Valuing 'The Hundred': How will prospective investors evaluate cricket’s newest franchise?

As the nights draw in and the weather begins to turn cooler (and wetter), many will be feeling a sense of sadness at the end of another long and eventful domestic cricket season.  The competition is about to hot up, however, when it comes to the England and Wales Cricket Board’s (ECB) attempts to sell off stakes in the eight Hundred franchises (the Franchises).  The Hundred is the ECB’s flagship short-form domestic cricket tournament, consisting of eight men’s and women’s Franchise teams from across England and Wales.  Earlier this year, the ECB announced that it would sell stakes in the eight Franchises to private investors, with the aim of raising up to £500 million to invest in the established county system and grassroots game.^[1] 

So, who is going to invest in the Franchises?  Recently, there has been speculation that Hollywood stars and Wrexham AFC co-owners Ryan Reynolds and Rob McElhenny are interested in buying a stake in Welsh Fire^[2].  This follows other news stories around the interest of investment by private equity firm CVC Capital Partners^[3] and attempts by the ECB earlier this summer to gauge interest in investment from National Football League (NFL) and Indian Premier League (IPL) owners.^[4]   The variety of potential investment parties may explain why it has been reported that valuations of 100% of the Franchises could be worth anywhere between £30 million and £120 million.^[5] 

This article explores some of the valuation factors that may explain why the range of valuation could end up being so wide when it comes to the particular Franchises and the parties who may invest:

• The importance of the captain and the need for control
• A “Baz-ball” premium – the benefits of adding to the brand
• Four-seeability – what are the key risk factors for potential investors