Tuesday 25 June 2013

Misunderstanding cricket's value

We're living in the golden age. Never have cricket's financial foundations been more secure. Yet still, worry abounds. Oddly, it is these very riches causing the uncertainty, because by obsessing on the revenue-generating parts of cricket, administrators are putting the value of the wider game at risk.

It is worth reflecting on how much has changed. 17 years ago the sport's most lucrative product – the 1996 World Cup – earned full member nations $500,000 each. At the time it was big money. In 2011, the IPL alone – a notionally domestic tournament - made the BCCI nearly $50m. Such largesse is unprecedented.

With this wealth has come much wrangling over the direction the game should take. Players, broadcasters, boards and franchises all see themselves as the key to future fortunes and the ones deserving of greater rewards. Over the last few months this has played out in a number of spats.

There was the PCA claim that England players are “substantially underpaid”. Before that Nottinghamshire announced contracted players would be blocked from playing in the IPL. The lead-up to England's Test series in India saw the 'TMS war' where the BBC took umbrage at having to shell out great expenses to cover England internationals while Test Match Sofa didn't pay a penny. And in India, the BCCI denied access to photographers, web-journalists and broadcasters unwilling to meet stringent financial conditions. In short, the sudden wealth brought a poverty of vision and much backbiting.

In some sense it is right for the England players to demand flexibility. Central contract retainers pay between £200k - £400k a year, so England's stars are hardly impoverished, but they do earn less than Australia's. Michael Clarke and Shane Watson receive £1m from the ACB while, crucially, remaining free to sell themselves in the BBL and IPL. The early-summer Test matches in England clash with the IPL and are frequently underwhelming affairs against underprepared and understrength oppositions. A rejigging of the summer calendar is welcome but players should accept that their demand for higher salaries drives congestion of the international fixture list.

If the PCA case is an attempt to harness player power, Nottinghamshire's stance is the reverse. Cricketers like Alex Hales would undoubtedly learn (as well as earn) plenty from playing alongside the best in a high-pressure atmosphere at the IPL. What that experience and opportunity contributes to the English game might be vast, but difficult to quantify. It is understandable Nottinghamshire should want the services of their player but it is an unsustainable decision in the long term and if all county teams did the same it would not necessarily do much good for English cricket.

Both the BCCI and critics of the Sofa share a similar short-sightedness. The inflated cost of broadcast rights has priced all competitors to Sky out of the television market in England, but the BBC's radio coverage was thought sacrosanct. The Sofa changed that by opening out to a new online audience but was criticised for not making a direct financial contribution to the ECB.

Greater coverage – whether through online radio, or photography, or web-journalists - broadens the reach and raises the profile of the sport, which can only improve commercial worth down the line. Ensuring people in Australia can listen to radio coverage of the Test series against India, for instance, deepens the presence of the sport globally. That is something to be fostered for tomorrow's good, not blocked in search of a better return today.

Underlying all this is a false logic over how wealth in the game is created. On the surface it may seem obvious. Punters watch short-form cricket, especially T20, and this makes broadcasters happy to shell out vast sums for the access to sell adverts to them. Longer forms of the game are less attractive so should be, at best, set aside solely for nostalgic safekeeping. In England specifically, the international team is what is marketable, so the needs of county cricket should be demoted. The implication is straightforward. Limited-over cricket is the must-have product, broadcasters the financiers, and the game should be run to best appease both.

Yet if the last five years have taught us anything, it is that balance sheets can occlude more than they reveal. The value of a product can't be understood by how much it is sold for. This is because of the difference between what business textbooks would call “value-creation” and “value-capture”. The first is a complex, messy and often unintended process involving many parties over a long period, while the second is a more simplified snapshot of all that went before.

International players can point out it is their labour on display that people enjoy watching, so should be entitled to a handsome share of the revenue created. But where would they be without an administrative set up that provides them the place to showcase their skills? Counties and other domestic teams don't attract the kind of crowds, sponsorship or rights deals that allow them to generate much revenue, but it is they who identify and nurture the talent that goes on to become broadcast-valuable international cricketers. So while they may not capture value, they certainly help create it. Similarly, women's cricket may not yet draw the same audience numbers or rights deals as the men's game but by opening out cricket's audience and changing perception of the sport, it helps cricket as a whole become more lucrative. As such women cricketers could demand a greater share.

Looking further down the ladder to grass roots, clubs play a pivotal role fanning the first flames of interest in youngsters. Without Burnley CC, James Anderson might have become an estate agent. Moreover the communitarian spirit recreational cricket instills forms an important part of the affection for the sport more broadly, which matters when boards sell sponsorship and rights.

At the most basic level, cricket is valuable because people like it and it takes all these groups to ensure that's the case. How this love gets monetised is a different matter and changes as society and technology evolves.

Cricket's first flourishing was thanks to aristocratic patronage. High society benefactors showcased their wealth and status by paying amateurs and shamateurs to compete. The popularity of both the cricket and especially gambling on it, then allowed the game to expand with punters happy to pay to watch matches. Fast-forward two generations and the post-Packer era of bumper media rights provided the engine for the multimillion-pound growth in the game. Just lately the circle is intriguingly returning in some way to its origins, with IPL teams being bought partly as very public displays of status. In the long term, as technology further undermines the ability for monopoly broadcasting, it may be that the sums available for the game diminish.

It is important to remember all this in the dash for cash. Those arguing that Test cricket's pre-industrial sprawl is out of kilter with contemporary commerce, miss where some of the short-form's value comes from. In part it is the context and contrast provided by the longer game that makes T20 attractive. Also it is the star personalities, forged over international series, that brings value to the IPL and BBL brands.

These two dominant Twenty20 tournaments rely on the stardom of international cricketers to market themselves. How else to explain Shane Warne's continued presence? Unlike football, cricket is a sport that blossomed primarily through international competition. Even in the private, city-based tournaments, the success of the national team matters. The 2012 BBL is forecast to make a £7.2m loss at just the time the Australian national team are floundering. Likewise the IPL's brand value, while still sizeable, dipped along with the form of the Indian side.

The skills and new audience developed in the shortest form have already crossed over to the longer game. Test cricket is going through an especially fast-paced period. While recognising how gains from one form can cross-subsidise another in this way, administrators seem less able to see the reverse. The South African cricket board's decision to stage a T20 international on Boxing Day last year instead of a Test was a galling example. Pulling support out of Test and long-form cricket and hoping to get by predominantly on limited-over games might look commercially sensible now, but may undermine the value of the game further down the line.

One way or another, the new wealth will dramatically restructure how cricket is played. It provides administrators with a wonderful opportunity to expand the game. Yet if they continue to chase short-term gains over broader support they will only squander the chance.

This article appeared first in the May 2013 issue of Spin Cricket. Subscribe here

No comments: