Diageo deal ends Mallya’s major sporting interests
BENGALURU: With the signing of the deal that terminated Vijay Mallya’s chairmanship in United Spirits earlier this week, the ‘King of Good Times’ has also kissed goodbye to two of his major sporting interests – IPL and F1.
The $75 million (`515 crore) golden handshake Mallya signed with UK-based liquor major Diageo effectively terminated his control over IPL team Royal Challengers Bangalore (RCB) and Sahara Force India.
The footnote in his media statement announcing his resignation from United Spirits Ltd (USL) said: “On the sporting front, I will now be the chief mentor of the Royal Challengers Bangalore. I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a Director as he is equally passionate about RCB.” The statement was silent on Force India.
RCB is controlled by USL (in which Diageo holds controlling interest) and the control over Watson Ltd, the UK-based company that owns the F1 team, has also shifted to Diageo. The loss of control over Watson was a result of a $135 million (approx ` 928 crore) loan deal with Standard Chartered Bank for which Diageo stood as a guarantor, which was subsequently defaulted. Shares in Watson and United Breweries had been pledged with Diageo. Last May, Standard Chartered loan matured and went into default.
Diageo paid Standard Chartered approximately $141 million (approx ` 970 crore) under this guarantee, including the $135 million (approx ` 928 crore) principal amount, as well as payments of default interest and various fees and expenses. Watson remains liable for all amounts paid pursuant to the guarantee, Diageo said.
The UK-based company also said that Sidhartha Mallya will remain on the board of the USL group company which holds the RCB franchise. “Diageo may not seek to remove him from that board for a period of two years, subject to agreed exceptions. Dr Mallya will have the honorary title of chief mentor while Sidhartha Mallya remains on that Board.
“It is also agreed that the members of that board will be able, if they wish, to consult with Dr Mallya.”
Mallya had bought RCB in 2008 for a staggering $111.6 million (approx ` 767 crore), second only to the $111.9 million (approx ` 770 crore) Mukesh Ambani paid for Mumbai Indians.
Earlier this month, Mallya had bought a stake in t he Caribbean Premier League franchise Barbados Tridents for $2 million (`13.75 crore). Mallya had also invested in football through Mohun Bagan and East Bengal, although his controlling interest in the teams remains unclear.