Vijay Mallya's IPL splurge: Can he afford the luxury?

Flamboyant liquor tycoon and owner of the Royal Challengers Bangalore IPL franchise Vijay Mallya went all out on day one of the 2014 players’ auction held on Wednesday.

In a single day, RCB spent about Rs 29 crore on buying players, nearly half of which was spent on buying all rounder Yuvraj Singh for an eye-popping Rs 14-crore amount.

Given Mallya’s rather stressed state of finances in the wake of the Kingfisher Airlines crisis, that RCB has continued operations is a surprise in itself.

After all, with over Rs 7,000 crore of debts at the now-grounded airlines, a bevy of lawsuits over unpaid bills, taxes and employee salaries for a couple of years now, and Mallya gradually losing control of his UB group jewels, United Spirits and United Breweries (he’s no longer the largest shareholder in both firms), one would wonder where the money to pay exorbitant salaries to IPL players will come from?

Or worse, if Mallya even has the moral right to continue indulging in such luxuries as owning an IPL franchise, in the face of the developments of the past few years?

Hindustan Times reached out to a spokesperson at Kingfisher Airlines who said the IPL franchise was a subsidiary of United Spirits, which he claimed had nothing to do with the troubles of the airlines, and added “it is wholly incorrect to make a mischievous link between the IPL auction and KFA.”

But the same logic of United Spirits being insulated from Kingfisher’s debt woes did not wash with the Karnataka High Court when the carrier’s lenders contested the sale of United Spirits shares to British spirits maker Diageo by its parent company UB Holdings.

In a landmark decision in December last year, the court, while annulling the multi-billion-dollar sale, held that since UB Holdings was the guarantor for several of Kingfisher’s loans, it could not be allowed to sell United Spirits shares on its own volition.

Earlier, in 2012 as well, there were reports of RCB defaulting on its payments it owed to several foreign players such as AB De Villiers and Daniel Vettori.

While it is not clear when or whether that issue was sorted out, RCB continuing to operate in the IPL even as its parent group is saddled with thousands of crores of debt is bound to raise questions of where Mallya will get the money from for player salaries or whether it is morally upright for him to continue to own the franchise.