Redistribution but no Growth in Cricket`s Pie
Russell Degnan

If one was to go off the most recent financial reports of Australia or England or India and you'd conclude that cricket's financial health has never been better. Total revenue has been increasing, almost as quickly as in the recent past. But scratch down below and the story is not as pretty. The ICC is scaling back tournaments, denying opportunities for international play to roughly a third of its members. At least five full member cricket boards border on bankruptcy, with another facing a crippling loss if India refuse to tour.

Meanwhile, the BCCI looks at the ICC dividend - a full 75% of revenue amongst the ten most privileged members - does some sums, and concludes that, as Indian fans are the major source of revenue, and as those fans mostly want to watch India, that they are entitled to much more.

The article cites La Liga as a model, referencing the larger tv rights deals negotiated by Barcelona and Real Madrid, for their own home games. It isn't clear if this is the BCCI view, though as Gideon Haigh notes, there is an underlying view that the BCCI's control over revenue affords it the same position as the NBA, NFL or other major sporting league.

The problem is that these analogies are both broken and actively destructive.

Let's start with La Liga. The first thing to note is that the BCCI (and the ECB and CA) already has a better position than either Barcelona or Real Madrid. Not only do they control their home tv revenues, they get to modify the fixture to suit their own purposes. Want to play El Clasico ten times in one season? Done. Over a five period, from October 2010 to October 2015, England, Australia and India will play 47 tests against each other; I don't even want to count how many ODIs. The gradual replacement of other fixtures with those between the big-3 has meant there is now roughly double the number of these matches against any comparable period. European football's giants don't entertain playing that level of glamour fixtures in their wildest dreams.

The second thing to note is that every commentator agrees that La Liga's financial model is hopelessly broken. That the league has become uncompetitive with most clubs mired in debt. That the inequitable tv deal is so bad there was a threatened strike before the start of the season. TV revenues for La Liga are only fourth largest as well; despite the quality on display. And this is a model for cricket?

On the right is what baseball looked like in 1875, before they realised that having one team play six times as many games as another, leveraging their success for solid profits, while others quit half-way through the season for lack of funds, was not in the best interests of the league, the teams in it, and the sport generally. Cricket is a 135 years behind other major sports in terms of the structure of its scheduling and the means by which that structure adds context and financial stability to its participants. And it is getting worse, not better, driven by the schemes of its most secure participants.

The major difference between cricket and other sports is obviously its international flavour. Numerous sports economists - Szymanski is the most cited - have commented on the difficulties of international (representative) sports compared to domestic (franchise) structures. Notably with uneven competition, the waste of talent unable to gain representation and the inefficiency of multiple stadiums being used for a few days per year. The IPL gets around some of these issues, as does the BBL and other T20 leagues. Their success would leave open the possibility of player wages being paid by domestic competition, and the international arm of the sport making only enough money to pay for its structures. But in order to achieve that, they need to be integrated with each other; and that is not happening; instead each tries to cannibalise the other, leaving both poorer for it.

There is another element to these leagues that we are decidedly not seeing in the case of the cricket governance. The NBA, EPL and others care first and foremost about their product, its growth, and development. They are aggressively targeting emerging East-Asian markets; they push to find players in any pocket of the world, and bring them into their league; they work on competitive balance and fixturing to chase market appeal and increase total revenue. Cricket, be it the ICC, the BCCI, ECB, CA or the other full members summarily fails to build its product. They are engaged in a game of redistribution, chasing every last piece of the Indian/Ashes market through whatever means gains them some access, destroying the good-will of fans with endless repetition of fixtures with barely a point.

If the BCCI wants to control cricket then they have that option. They have the market strength and sufficient control over the major stars of its biggest market to pursue that end. But that control comes with a need to actually develop cricket, as a product, not just at grass-roots level or by advancing the prospects of their national team. They have an enormous head start in the Indian market, but as ex-pat Indians return from Europe and the USA, and as the satellite dishes of the youth increasingly turn to what is globally popular, cricket's lead disintegrates.

Cricket's biggest threat won't come from the internecine fighting amongst the boards; it will come from globally dominant sports that have better products to sell. And cricket, great sport that it is, has a rubbish product to sell. Over-long events, uncompetitive structures, no context to fixtures, lack of media access to players, incoherent last-minute fixturing and an obsession with local appeal over the total package.

If the ICC executive board cannot organise itself sufficiently to fix the product and make it competitive; then the players need to realise that their livelihood is damaged from the incompetence above and break with the boards. It was players who invented modern cricket; they remain the star turn, the indispensable part of the appeal; and as with the ATP forty years ago, and twenty years ago, they are not being served by the administrators who ought to be doing the job. And if not them, then who?

Cricket - Articles 18th September, 2013 03:06:49   [#] 


Redistribution but no Growth in Cricket`s Pie
Outstanding piece Russ. One point I'd add is that a key to success of some of the American leagues is that making financial sacrifices in short term opens door for better long term health. NFL's foundation for success was built on revenue sharing for TV rights. At the time it was first mooted when Pete Rozelle was NFL Commissioner in the 1960s, the bigger markets teams like the Dallas Cowboys and New York Giants, not to mention the successful teams of the era like the Johnny Unitas led Baltimore Colts and the Green Bay Packers, stood to lose some money if they shared overall league TV revenue with smaller markets like St. Louis and Cleveland. Rozelle convinced the owners that it would benefit them to share in revenue because it would protect against losing revenue in the future if a team that was currently strong went through some losing/lean years and local revenue took a hit. No point having three teams raking in all the TV dough because they are in big markets (Dallas, New York, Los Angeles) while the other 10 teams in small markets go bankrupt because eventually it'll catch up to the balance sheets for the big three too if they have no one to play against. The NFL had 13 teams when Rozelle started as commissioner in 1960. It now has 32 teams with broadcast rights packages in the billions. NFL saw benefits of expansion. Owners didn't see a smaller slice of the pie for themselves, but focused on producing a bigger pie overall. Cricket has been stuck on 10 Test teams for more than a decade. All revenue from the ICC to its members is based off of Test status. They are trying to promote T20s as the future, but if that were truly the case, then revenue would be distributed to its members based on T20 eligibility/status, not Test status.
Peter Della Penna  18th September, 2013 13:36:49  

Redistribution but no Growth in Cricket`s Pie
In the post-IPL cricket world, we have a strange situation where (Int'l) Cricket can't increase its overall pie without some amount of redistribution. To see them as two distinct parts isn't practical. Cricket's pie has increased substantially from even as recently as 2008. Problem is that it's increasingly going to only one board. IPL had hijacked a chunk of the international calendar primarily because it can do so without any dire consequence. In a sub-optimal world, it suits every other board to be subservient to BCCI because there is no other viable alternative. With ICC being as powerless as it is by design, cricket can't sell a better product if it can't fix the internecine fighting among the boards. Over-long events (well, Badminton is quite a short game....and it's not a particularly rich sport. Also, isn't it the duration that also makes cricket the great sport that it is?). Noncompetitive structures - how can it be fixed without some rationalization of the schedule? How do you get B'desh to tour India if it conflicts with BCCI's commercial agenda and they are free to do as they wish? No context to fixtures - Again, isn't some amount of redistribution the solution here? Lack of media access to players - valid point, but let's assume everything else remains the same and this gets better, will we have a better, bigger and more equitable ecosystem? It's an imp but a marginal issue. Incoherent last min fixtures - what causes this? As far as I knew, there was a clear context to both India's tour of SA and NZ, following the two-year home and away cycle quite nicely. As a fan, I was looking forward to it, even made plans to visit one of the two countries. Now, the context is ripped apart, because BCCI can afford to rip it apart. I don't know how any measures to increase the overall pie can be implemented without fixing the way cricket's administration is so poorly structured.

Also, I am not sure of your interpretation of GH's column. Is he alluding anywhere to the notion that BCCI is in the same position as NBA or NFL? How is GH's analogies of how BCCI functions actively destructive?
Mahesh  18th September, 2013 14:14:04  

Redistribution but no Growth in Cricket`s Pie
Peter, absolutely. In a business sense it comes down to where are they investing their coin. Ten years ago, developing the Indian market made sense, but (and to answer Mahesh's first point), that market isn't growing in size. It is possibly to get more money from it, by fixturing more games into it (which is what has happened), but that has come at the expense of other markets. Hence the title, it is redistributed growth, not market growth. And cricket is a million miles from tapping all its potential markets.

Mahesh, on GH, he quotes the Great Tamasha, which quotes a BCCI board member on the idea that India can operate alone. It is an idea increasingly bandied about. Analogies with La Liga are actively destructive for the reasons mentioned. La Liga is a broken financial model (as is cricket, even moreso). I believe cricket should aim towards what is accepted as creating the largest markets, and it isn't pursuing that model. I agree with your point about administration - and if you read the last paragraph you'll see how little I care for what cricket has currently. Other sports leagues work collectively to improve their sporting product, to grow their sport and league. Cricket's major players are undermining any improvements, and growth to improve their short-term financial position, moreover, they believe that is their role.

On why I think cricket lacks context and creates poor tournaments I've written extensively before. Check out the manifesto for more. And thanks for commenting.
Russ  18th September, 2013 22:30:55  

Redistribution but no Growth in Cricket`s Pie
Good article. I think your paragraph on the international/domestic nexus nails it - the potential is there to solve the difficulties associated with having an international sport, but it's not yet being realised.
Troy  2nd October, 2013 11:39:54