Diageo's United Spirits Ltd. begins strategic review of its cricket franchise, Royal Challengers Bengaluru.

Diageo's subsidiary in India, United Spirits Limited (USL), has announced a strategic review of its investment in Royal Challengers Sports Private Limited (RCSPL). RCSPL is wholly owned by USL and holds the rights to the Royal Challengers Bengaluru (RCB) franchise teams participating in the Men's Indian Premier League (IPL) and Women's Premier League (WPL).

USL stated that RCSPL is non-core to its core alcohol and beverage (alcobev) business. This move is part of a broader commitment by USL and its parent company, Diageo, to continuously review their Indian enterprise portfolio to ensure sustained long-term value creation for stakeholders.

The review process is slated to conclude by March 31, 2026. RCSPL's financial performance for Fiscal Year 2025 showed a revenue of ₹504 crore, a 21 percent decrease from ₹634 crore in Fiscal Year 2024. Profits also declined to ₹140 crore from ₹222 crore, attributed primarily to a reduced number of IPL matches played by the RCB team. Consequently, the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the sports division fell from ₹294 crore in FY24 to ₹186 crore in FY25.

Separately, while RCB's brand value was recently estimated at US$269.0 million in an IPL brand valuation study, the franchise also faces legal scrutiny. The Karnataka High Court took suo motu cognizance of a stampede incident during a celebration event, staying investigations in some FIRs against its officials, though others are still ongoing.

Impact This strategic review could significantly impact investor sentiment towards United Spirits Limited. A potential divestment or restructuring of the RCB asset, even if non-core, could lead to significant financial adjustments and strategic realignments for USL. The declining financial performance of RCSPL highlights the inherent volatility and challenges in the economics of sports franchises. The ongoing legal issues add another layer of complexity and uncertainty, although the High Court's intervention in some matters provides a degree of mitigation. Rating: 6/10

Difficult Terms: Strategic Review: A process where a company examines its business units or investments to decide if they should be kept, sold, restructured, or expanded to maximize shareholder value. Wholly Owned Subsidiary: A company that is completely owned by another company, meaning one company holds all of its voting stock. Alcobev: Abbreviation for alcoholic beverage. Stakeholders: Individuals or groups who have an interest in a company, such as shareholders, employees, customers, and suppliers. FY25 / FY24: Fiscal Year 2025 / Fiscal Year 2024. This refers to the financial reporting period, usually from April 1 to March 31. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance. Suo Motu Cognizance: A legal term meaning an action taken by a court on its own initiative, without a formal request from the parties involved. Quashing of FIRs: The process of cancelling or invalidating a First Information Report (FIR), which is the first step in a criminal investigation in India.