Investigations reveal 15% stake bought by MS Dhoni in sports marketing firm Rhiti
Rhiti Sports Management, set up by Arun Pandey, a close friend and business associate of Dhoni - also manages four other current cricketers: Suresh Raina, Ravindra Jadeja, Pragyan Ojha and RP Singh.
Is there a conflict of interest between MS Dhoni the businessman and MS Dhoni the Indian cricket team captain? ET investigations reveal that a 15% stake bought by Dhoni earlier this year in the sportsmarketing firm that manages him has spawned a tangled web of business associations, raising issues of propriety and conflict of interest in at least two situations.
The first situation is in his position as the captain of the Indian cricket team in all three formats of the game. This sports marketing firm - Rhiti Sports Management, set up by Arun Pandey, a close friend and business associate of Dhoni - also manages four other current cricketers: Suresh Raina, Ravindra Jadeja, Pragyan Ojha and RP Singh.
This puts Dhoni in the conflicting position where he has a 15% share of the profits earned by Rhiti Sports from managing these four players, even as he opines or votes on them in team selection meetings as the Indian captain. "There is definitely a conflict of interest in this case," says former cricketer Kirti Azad, who was also a selector in 2002-03.
Dhoni did not respond to an email questionnaire sent to him on May 31 while Pandey declined comment. "I have heard it for the first time," says Anurag Thakur, joint secretary of the Board of Control for Cricket in India (BCCI). "If there is a concern, we may look into the matter."
The second situation is in Dhoni's position as the captain of the Chennai Super Kings(CSK), the Indian Premier League franchise for which he, Raina and Jadeja play and whose team principal Gurunath Meiyappan is currently in custody on charges of illegal betting and sharing team information with bookies. So far, Dhoni has maintained a conspicuous silence on the spot-fixing and betting scandal, raising whispers that his position is perhaps compromised by the ties that bind Rhiti and him to CSK and its ownership.
Srinivasan is also the owner of India Cements, the company that owns CSK and in which Dhoni is a vice-president. And Rhiti, riding on its prized client Dhoni, markets CSK. "Dhoni is part of the corridors of power," says Rahul Mehra, a lawyer who has been railing against sports management in India.
"Which selector will oppose Dhoni when he is a part of the think-tank in CSK, which is owned by a company of the BCCI president, and he himself is a vice-president in that company?" Under BCCI rules, the 15-member team for a tour is picked by a group of five selectors. The captain and coach have a say in the selection meeting, but they don't have a vote. "The captain gives inputs to selectors," confirms Thakur of BCCI.
On tour, the playing 11 is picked by the captain, vice-captain and coach. "The players managed by Dhoni's company will have an unfair advantage," says former India cricketer Maninder Singh. Rhiti Sports today probably has the best portfolio of cricketers among sports management firms. Dhoni is a factor in building that portfolio.
A young cricketer playing for Delhi told ET, on the condition of anonymity, that he was worried about joining a rival sports management firm because of the impact it may have on his selection for India. Shailendra Singh of entertainment marketing firm Percept, which has managed cricketers Kapil Dev, Sourav Ganguly and Yuvraj Singh in the past, feels, in principle, there's no problem in the arrangement Dhoni has with Rhiti, but adds it needs to be seen in the current context. "There's so much muck in the corridors," says Singh, joint MD of Percept.
The first situation is in his position as the captain of the Indian cricket team in all three formats of the game. This sports marketing firm - Rhiti Sports Management, set up by Arun Pandey, a close friend and business associate of Dhoni - also manages four other current cricketers: Suresh Raina, Ravindra Jadeja, Pragyan Ojha and RP Singh.
This puts Dhoni in the conflicting position where he has a 15% share of the profits earned by Rhiti Sports from managing these four players, even as he opines or votes on them in team selection meetings as the Indian captain. "There is definitely a conflict of interest in this case," says former cricketer Kirti Azad, who was also a selector in 2002-03.
Dhoni did not respond to an email questionnaire sent to him on May 31 while Pandey declined comment. "I have heard it for the first time," says Anurag Thakur, joint secretary of the Board of Control for Cricket in India (BCCI). "If there is a concern, we may look into the matter."
The second situation is in Dhoni's position as the captain of the Chennai Super Kings(CSK), the Indian Premier League franchise for which he, Raina and Jadeja play and whose team principal Gurunath Meiyappan is currently in custody on charges of illegal betting and sharing team information with bookies. So far, Dhoni has maintained a conspicuous silence on the spot-fixing and betting scandal, raising whispers that his position is perhaps compromised by the ties that bind Rhiti and him to CSK and its ownership.
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Meiyappan is the son-in-law of N Srinivasan, who on Sunday agreed to step aside as BCCIpresident till the probe into the IPL betting and spot-fixing scandal is on.
Back in January 2012, after eight consecutive Test losses suffered by India, Srinivasan reportedly used his veto powers as president to stop a 3-2 vote in the selection committee to remove Dhoni as captain and player from the Test team.Srinivasan is also the owner of India Cements, the company that owns CSK and in which Dhoni is a vice-president. And Rhiti, riding on its prized client Dhoni, markets CSK. "Dhoni is part of the corridors of power," says Rahul Mehra, a lawyer who has been railing against sports management in India.
"Which selector will oppose Dhoni when he is a part of the think-tank in CSK, which is owned by a company of the BCCI president, and he himself is a vice-president in that company?" Under BCCI rules, the 15-member team for a tour is picked by a group of five selectors. The captain and coach have a say in the selection meeting, but they don't have a vote. "The captain gives inputs to selectors," confirms Thakur of BCCI.
On tour, the playing 11 is picked by the captain, vice-captain and coach. "The players managed by Dhoni's company will have an unfair advantage," says former India cricketer Maninder Singh. Rhiti Sports today probably has the best portfolio of cricketers among sports management firms. Dhoni is a factor in building that portfolio.
A young cricketer playing for Delhi told ET, on the condition of anonymity, that he was worried about joining a rival sports management firm because of the impact it may have on his selection for India. Shailendra Singh of entertainment marketing firm Percept, which has managed cricketers Kapil Dev, Sourav Ganguly and Yuvraj Singh in the past, feels, in principle, there's no problem in the arrangement Dhoni has with Rhiti, but adds it needs to be seen in the current context. "There's so much muck in the corridors," says Singh, joint MD of Percept.
"It's just too coincidental... things are too comfortable." Dhoni and Pandey go back about 15 years, starting as friends and, along the way, becoming business partners. Around 2007, Pandey started negotiating endorsement deals for Dhoni. The pinnacle of their business relationship came in July 2010, when Dhoni stumped the sportsmanagement landscape by choosing greenhorn friends over grizzly veterans to manage him. His three-year deal with Rhiti Sports was for Rs 210 crore, or an average of Rs 70 crore a year, the priciest ever in Indian cricket.
Extrapolating from the filings made by Rhiti Sports, which is an unlisted firm, with the ministry of company affairs (MCA), Pandey seems to have almost made good on his word. In 2011-12, the latest year for which numbers are available and the first full financial year of the deal, Rhiti Sports recorded revenues of Rs 63 crore and a net profit of Rs 2.5 crore. MCA filings also suggest that in the first 18 months of the contract, the relationship between Dhoni and Rhiti Sports was structured as a client-company relationship, and that Rhiti Sports existed primarily, if not wholly, to service Dhoni. Rhiti Sports drew income from sponsors, kept a commission and paid the balance to Dhoni.
In 2011-12, when its income was Rs 63 crore, it showed operating expenses of Rs 59 crore. Its annual report does not disclose how these expenses were broken up between payments to Dhoni and commissions to Rhiti Sports. The structuring of that relationship changed in 2012-13 as Dhoni started acquiring equity stakes. MCA filings show that a Rhiti Sports board meeting held on March 22, 2013, approved the allotment of 30,000 shares (or 15.1% stake) to the Indian captain.
The shares were allotted at par value, which means Dhoni paid Rs 3 lakh for the 15.1% stake. "For a going concern with a turnover of Rs 63 crore, it is unusual to do valuation at par and issue 15% equity," says a chartered accountant, on condition of anonymity. Dhoni also floated entities, in partnership with Pandey and/or Rhiti Sports, to enter into new business areas like image licensing (in March 2012, through Rhiti MSD Alamode Pvt Ltd) and gyms (in February 2013, through Sportsfit World Overseas Pvt Ltd).
In Rhiti, MSD Alamode Pvt Ltd, Dhoni and his wife Sakshi hold 65%; Pandey 30% and Rhiti Sports 5%. According to company filings, it is in the business of "licensing the use of theMahendra Singh Dhoni (MSD) name for various products like consumer goods, luxury items and other fashion-related products, and enter into ventures/business with MSD". Sportsfit World Overseas is in the business of gyms. Rhiti MSD Alamode owns 73% of this company. Another 26% is held by Sajid Shamin, the former marketing head of Reebok India, and 1% by Arun Pandey.
In other words, Dhoni has an equity interest, direct or indirect, in at least three firms of which Rhiti Sports is also a part. Possibly four. It seems Dhoni, who has a passion for motorcycles, also owns a stake in Rhiti MSD-N Motorsport India. This company runs the MSD RN Racing Team, which participates in the World Superbike Championship.
The company was originally called N Motorsport India and promoted by two Bangalore residents, Nandish Domlur and Amit Sandill. On September 2, 2012, that company moved an application to change its name from N Motorsport India to Rhiti MSD-N Motorsport India. ET could not establish from MCA filings the company's shareholders. But the company's website shows that it is headquartered at the same Delhi address as Rhiti Sports. Further, Pandey is its MD and CEO, Domlur is co-MD and Sandill director. The other two people listed under 'management' are actor Nagarjuna and Dhoni.
(With inputs from Vijaya Rathore)
Extrapolating from the filings made by Rhiti Sports, which is an unlisted firm, with the ministry of company affairs (MCA), Pandey seems to have almost made good on his word. In 2011-12, the latest year for which numbers are available and the first full financial year of the deal, Rhiti Sports recorded revenues of Rs 63 crore and a net profit of Rs 2.5 crore. MCA filings also suggest that in the first 18 months of the contract, the relationship between Dhoni and Rhiti Sports was structured as a client-company relationship, and that Rhiti Sports existed primarily, if not wholly, to service Dhoni. Rhiti Sports drew income from sponsors, kept a commission and paid the balance to Dhoni.
In 2011-12, when its income was Rs 63 crore, it showed operating expenses of Rs 59 crore. Its annual report does not disclose how these expenses were broken up between payments to Dhoni and commissions to Rhiti Sports. The structuring of that relationship changed in 2012-13 as Dhoni started acquiring equity stakes. MCA filings show that a Rhiti Sports board meeting held on March 22, 2013, approved the allotment of 30,000 shares (or 15.1% stake) to the Indian captain.
The shares were allotted at par value, which means Dhoni paid Rs 3 lakh for the 15.1% stake. "For a going concern with a turnover of Rs 63 crore, it is unusual to do valuation at par and issue 15% equity," says a chartered accountant, on condition of anonymity. Dhoni also floated entities, in partnership with Pandey and/or Rhiti Sports, to enter into new business areas like image licensing (in March 2012, through Rhiti MSD Alamode Pvt Ltd) and gyms (in February 2013, through Sportsfit World Overseas Pvt Ltd).
In Rhiti, MSD Alamode Pvt Ltd, Dhoni and his wife Sakshi hold 65%; Pandey 30% and Rhiti Sports 5%. According to company filings, it is in the business of "licensing the use of theMahendra Singh Dhoni (MSD) name for various products like consumer goods, luxury items and other fashion-related products, and enter into ventures/business with MSD". Sportsfit World Overseas is in the business of gyms. Rhiti MSD Alamode owns 73% of this company. Another 26% is held by Sajid Shamin, the former marketing head of Reebok India, and 1% by Arun Pandey.
In other words, Dhoni has an equity interest, direct or indirect, in at least three firms of which Rhiti Sports is also a part. Possibly four. It seems Dhoni, who has a passion for motorcycles, also owns a stake in Rhiti MSD-N Motorsport India. This company runs the MSD RN Racing Team, which participates in the World Superbike Championship.
The company was originally called N Motorsport India and promoted by two Bangalore residents, Nandish Domlur and Amit Sandill. On September 2, 2012, that company moved an application to change its name from N Motorsport India to Rhiti MSD-N Motorsport India. ET could not establish from MCA filings the company's shareholders. But the company's website shows that it is headquartered at the same Delhi address as Rhiti Sports. Further, Pandey is its MD and CEO, Domlur is co-MD and Sandill director. The other two people listed under 'management' are actor Nagarjuna and Dhoni.
(With inputs from Vijaya Rathore)
Source : By John Samuel Raja D, Ratna Bhushan & Ravi Teja Sharma, ET Bureau
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