oct 2010: Rajasthan Royals are shocked and surprised by the termination notice today, particularly without issuance of the show cause notice described to the media ten days ago, which was never received. Naturally we will need some time to review the termination notice sent today, such that we can provide a considered response. We have always conducted ourselves transparently in accordance with our contract terms and only desire fair and unbiased treatment from the BCCI. If the only way to achieve this is through legal recourse, then that is a shame for those that seek to invest in sport in India.

We are proud of the role that we have played in building the IPL into one of the most successful sporting events in history, and we intend to protect our investment and our brand – especially for the millions of fans that we have across the world.

Related:

– The Hindu: World Sport rejects BCCI’s termination of agreement
– NDTV/PTI: MSM To Pay Over Rs. 190 Cr More To BCCI For IPL 4 Rights

– LCM President Mark Melville Resigns; To Join Global Cricket Ventures
– July Systems Expects Double Digit Million Revenues; Equity Deal With GCV
– VRock Licenses IPL Mobile Content To Multiple Co’s; In Talks For Stake In PhoneyTunes
– Complete List Of IPL3 Mobile Partners