x Abu Dhabi, UAEFriday 19 January 2018

England, Australia and India to claim lion’s share of revenue in proposed ICC reforms

Proposal would concentrate decision-making and financial power with England, Australia and India

Australia's Shane Watson hits a boundary during the first day of the fifth Ashes Test against England at The Oval on August 21. If the proposed International Cricket Council reforms go ahead, England, Australia and India will hold the lion's share of decision-making and financial power in world cricket. Glyn Kirk / AFP
Australia's Shane Watson hits a boundary during the first day of the fifth Ashes Test against England at The Oval on August 21. If the proposed International Cricket Council reforms go ahead, England, Australia and India will hold the lion's share of decision-making and financial power in world cricket. Glyn Kirk / AFP

The central plank in the bid by the three strongest boards to take over control of cricket is based on their elaborate plans for a complete remapping of the way the game’s revenues – from International Cricket Council (ICC) events – is distributed among full members as well as associates and affiliates.

In short, the Board of Control for Cricket India (BCCI), Cricket Australia (CA) and the England & Wales Cricket Board (ECB) are set to grab a greater share of any growth in revenues from the sale of the ICC’s next media rights.

The sop they are providing to the rest of the membership, according to the draft report by a working group of the ICC’s Finance & Commercial Affairs (F&CA) body seen by The National, is that the current model for the distribution of funds – 75 per cent to full members and 25 per cent to associates – will remain and a Test cricket fund added for members where Tests are financially unprofitable; but new, greater growth in ICC revenues will effectively be filtered in large parts to the three boards, with the BCCI standing to gain the most.

That, theoretically, may only increase the inequality in finances that has so hamstrung the game.

The report envisages the setting up of a revenue stream for full members to be earned from ICC’s gross revenues. The basis for this is an alarming subversion of the relationship between the ICC and its full members.

The report states that “a participation fee (called Contribution Costs for various purposes) will be paid to all full members to compensate them for playing in ICC events and contributing their services to the ICC”.

In other words, playing and participating in an ICC event, for a full member, is effectively a hardship, at the potential cost of more lucrative, domestic commitments, for which compensation is needed.

This revenue stream will be distributed to members through a vaguely-calculated and graded percentage share, worked out by a “marked scoreboard method”.

As of now, the ICC’s financial model is straightforward: 75 per cent of all the surplus it earns from the sale of media rights for its events, is divided equally between 10 full members. The remaining is divided equally in cricket’s second tier.

If gross revenues will be distributed in unequal shares to 10 full members – with the big three guaranteed to earn more than the rest – the remaining surplus (from which the traditional 75-25 split comes) might be reduced.

In particular, associates and affiliates could be hit hard: not only could that 25 per cent be lower, the report says that just the top six associate nations receive half of that share and the vast members beyond them the paltry rest.

The rationale behind this is spelt out in ominous lines. “It should be recognised by all members that this model still sees considerable funds coming from two countries in particular and these funds are still shared among all Full Members.

“If ICC funds were entirely allocated on the basis of where they came from, all Members bar two would suffer a seriously damaging reduction in their ICC funding and this is not the position favoured by the BCCI, the ECB or CA.”

The proposals are cleverly masked, in much the way cricket seems to have run recently: offer financially weaker boards short-term monetary incentives at the cost of reducing their longer-term influence and strength.

In a series of tables, the report draws on a series of projected revenues to show how much boards could earn, depending on how much the ICC’s next batch of commercial rights – up for tender in April – are sold for.

The guaranteed returns from the 75 per cent share reserved for full members will rise, the report points out, if the sale goes well.

At the current level of ICC revenues – on rights sold for US$1.5 billion (Dh5.5bn) – the report works out that the BCCI will earn 4.2 per cent of the revenue, the ECB 0.9 per cent and CA 0.6 per cent (Pakistan get 0.3 per cent, South Africa 0.2 per cent, West Indies, New Zealand and Sri Lanka all 0.1 per cent and both Zimbabwe and Bangladesh 0 per cent).

In this case, the contribution cost earnings for the BCCI are US$63m, to which is added the US$52 million (which every full member continues to get as an even distribution of the surplus). But the key figures and trends emerge towards the higher level of their predictions.

If, for example, the ICC secures an eight-year deal worth $US3.5bn, then the shares for the three boards increase by vast amounts. At that level of income, the BCCI will receive – as contribution costs – 21.9 per cent of the total amount, the ECB 4.8 per cent and CA 2.9 per cent.

The other full members are a fair bit behind: Pakistan receive 1.4 per cent, South Africa 1.3 per cent, West Indies and Sri Lanka 0.8 per cent, New Zealand 0.5 per cent, Bangladesh 0.2 per cent and Zimbabwe 0.1 per cent.

The disparities in earning are starkest in this scenario: the BCCI could earn US$766m from the contribution cost percentage plus US$85m as an even distribution of the surplus. Bangladesh, at the lowest end, will make only $7m from the contribution cost plus the US$85 million from the surplus.

There has also been proposed the addition of a Test Cricket Fund, designed primarily to help other members make Test cricket more financially viable.

But this only kicks in if the ICC’s sale generates more than $2bn and it begins at only US$30 million, to be divided equally. If rights are sold for $3.5bn, then this fund is increased to $90m.

Intriguingly, Cricket South Africa are the only full member not mentioned in the report as recipients of this fund; whether or not that is the result of their recent fracas with the BCCI is not clear.

“This will be given in equal amounts to BCB, ZCB, NZC, SLC, PCB and WICB, each of whom are currently faced with the increasing challenge of uneconomical tours,” the report writes.

The biggest questions, when these proposals are brought for further discussion in Dubai towards the end of this month, are likely to focus on how the three boards have calculated the relevant percentages in their Marked Scoreboard Method.

The parameters are vague: the revenue contributed to the ICC (chief parameter), a value to a historical ICC membership, on-field performances over the past 20 years in men’s and women’s competitions, and domestic development performance.

Without elaborating on their methodology of calculation, the document says that during the last ICC media rights sale, the “value contribution” of India was more than 80 per cent while the contribution of other full members ranged from 0.1 per cent to 5 per cent.

No evidence is given to back up these figures but “calculations have been worked on and negotiated by BCCI, CA and ECB. Agreed principles are sound and the break-up between categories appropriate.”

Other questions will also revolve around the proposal in the paper that a three-member team – made up of the big three boards – will have, the report says, a “mandate to look at every element of each ICC event and all event costs and to manage those costs with the objective of optimising them for every ICC event”.

This team will report regularly to the F&CA committee, which, as revealed on Saturday in The National, is also planned to be composed of members from the three boards.

In another blow to associates and affiliates, the ICC’s development committee – which handles financial affairs for that division – will have no authority other than as a recommendation committee. “The Development Committee will report to the F&CA and will only be a recommendation committee with no financial authority. All recommendations on matters within the remit of the F&CA must be approved by the F&CA.”