CA claims cuts will reduce A$142 million revenue hole

Cricket

Kevin Roberts, the Cricket Australia (CA) chief executive, has outlined his case for 25% across the board cuts to the governing body, the state associations and revenue due to the players. Roberts claimed that the game would be facing a cash deficit of A$142 million by the end of the next financial year without major cost reductions in the time of the Covid-19 pandemic.

Cricket Australia and Roberts have been mired in arguments with its state association owners, the Australian Cricketers Association (ACA) and within its own organisation since declaring in April that there was danger it would be “trading insolvent” by August without major cutbacks. New South Wales, Queensland and the ACA have all openly disputed CA’s course of action, while Western Australia has insisted that its own agreement to a reduction on distributions will not take effect unless all states agree.

Coinciding with the delayed deadline for CA’s projections of Australian Cricket Revenue to the ACA – a requirement inked into the MoU with the players that was last renewed in 2017 – Roberts attempted to articulate his and the CA board’s position on cutbacks on Wednesday, after briefing the state associations of NSW and Queensland earlier in the week.

The ACA’s response is expected on Thursday, with players looking at a reduction to their payment pool of around A$28 million. This would be smoothed out by drawing cash from the adjustment ledger that collects the extra cash made above CA’s conservative 2017 revenue projections – most of it from a A$1.18 million broadcast deal signed with Fox Sports and Seven in 2018.

According to its modelling, CA could improve its projected cash position by the end of June 2021 to a deficit of around half the A$142 million figure with cuts of around 25% to player pay, state association grants and staff cuts – an amount that would be covered by the provision of a credit facility worth A$100 million through the Commonwealth Bank. The plan has been pulled together by a financial crisis team featuring Roberts, the CA chairman Earl Eddings, fellow board members Paul Green and Michelle Tredenick and the acting chief financial officer Paul Reining, who previously worked with Roberts at the sports apparel company 2XU.

“Given the economic uncertainty caused by the coronavirus pandemic, many organisations are working with scenario plans rather than developing precise financial projections that may need to be updated various times in ever-changing circumstances,” Roberts said in a statement provided to Nine and News Corp. “We face similar challenges in projecting cricket’s revenue, however we wanted to fulfil our obligation to provide the ACA with our outlook for the next two years, along with additional information on various possibilities for that period.

“We are continuing to do everything possible to deliver an exciting 2020-21 cricket season, including the men’s Test series between Australia and India that will see the world’s top two ranked teams face off against each other. Our planning for the 2020-21 season also needs to respond to ongoing uncertainty in relation to travel, mass gatherings and economic conditions that mean the season will most likely look quite different to what we are accustomed to.

“It’s important to note the revised revenue projection provided to the ACA will have zero impact on the value of player retainers, match fees, national team performance bonuses or domestic competition prize money in 2020-21 or 2021-22. As it stands, the revised revenue projection would impact the amount owing to the players at the end of the five-year MOU agreement in 2022, however we are focused on maximising revenue in the next two years.”

Cricket Australia’s board and executive felt compelled to move in a drastic cost-cutting direction in late March, less than two weeks after the women’s Twenty20 World Cup final was watched by nearly 90,000 spectators at the MCG. This change of direction – after Roberts had publicly stated that CA was well placed to ride out the coronavirus pandemic – was not articulated beyond a small circle of executives and board members until about a month later in late April. It cannot have been driven by anything other than fears of massive reductions in the broadcast rights payments that are the bread and butter of the game’s wellbeing.

The first action made by CA was to stand down the majority of CA staff on 80% pay cuts until the end of June, returning a saving of just A$3 million. At the same time, it asked the state associations to accept cuts of 40% to their annual grants and also contacted ten senior contracted players individually rather than first approaching the ACA to declare the urgency of the situation.

Those actions set off a chain reaction of cutbacks among all the states apart from NSW, while the ACA reacted with understandable scepticism given the relatively recent history of a fractious pay dispute in 2017. Some of the state cutbacks, particularly in Victoria and Queensland, met an angry response from CA as they saw huge swathes of community cricket staff being removed despite the governing body’s previous statement of a strategic priority for funding cricket’s grassroots.

Negotiations between CA, the states and the ACA have subsequently been taken on primarily by the chairman Eddings and fellow board director Green, the second time Roberts has been moved to one side in critical talks after a similar turn of events during the 2017 pay dispute. This has left Roberts to deal with considerable disillusionment among his staff, who after being stood down in vast numbers in April are now bracing for the inevitable round of redundancies.

There is a sense among many of the game’s people of an opportunity lost, even in the time of coronavirus, for a more open and integrated approach to have been taken, rather than the piecemeal, state-by-state cuts that have resulted in recent weeks.

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