IPL, Modi, Tharoor, Sunanda and the X-Man

She was supposed to bear only 1% of the loss. However, her supposed 5% in the Kochi IPL franchise has already claimed two careers – Shashi Tharoor’s and Lalit Modi’s. Personally I think Shashi got a better end of the bargain. Due to the investments by a whole lot of powerful people, the matter will be whitewashed quickly. Shashi will be able to portray himself as a victim and reap political rewards.

Meanwhile, at the risk of beating a dead horse deader, I would like to look at what they call Sunanda’s 5% stake. According to the deal, she would have had rights to 100% of the profits. This implies, all future cash-flows belonged to her. Basic corporate finance then tells me that her economic stake was 100%. The other people simply held a form of debt in the firm. Perhaps, even they were acting as fronts to someone else who just decided to use multiple channels to obfuscate the source of investment and use one clean channel to siphon off the upside. It implies that when she gave up the equity she held, the principal behind her lost nothing more than a convenient profit booking channel. The investment remained intact.

So why did Modi take on a Union Minister? He would do so only if he had a lot to lose. Either, he had an indirect stake in the other bidding team, or having received a kickback, he was asked to deliver the goods. There can be a simpler reason too. His meteoric rise in past few years must have misbalanced his thinking and he genuinely could have thought that he can tackle the Union government. Poor judgment – I’d say.