What happened? Bloomberg has reported that Diageo is exploring selling part or all of its stake in the Indian Premier League (IPL) cricket franchise Royal Challengers Bengaluru (RCB) for a valuation of up to USD2bn. BNPP Exane View: Diageo owns 100% of the RCB cricket franchise via its wholly owned subsidiary, Royal Challengers Sports Private Limited (RCSPL). In Diageo India''s FY24 (ended March-24) RSCPL generated sales of INR6,350m (+160% YOY) and a reported profit of INR2,220m. Diageo India recently stated that RCB is the most popular IPL cricket franchise (based on online viewership stats), and the team recently won this year''s edition of the competition. Diageo leverages the Royal Challenge brand through both alcoholic (e.g. Royal Challenge whisky / Royal Challenge American Pride whisky) and non-alcoholic products (e.g. Royal Challenge packaged water). It is not clear if these brands are being considered for sale or just the sports franchise on its own. India''s Health Ministry has recently pushed for a ban on all forms of alcohol and tobacco advertising, including surrogate promotions, during IPL broadcasts and related events. We note that the reported price tag of USD2bn implies a valuation of 25x sales (12m to Mar-2024) but the cricket franchise revenues are growing strongly. We view the sale as a sensible move as: 1) the asset is non-core; 2) if disposal proceeds of USD2bn are achieved we estimate it would reduce Diageo''s group ND/EBITDA by c.0.2-0.3x; 3) the sale is unlikely to have a material impact from a group earnings perspective. Overall, we expect the shares to react positively to the news this morning (c.+1%).