## The F&CA working paper: cashing out the future of the sport Russell Degnan

In many ways I'm surprised by the angst generated by the ICC's F&CA working group paper. It does after all, propose things that have been proposed by many people many times: the removal of underperforming Bangladesh and Zimbabwe from test cricket; tiered test leagues with theoretical promotion for associates and no less than four tests against the lowest ranked top-8 side; a significant reduction in the vote-for-tour-trading that plagues the ICC Executive Board; and the marginalisation of several full members up to their arm-pits in corruption and mismanagement. There are also many people who genuinely believe in cricket as a global game, and in better governance from the ICC, but I think it would flatter them to say they are in the majority, particularly amongst ex-players whose influence runs deepest in the generation of policy.

That the decisions being proposed by the leading ICC members are based purely on promoting their own financial benefit oughtn't be a surprise either. The FTP was birthed to give financial security to the full members, and it has declined as cartels inevitably do, as those same members realised more profitable opportunities on their own. Even there though, the draft carefully threads together enough clauses to maintain the full members outside the big-three in their current states, at least in the medium term. The real losers are the ICC administrative arm, castigated for waste and mismanagement, and the dozens of smaller members whose tournaments have been cancelled without anyone outside the tiny development community even noticing.

Taking the long view of ICC history this is perhaps no more than we ought to expect from those who have controlled it. Much is said, in praise, about the revolution of 1996 that saw the veto pass into history, but not enough is said, in condemnation of what replaced it. As Rod Lyall's history of ICC development makes clear, the growth in associate numbers (even with each vote counting for half a full member) had already brought forward a restrictive clause on their influence: that a two-thirds majority of full members be required to pass a binding resolution. Post-1997, under the reforms proposed by NZ's John Anderson, no associate vote mattered; they could no longer influence decisions because they were but three of them on a twelve (then thirteen) member board.

It was those reforms that laid the foundation of the venal and incompetent ICC Executive Board that is sorely in need of reform, even if these are not necessarily the right type, or direction. The combination of a vast increase in ICC revenue, the significant structural limitations most boards face in generating revenue of their own; and the subsequent creation of the FTP to protect revenue streams from the hosting of tours; has been immensely damaging to cricket. Test cricket has stagnated at ten (realistically eight) nations, with no context worthy of the name and the gradual erosion of smaller tours. A tragedy of the commons has played out amongst the smaller members, each fighting for their piece of a large Indian pie, while neglecting to build the multi-lateral institution and robust competition that might have acted as a counter-weight to alternative ambitions. That is, in the main, on their heads.

In theory they remain full members, but while the working paper argues that "no member will lose any of their current voting powers", having the four person Executive Committee act as the "sole recommendation committee" means they are a rubber-stamp, significant beneficiaries of ICC largesse and little else. If reform comes, we oughtn't lament the demise of a body that has been dysfunctional, self-serving, and myopic in its vision. The new prince(s) might become tyrant(s), but the old aristocracy was an oligarchy too.

But any improvement in governance from the proposed reforms would wrest on whether big-three govern sensibly and with some imagination for the development of the game. There is precious little evidence in the draft document to suggest they will. The lack of transparency and wider consultation that leads to paucity of ideas will remain. The chasing of short term financial wealth over development will worsen. The ideas put forth in the working paper are doomed to fail, slowly perhaps, but eventually.

The biggest proposed change to the cricket landscape is the removal of the FTP in favour of bilateral agreements (with an implied guarantee from ECB and CA, though notably not the BCCI), and the introduction of a tiered system of test cricket.

Tiers I have covered at length. They are A solution. They are not a good solution. The working paper manages to recognise this when it states that the big-three cannot be relegated. Finance, much as we'd like it not to be the only thing considered, is important. If India was relegated or the Ashes ceased to be played for a period, the flow-on effects would be monumental. The costs (both financially and in match status) of relegation, even with the protections imposed, are enormous for any member subject to it. Any half-way sensible body would put out a working paper that discusses alternatives, looks across different sports, and analyses the implications. Cricket, with its asinine obsession with maintaining status gaps, presses on, creating, in effect, a four game play-off, and the reasonable probability that their inept rating system will raise some interest in a few matches leading up to it.

There is a vastly superior alternative for full members concerned that their bilateral matches aren't profitable: cede the bilateral rights to non-inter-big-3 bi-laterals to the ICC, share the revenue and create a 2-3 year tournament that integrates a large number of nations into a profitable and marketable entity. That, in essence, is what the world cup is: a massively profitable tournament despite India only playing in but ten or fewer of the matches. Instead we have uncertainty and high risk. And still no test championship.

The details pertaining to relegation may overstate the risks in any case. Firstly, a side must lose a four match playoff, against a side with little cricket against strong teams behind them, and if an associate, a significant spending gap. Secondly, even when relegated, a nation will maintain their previous bilateral agreements and lose only 10 per cent of their dividend payments in the following rights cycle. Meanwhile, a promoted team is guaranteed no matches at all, and must find space within the existing (maintained) bilateral agreements for tests of their own, with only that 10 per cent ICC funding increase and whatever hosting rights they can sell to sustain a professional structure.

In essence, this is little more than a convenient way to remove any obligation to play Bangladesh and Zimbabwe by relegating them to the I-Cup. That may not be a bad thing, as it will certainly improve the quality and value of that competition. Similarly, it will be no bad thing if the powers that be have abandoned the whiggish concept of progress amongst cricketing nations. Relegation at least recognises that teams can improve, and decline, that there are (possibly permanent) differences in the quality of sides, and that a structure must accommodate that. It isn't a terribly good structure, but it is something.

At the top-end, the dropping of the FTP merely reflects the unstated status quo. Australia's main summer opponents from 2010/11 until 2014/15 were England, India, South Africa, England, India. Four year cycles good, three year cycles better; except now the ICC lacks even the moral authority to argue for a more even distribution. This is a process, needless to say, defined entirely by finance, though there is nothing new in that. The saddest aspect of the working paper is to read through looking for something other than finances to justify the decisions. There isn't. Defining and structuring a competition, even if one does that for financial reasons, is the providence of other sports.

In that, the ICC ought to have a role; indeed, it is hard to see what the point of the ICC is if not to structure and define competitions. The MCC control the laws, noone seems to collect statistics or define what constitutes an official match between the majority of their members; and the ICC rankings are a joke, mathematically flawed and excluding 90 per cent of the membership. Yet, the ICC has done good work in its development offices; work I don't always agree with, but with some reasonable progress, and after some mistakes, they have created a structure that incentivises grass-roots growth and player development.

The working paper absolutely trashes the work being done in the ICC. There are complaints about admin costs, though how they might be saved is not clear; of tournaments being run "without approval", presumably the division three regional ones now scrapped; and of the costs of minor cricket, even though it represents only $20-30 million on$1.5 billion in revenue. The cost of associate and affiliate cricket is inflated by including everything development related, such as the women's world cup, reserves and development funds. Any independence the development committee had is proposed to be reduced, and subject to the F&CA committee.

Costs are to be cut, administration shaved. And the beneficiaries of all these savings?

Far and away the most ethically questionable element in the working paper is the concept of "distribution cost". As I outlined last year, the BCCI receives a much smaller proportion of the money generated in India than comparable nations do from their local markets. This is, in part, because ODI cricket is popular there, and the World Cup is far and away the most popular tournament of that type. The implications of the working paper are that the BCCI has made their future (lucrative) involvement in the tournament that props up the ICC, and by extension, most of its members, on more of that revenue going to them. There are several points to be made on this:

Firstly, deceptively, the working paper doesn't specify amounts, but percentages of total revenue. The table below helps fill some of them in, because actual amounts are much easier to understand and compare. In its last cycle the ICC reported $1,564 million in revenue. If revenue stayed roughly the same, the cost saving outlined above would find their way into the big-3's pockets, the BCCI taking some$63 million. In other words, the likes of Estonia and Peru will not play any international cricket, so the world's richest cricket board will have an extra $63 million to pay some of the world's richest athletes. If revenue increases to$2 billion, the big-3 will take 108 per cent of that increase. That's not just wrong, that's a disgrace.

ICC Revenue:15002000225025002750300032503500
BCCI (Dist Cost. %)4.217.419.720.320.721.921.921.9
ECB (Dist Cost. %)0.93.84.34.44.54.74.84.8
CA (Dist Cost. %)0.62.32.62.72.82.92.92.9

Full Member Surplus payment52.555.559.6256370.573.3578.9885.13
BCCI Dist. Cost63348443.25507.5569.25657711.75766.5
ECB Dist. Cost13.57696.75110123.75141156168
CA Dist. Cost94658.567.5778794.25101.5
Distribution Cost (big-3)85.5470598.56857708859621036

Secondly, there is an implied ownership of the local market, and for that matter the ICC, now being plucked like a plump turkey. Clearly the representatives of the BCCI are more marketable to the Indian public than other teams, but ICC events are organised and operated by ICC, the business. The money generated by that business is a payment from fans to the ICC, for providing a product. Moreover, the money the ICC generates out of the world cup is significantly higher than what India generates from a whole summer of matches. The world cup has cachet that a bilateral series does not; to claim money generated in a locale as otherwise belonging to that locale's cricket board is a nonsense. As a fan, I object in the strongest possible way to being considered a serf to Cricket Australia.

That money should be cross-subsidising development initiatives, smaller tournaments, administration and anything that grows cricket as an international sport. That should be the ICC's remit and their option as an independent entity. FIFA may be riddled with corruption, but it spends up big on development, and well it should. ICC revenue was already overly orientated towards funding members, and in turn, their professional programs, instead of grass-roots growth, infrastructure and development. The World Cricket League currently shuttles between a small handful of nations for lack of turf pitches and decent facilities. Whereas FIFA would go and build pitches, the full members of the ICC, and particularly now, the big three, are taking every last penny they can.

Thirdly, the accounting of the "distribution cost" is questionable in the same way Goldman Sachs bonuses are. The standard full member/development split is 75/25 per cent of the surplus. But as the table above shows, the surplus barely increases with revenue even though costs (and therefore the scope of services offered by the ICC) stay nearly the same. The difference is made up by accounting for payments made to full members (naturally not associate members), to cover the opportunity cost of participation instead of playing elsewhere. Instead of investing ICC revenues in the game, they are being paid out as a "cost" to nations for the right to have them turn up; a kind of corporate bonus from management to part-owner, that strips value from the firm.

And for associates and affiliates, these payments mean they get a double kicking. Not only is ICC development funding being reduced, but the 25 per cent surplus has now been redefined to exclude the "distribution cost" that makes up almost a third of revenue in most scenarios. As the "distribution cost" is larger than the projected surplus, this represents roughly a halving of the associate and affiliate development payment for most revenue projections. Add in the Test fund, also a cost, and the scrapping of subscriptions, which added to revenue, and the full members are getting an enormous increase in payments without giving anything back in return. Sometimes you just have to stand back and admire the sheer brazenness.

Other issues pertaining to global growth could go either way. The accounting of events as event costs, rather than under development might be an improvement; but the subjugation of development to the F&CA committee means it comes under the control of full member representatives who've repeatedly demonstrated little to no knowledge of development issues, and even less care; and who, via their dividend payments have a vested interest in cutting as many programs as possible. The increase in funding to the top-6 associates is likely to backfire too. We have already seen in the recent past that high performance program grants are mostly used to pay professional players to train, which adds nothing to long-term development. The scorecard system in place provides a much more nuanced assessment of needs and value-added, and while it will no doubt remain, increases in funding to teams without increasing playing opportunities is a waste of time.

Last year I wrote that there is little market growth and development, but a lot of redistribution. The working paper proposal would serve only to exacerbate that problem. There is no development of cricket's products, though the most lucrative bi-laterals can now be played even more often. And there is a clear aim to reduce the scope of ICC operations under guise of cost-cutting; a lot of re-accounting to increase distributions to full members (but mostly the big-three) at the expense of ICC programs, and independence.

Is it disastrous? For test cricket, possibly, as the test fund doesn't kick in unless revenues are high, and even then teams have no significant incentive to play: neither monetary nor competition. But for the most part it leaves cricket exactly where it is now. And that is a very short-sighted solution to ver real problems. The ICC certainly needed reform, but it also needed to build on what was there. Limiting the only multi-lateral body capable of moving the game forward is a backwards step. This proposal is a power and money grab by bodies that believe in little else; with no demonstrated capacity for leadership or growth. Cricket will survive it, as it always will, but any notion of it growing into a global sport recedes. You can't grow a sport without investment, and that just isn't happening, in product development, in market development, or in administrative capacity. Even if we consider the ICC as nothing more than a business, and not a sport, those in charge should still be held accountable for investment decisions; when investment is foregone for asset stripping then it is time to sell your stock instead.

Cricket - Articles 21st January, 2014 01:43:06   [#]