AS THE DUST settles down on the ICC pronouncements and changes, and the strident pleas by the cricket world on BCCI and its “cronies’ to correct the wrong, it is time to step back and reflect on the bigger picture of what it could mean to the cricket world going forward.
While there may be indignant commentary of the new revenue structure, and the skew towards the Indian board and its partners, the reality is that in terms of what it gave to the sport, the Indian board got much lower than its share of revenues.
In fact, even after the new revenue share agreement, India still has a lower than its share of the global revenue it generates. After this move, and including the IPL license fees that India gets, India would still have a less than 50 % share of the overall cricket revenue in the world, whereas in terms of ratings, GRPs and spends, the value creation is upwards of 75 %.
I think time has come now to reflect on how the game could evolve rather than who deserves what revenues, because that debate is over, but before that it is important to understand how the numbers look.
The projected sharing of future revenues is said to be as outlined below:
Cricket Board
Erstwhile Arrangement
New arrangement
(in million dollars)
BCCI
117.5
568.0
ECB
117.5
173.0
CA
117.5
130.5
CSA
117.5
93.5
PCB
117.5
95.5
WICB
117.5
80.5
NZC
117.5
75.5
SLC
117.5
80.5
BCB
117.5
68.0
ZCB
117.5
65.5
Associate Members
522.5
210.0
Total distribution
1640.0
1640.0
Just to clarify, these are 8-year numbers, and assume a $2.5 billion rights number over the next 8-year cycle of ICC rights, and are net of the costs of running cricket.
So, a few things strike us immediately. India is around 30 % of the international revenue – sounds fair if you ask me. The big drop is in the associate number – and that is a good issue to mull over.
The increases in Cricket Australia and English Cricket Board are not significant, given their other cricketing revenues.
Pakistan and South Africa are a major surprise in the revenue share matrix.
There is an element of randomness in the distribution, and I am sure there is some logic to this. But all is not lost, as for most boards bilateral revenue make for a higher share of revenue than ICC pie, and if their bilateral and T20 league revenues are considered, this drop would be in single digits, and in some cases there would be increases depending upon their new deals with their host broadcasters.
In terms of revenue fallouts, broadly the countries can be classified into three categories. The BCCI Brahmins – England and Australia – which clearly benefit financially. The other benefit they will get out of the arrangement is that they will almost certainly play India more as this kind of an arrangement will lead to a more clustered structure. That itself will add $80 -100 million dollars more to their revenue pie over the next license period.
Then there are the Non-Aligned ones – South Africa, West Indies, New Zealand, and may be even Bangladesh and Zimbabwe.
The impact on South Africa is minimal, and they have a robust cricketing structure which will be able to absorb this hit, and given their quick turnaround on the ICC roundtable it appears that a deal has been cut with India to support them on other revenues.
West Indies again should be able to manage – it has a reasonably robust financial operation, a decent long term broadcast deal, and they are aligning themselves to service a western hemisphere-based cricketing audience through some of the new products they are launching.
The other non-aligned ones will be severely hit – Zimbabwe and New Zealand have little cricketing revenues to speak of, and Bangladesh, though strong in domestic cricket revenue generation have done precious little to build it over the years – though the latest news is that they have agreed to a 4-series deal with India to help them buttress their financial position.
Pakistan board a confused one
What confounds me is the next bunch of countries who I call Confused – Sri Lanka and Pakistan.
Sri Lanka more so as they are dependent on BCCI for their survival, and the position they have taken belies their reality. Their revenue loss because of the restructuring, for example, is set off by one Indian tour, and India has really supported them over the years, with contrived trips to the Southern Island. They also have a good domestic structure, which drives their cricket, and some of their financial problems have been of political profligacy rather than bad operating management.
Their position on this change surprised me, to say the least. But wisdom seems to have prevailed with the executive committee of the Sri Lankan board now unanimously supporting the reforms.
Pakistan, of course, is a completely different story. They are probably the only other nation apart from The Big Three, which can build an independent revenue model around their cricket. Apart from the political issues, they have a significant roadblock on the broadcasting side, where their cable system has been completely hijacked by Indian Television. So their product remains under monetized and in spite of a buoyant local market, is sold at the fraction of the price it deserves.
The board has to drive this with the government in terms of regulatory actions and in the interim find ways of generating more money. All that notwithstanding, it is a board which I feel is genuinely hard done by the current share of revenues. At 200 million Pakistanis that follow the game, they deserve more from the cricket business, and also the value they bring to the game. To a large extent the situation is out of PCB’s hands, as recent statements from the ex PCB chairman Mr. Zaka Ashraf are to be believed, and the government has been invoked. Also, their relationship with the Indian board continues to perplex all, and while is toned with the political equations between the two countries, needs significant improvement.
The last word on this is not written yet, and in the sub-continent we should see another series of structural actions, as the players lick their wounds, and transfer their beady eyes to big brother India for resurrection and rehabilitation.
Murdoch group emerges as the dominant player in world cricket
On the cricketing business front, some interesting things begin to happen. The Murdoch group emerges as the dominant player in world cricket, and will control upwards of 80 % of revenues of the business. It’s a strategy they have been chasing for some time now, and it’s beginning to fall into place. They will dominate a sport, which services 1.6 billion of the world’s population and also gets them a foothold in emerging markets for the sub-continental diaspora in the west.
Is it a bad thing – not necessarily so, as it has been proven in football, where their support to English football has made it the largest league in the world? Product quality will improve, and product costs will increase substantially at the consumer level – something which is very evident if one watches cricket on Indian television now.
There will be a clear emergence of three major cricketing seasons through the year. June to September – English cricket. October to February – Indian cricket and Australian cricket. And March to May – the IPL season. India will probably travel in the six-week window between December to mid January, when it gets too cold in large parts of the country and it suits Australian and South African markets. And it also leads a July to September window open for other tours and the probable enhancement of English ODI and T20 leagues
We will see India, Australia, England play bilateral every year now. In a way, a triumvirate has been created. It is of great interest to see how South Africa gets accommodated in this. They are a cricketing super power and they are the ones who will now have to edge their way in. And so now we understand the reason they voted for this change. It’s a pity, as they are a proud cricketing nation and put money where their mouth is in terms cricketing investments and the development of the game.
As a fallout, we will see more bilaterals being played by the smaller countries. This is to keep the game going and also continue feeding revenues to the respective boards. The role of Pakistan will be very crucial in this, as they probably have the highest revenue momentum of the remaining nations. It is evident that the FTP will be redrawn now, and how it shapes up is an interesting viewpoint
3-month IPL window
It appears to me that all this will lead to a 3-month IPL window. It could become a 100-day season with probably 4 more teams. The interesting question to note on this is whether the sub-continental teams also get a chance to participate in this party.
One of BCCI’s chief concerns has been the emergence of country leagues in Sri Lanka and Bangladesh, at a fraction of the value of IPL, and thus potentially depleting the value of IPL. If, say, one Bangladesh, one Sri Lanka and two Pakistan teams are allowed, it addresses three issues immediately. It snuffs out the current leagues in these countries, and it opens out higher player participation from these countries into IPL. And also opens up a larger market for IPL in these areas.
The current issue of Indian players playing in The Big Bash and the English T20 league becomes easier to resolve and will add more commercial value to those leagues, with more revenue participation, potentially, for BCCI. And as the current IPL demonstrates, there are enough players willing to hang their hat on this league.
This could happen over the next 2/ 3 years as IPL come up for a rebid, and it appears from a fee perspective, is poised to take a dramatic leap upwards, as a 3-month season gives significant pricing leverage to sports channels to drive their penetration on this product. In my opinion, the product is ready to be taken to more cities, and if the franchise financials are managed right will find many takers.
So what happens next?? As I am not an ICC expert, and do not profess to understand the decision-making process at the venerable institution well, I can only comment on the final outcomes.
I think the emergence of BCCI, as the driver of international cricket formally is a good thing to happen. It was quite evident that BCCI was chafing at the seams over the last few years as it felt it needed more influence on how the game was run. I think the responsibility of running the international game will now also fall on BCCI more than anybody else, and they will have to support the smaller countries and members to bring up their cricket as envisaged by the ICC constitution.
Cricket world needs a strong Pakistan
The Woolf committee report, it appears, while being very sanguine on the issues of governing an international board, remained oblivious to the changing viewing dynamics of the game. It is obvious that it did not have full support even at the Big Three level, which forced the strategic ambush that has led to these actions. I am also very confident that the new ICC committee will set into motion a good development plan for new nations.
While on the new ICC committee, how it functions would be an interesting thing to watch. The objectives of the three boards are quite divergent, especially when the development of the national teams and cricket structures come in. Industry watchers tell me that they expect developments here as well, as the new structure settles down and the players chalk out their common objectives. The last word on the structure is not written yet, and I continue to observe this with interest.
The fate of the associate members is not clear at all. Their funding has been cut down and in a way it appears that the new ICC thinks that they are not relevant. It’s an issue to be discussed going forward, though clearly in terms of immediate importance it could take a back seat. Maybe, the current thought is to grow the game in countries where it is popular and let the diaspora take care of the rest. We will have to wait and watch.
Redressal of Pakistan Cricket in some way is also a pending item. The cricket world needs a strong Pakistan and the viewing public deserves a sizzling India-Pakistan rivalry. It is a more complicated issue than it appears because of the way television runs in Pakistan, and also the attendant political issues between the two countries. BCCI will have to really step to the plate to make this happen.
As I write this, and try to make sense out of the puzzle, I am left with a feeling that this momentous change is just the beginning of the real restructuring of the cricket world, and will set into motion many events which will transform the way the administration of the game is conceptualized and run across the world. And also the way it is played!
