So when Diageo India, through United Spirits Ltd, announced that it is reviewing strategic options for its ownership in RCB, the move made financial sense on paper. A look at the names and profiles of potential buyers and a likely $1.5-2 Bn deal size has D-Street excited too.
But as they do in cricket, should there be another look at this? A DRS (Decision-Review-System) perhaps?
The Logic On Paper:
To be fair, there is a very strong case for it. RCB is not core to Diageo’s primary business — making and marketing alcoholic beverages. The company makes its money from brands like McDowell’s No.1, Royal Challenge, and Smirnoff, not from selling tickets or jerseys.
And the value on offer is not small change either. RCB’s estimated valuation – between $1.5 billion and $2 billion – could fetch anywhere between 15–20% of Diageo India’s total sum-of-the-parts valuation. For any public company, that is a tempting cheque to cash.
RCB is at a high point: fresh off its first IPL championship win in 2025, riding a wave of fan sentiment, and topping the latest franchise valuation charts. Virat Kohli’s playing future remains uncertain, women’s cricket and the WPL franchise RCB owns have exploded in value, especially after Team India’s recent victory at the Women’s ODI World Cup. Selling when the market is hot makes financial sense.
It’s fair that Diageo may prefer to redeploy that capital into its high-margin premium spirits portfolio. From a purely corporate-finance lens, this is a clean, high-IRR exit. For perspective, when the earlier owner of United Spirits, Vijay Mallya, first bought it in 2008, it was valued at $112 million. Adjusted for currency, it’s a near 30 times return over 18 years.
Beyond Logic, Could There Be Magic?
Now, I’m neither a supporter of RCB (I’m a Mumbai Indians fan), nor a shareholder of United Spirits. As a truly unbiased – but interested in cricket and business strategy – party, I feel that if one takes a step back, this strategic review starts looking less like long-term strategy and more like short-term optimisation.
The IPL is the second most valuable broadcast property in the world, behind only the NFL. The ecosystem is valued at well over $18 billion and is still growing as per Houlihan Lokey’s IPL Brand Valuation Study 2025. RCB’s brand equity has skyrocketed, and selling now would mean exiting just when its brand relevance is the highest.
India remains one of the few large markets where alcohol consumption is growing. In most Western economies, moderation is the narrative, while here, premiumisation is. Why exit a marketing platform in the very market that is expanding? Especially when the government bans traditional liquor advertising, making platforms like the IPL invaluable.
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Owning RCB gives Diageo a front-row seat to the Indian consumer’s mindshare. Every victory, jersey, and campaign keeps their brands alive in public consciousness and on social media.
Advertising bans have forced alcobev companies to become creative marketers, lifestyle associations, music festivals, social media, sports tie-ups, all aiming to anchor the brand in aspirational moments.
The paradox is stark: the same company that spends crores on associations with these events, surrogate campaigns and brand activations already owns one of the most powerful consumer platforms in the country – and now wants to sell it. It’s akin to having a Michelin-star chef at home and choosing to let go of their service to eat out daily.
Yet, it is not a loss-making business. As of H1FY26, Sports generated revenue of ₹478 crore and EBITDA of ₹225 crore. This number in FY25 was ₹504 crore revenue at ₹186 crore EBITDA. The size of this business is minuscule compared to Diageo’s Alcobev revenue, but on both margin and ROCE, it’s miles ahead of their Alcobev performance.
Additionally, this business sits separately under RCBSPL; so it does not necessarily weigh down Diageo’s books nor demand constant managerial attention. On the contrary, it brings about a sense of occasion and celebratory vibe among the employees each year around the IPL. It’s a festive atmosphere, which I’m sure translates into overall productivity and performance enhancement.
Why monetise a long-term cultural asset in a market where both your category and your adjacency are in structural growth? You do not sell a growth story when it is compounding – you ride it. If potential buyers like Nithin Kamath, Adar Poonawalla and others see long-term value in this, why would Diageo itself not see it? Unless, of course, the goal is not long-term at all.
Follow The Incentive
Selling RCB today could balloon United Spirits’ profit after tax this year, boosting reported earnings and perhaps management bonuses in the process. The global parent, Diageo PLC, too, has been under pressure to improve returns amid softening sales in the West. A one-time gain of $1.5–2 billion from India would look great on global scorecards.
When shareholders measure success in quarters and culture compounds in decades, the smart money lies in staying put. RCB may not be a distraction, but a differentiator.
But then again, as all decisions that go to an umpire for the DRS, there is a clear out, a clear not out and a very discretionary Umpire’s Call – which in this case implies – We’ll know whether it’s a good decision or not – only in hindsight.
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