CRICKET’S MARKETING NIGHTMARE: The Ashes…RIP?

By - CTL
July 25, 2017
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By Marcus Honesta.

On 29 August 1882 Australia defeated England in a cricket match played at Kennington Oval, London. There was a great deal of despair felt by the English over their loss. A few days later a mock obituary notice written by Reginald Shirley Brooks appeared in the Sporting Times it read:

“In affectionate remembrance of English Cricket which died at the Oval on 29 August 1882. Deeply lamented by a large circle of sorrowing friends and acquaintances. RIP. NB. The body will be cremated and the ashes taken to Australia.” It was the first time the term ‘The Ashes’ had ever been mentioned.

Who would have thought that the boot would be on the other foot of a greedy and obeisant Cricket Australia Management in 2017, with the death of Australian Cricket clearly on the agenda. They who have little if any experience in either the administration or playing of the game and no appreciation of the tradition and importance of our greatest sporting icon.

Kerry Packer (above)

But what has this got to do with marketing? The answer is advertising sponsorship dollars, lots and lots of them. Up to 100 million dollars per year. Channel Nine has broadcast cricket every summer since Kerry Packer famously bid for the sport in the late 1970s and is renegotiating for 2018-2023 broadcast rights.

UBS media analyst Eric Choi believes Nine Entertainment Co should walk away from negotiations if Cricket Australia’s price is too high.

“The existing cricket deal costs Nine circa $100 million per annum,” he wrote in a note to clients. “We estimate the existing deal likely only generates gross revenues of $60-$70 million.”
“We think it would seem logical for Nine to enter negotiations with the following mindset 1) More cricket content at no additional cost, or 2) to step away from the cricket contract.”

The lack of a competitive bidding process for the TV rights would be a disaster for Cricket Australia, and comes as the sport attempts to re-sign all its major sponsorship contracts over the next 24 months. But do you think the fools at
Cricket Australia (CA) grasp the danger of this situation?

CA has already lost Victoria Bitter as a sponsor and the Commonwealth Bank is believed to have drastically cut its sponsorship budget from about $13 million to just $4 million. KFC, which has been a major partner since 2003 will be renegotiating its sponsorship deal at the end of next year.

Ben Amarfio, CA’s Executive General Manager for broadcasting, digital media and commercial, said “very positive discussions” with Nine about the next cycle of media rights had begun.

“We hope to begin formal discussions shortly,” he said. “We are not concerned that there will be a lack of interest for our media rights. Live sport, and cricket in particular, continues to be a premium asset.”

In 2013 Nine paid nearly $500 million for a five year deal to exclusively broadcast international cricket. However, rival Ten secured rights to the Big Bash for just $20 million, a stunningly low price given how popular it has become over the past two summers. Nine’s director of sport, Tom Malone, last year said “the network wants everything in the next rights deal”.

Adding to Cricket Australia’s problems is that Ten is unlikely to bid competitively for the rights as it did in 2013 when it offered $550 million now it is in “receivership and insolvent”. The only remaining options are Seven which already spends a fortune on live sports, or a publicly owned broadcaster like SBS or the ABC, neither of whom are likely to have the necessary funds to do so.

It strikes this writer as an extraordinarily poor time for the blockheads at CA to pick a fight with the only asset they have i.e.“the players” when they need all the friends and support that they can get. And what is their bitter dispute with the Australian Cricketers Association all about? Revenue sharing, control and power. Cricket Australia is attempting to flex its corporate muscles, but to what end?

So who is in charge of CA (Cricket Australia)? This would be James Alexander Sutherland. He played 4 games for Victoria in the Sheffield Shield in the early 90’s. A right arm fast-medium bowler who took nine wickets at an average of 39.77. Little wonder he was dropped. Sutherland is a chartered accountant who formerly worked for Ernst & Young. You would have thought, given he is an accountant, he would be capable of doing the sums and identifying the risk management issues correctly.

It would be a mistake to regard this dispute as solely about the division of a sport’s spoils. For players, the mechanisms of revenue sharing have been recognition of their position in the game as not just skilled practitioners but also national embodiments, as producers and product, as custodians and conscience.

In arguing for the end of the revenue-sharing model after nearly 20 years, however, CA has behaved as unchecked monopolies are apt to. It has postured, obfuscated, delayed, and intrigued. It has sought to divide the players: women from men; international from domestic; and most recently, senior internationals, to whom it offered extended contracts, from their colleagues. Having failed at every turn it has escalated proceedings to outright intimidation.

Why does CA want to end this historic arrangement? Obviously it wants more money and more power even if its precise end game is unclear. Their postulating about “grassroots” investment and the foreshadowing of significant increases in CA’s media and game development head counts notwithstanding.

In a letter forwarded to all male and female contracted players on Friday 12th of May, Sutherland stated that the board and state associations plan to present contract offers to CA and state players before the expiry of the current MoU (memorandum of understanding) on June 30. Terms of the contracts are to be in line with the current pay proposal, which was rejected by the ACA two weeks ago.

“Should no MoU (memorandum of understanding) agreement be reached by the deadline”, Sutherland wrote, “the board will not be offering payment to players under any alternative model, whether it be a rollover of the current MoU (memorandum of understanding) or the use of tournament-by-tournament contracts”.

“In the absence of the ACA negotiating a new MoU (memorandum of understanding), players with contracts expiring in 2016-17 will not have contracts for 2017-18,” Sutherland wrote. “Players with existing multi-year State or BBL contracts that expire after 2017 will be required to play in 2017-18 and will be paid the retainer specified in their contract, regardless of whether a new MoU (memorandum of understanding) is in place; and in the absence of a new MoU (memorandum of understanding), the Australian Women’s World Cup Squad will be paid in advance of the June/July World Cup and will be employed until the end of the event”.

“To be very clear, in the absence of a new MoU (memorandum of understanding), CA is not contemplating alternative contracting arrangements to pay players beyond 30 June if their contracts have expired.”

Also attached to the letter is a list of CA’s rebuttals of the ACA’s alternative pay proposal, which featured a “win/win” split of the game’s revenue with 22.5% to go to the players, 22.5% to go to the game’s lower levels, and the remaining 55% left to CA to run the game. Sutherland wrote in reply, “The ACA seeks to inappropriately expand its role as a players’ representative body into that of a de-facto administrator”.

Yet it concerns more than that. A telling paragraph in Sutherland’s letter complains of the ACA’s “Reluctance to recognise the necessity of change and innovation as circumstances change”, reflected in its push back on matters such as scheduling, and a reticent embrace of concepts like day-night Tests.

Had players been capriciously vetoing matters of significant cricket policy then there might be some grounds for Sutherland’s complaint. But they have not. On the contrary: the sustainability of Australia’s eight-day-a-week international treadmill and the vitality of the men’s and women’s Big Bash Leagues testify to their wholehearted commitment.
More than a few of their views too, have struck a public chord, such as misgivings expressed last season about the degradation of the Sheffield Shield and the debasement of national representation inherent in separate Australian teams playing simultaneously at home and in India.

It seems however, that what sticks in CA’s craw is the inconvenience of considering any view but its own. How dare the players express opinions? How dare they do anything but obey? This is the voice of authoritarianism and it has no place in a modern game.

And what of the losses should the parties not agree? CA could be sued by the very powerful India Cricket Board if Australia doesn’t tour India prior to the Ashes series. Not to mention Channel 9’s diminished advertising revenue if the Ashes are cancelled? At this point in time CA doesn’t have a team. And it is their own greedy fault. It is unthinkable that these fools could endanger a 135 year old tradition. Just for the record we are talking about many hundreds of millions of lost sponsorship and advertising dollars.

Mr Amarfio (CA spokesman) lives in a fools paradise denying there was a looming revenue crisis at CA. “On the contrary, we haven’t had a number of sponsors depart,” he said. “We are currently in the process of re-signing some of our sponsors to bigger partnerships. The changes to our restructured program will pave the way for an additional premium partner that will see us having three key sponsors for men’s international cricket (Shirt, Test and Short form series sponsors).” What is he offering? They have no assets.

Either Sutherland’s board directs him to personally become involved with the actual negotiations rather the acting as a petulant child and not rely on the firm of consultants currently appointed by CA to do the heavy lifting. Or he stands aside. There should be nothing more important on his calendar then the resolution of this dispute. It is this writer’s belief that in the same way he was dropped from the Sheffield Shield side, so should he be dropped as the CEO Cricket Australia, sooner rather than later.

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