MUMBAI: More bad news for the Indian Premier League as brand valuation of the cash-rich league has fallen further to $2.92 billion and is in the striking distance of falling to the first year's level of $2 billion, according to latest study from the brand valuation firm Brand Finance.

The IPL brand, as a single entity including all the stakeholders, was valued at $4.13 billion in 2010, when the tournament was at its peak with former chairman Lalit Modi at the helm.

However, the controversy involving Modi and former Minister of State for External Affairs Shashi Tharoor around the now defunct Kochi franchise which led to unceremonious exit of the former IPL chairman and a multiple agency probe into alleged financial frauds in the tourney further deteriorated the valuation of the brand.

The controversies eroded the IPL's long-term brand value by $460 million which was valued at $3.67 billion last year when the study was conducted.

The latest round of study will certainly ring alarm bells for the Board of Control for Cricket in India (BCCI) which will be forced to take corrective measures, particularly in the wake of a sting operation by a news channel which blew the lid over spot fixing menace in the league and other unlawful transactions between the IPL franchises and players.

"The seemingly never ending series of governance and transparency lapses have contributed to the rapidly declining brand value of IPL. By brand value, we mean the commercial sustainability of IPL or the value in the long run that this iconic property could deliver for all stakeholders. On a fairly regular basis stakeholder relationships and the 'Trust Flows' between IPL and its partners have got impaired," explained Brand Finance Global Strategy Director M Unni Krishnan.

"Our latest report shows that $1 billion of cash flows have dried up as a result of this and it is still diminishing. It will not be too long before which IPL would have regressed to its benchmark value of $2 billion in 2009, putting the whole ecosystem and the value creation of the franchisees under intense pressure. The proverbial Golden Goose is being systematically gutted."

However, it's not just the BCCI which had to bear the brunt of off-field controversies the nine IPL franchises as the second biggest stakeholders in the IPL also have nothing to cheer about as their brand valuation has plummeted by at least 15-20 per cent across the board.

The brand valuation of last year's table topper Mumbai Indians has shrunk to $48.21 million from $57.13 million last year, while the brand valuation of India Cements-owned Chennai Super Kings, which had second best valuation, dwindled by $10.09 million to $45.28 million.

Vijay Mallya-owned Royal Challengers Bangalore, which had a valuation of $47.58 million, has dropped to $41.15 million. Shah Rukh Khan owned Kolkata Knight Rider has been valued at $39.03 million, compared to a $46 million in the year before period.

Brand Finance noted, "While the core product asset and its innovative game format continues to draw in record crowds to the ground, IPL's owner needs to wake up to the larger stakeholder ecosystem meltdown which is happening due to the conduct of the organization and its decision making process.

"It might be tempting for the owners to wish away all the ominous signs and take comfort under the blanket of business-as-usual. This is no longer an option as IPL's value is steadily diminishing and it will not be too long before which it will hit the $2 billion rock bottom valuation of 2009."

The brand valuation has cautioned the IPL franchises to become more proactive and shape the governance process of the tournament, which is currently run by the BCCI with franchises having little say in the running of the league.

"Further, the commercial sustainability of the pivotal franchisee stakeholders who have already crossed five years of operations is coming under intense pressure. The revenue sharing terms from central pool of IPL will change from the current year progressively decreasing for the next five years.

"With only another five years left to make something of their significant investments, the franchisee owners must proactively choose to salvage the league and ensure that its governance systems are worthy of IPL's true potential. They must become active participants and shape the governance processes of the league rather than being passive observers as they have the most to lose."

Brand Finance has valued the 'brand' IPL, using the Royalty Relief methodology, which is based on the notion that a brand holding company owns the brand and licenses it to an operating company. The notional price paid by the operating company to the brand company is expressed as a royalty rate and the NPV of all forecast royalties represents the value of the brand to the business.