Projected $68m loss for CA makes TV deals crucial

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Brettig: Bowlers playing IPL a worry for Cricket Australia

Gaping loss projections for the 2016-17 home summer have underlined the pivotal importance of Cricket Australia’s forthcoming negotiations for new broadcast deals, both at home and in the spinally lucrative Asian market.

At an otherwise straightforward Cricket Australia AGM at the MCG on Thursday, a graph presented by the governing body’s new chief financial officer Todd Shand stuck out for its frankness. After posting an A$ 98 million surplus for 2014-15, and a more modest A$ 9 million for 2015-16, the projection for this financial year plunged through the floor to the tune of a A$ 68 million loss for the visits of South Africa and Pakistan.

While CA are in robust financial shape, with cash reserves of nearly $ 150 million and a well-established four-year revenue cycle to factor in the fluctuations created by inbound summer visitors – essentially India tours bankrolling all others – the sharp change from one year to another made for stark viewing.

Contributors to the figure expected for this summer include increases in areas such as player payments and dividends to the states, plus the targeted investment of around $ 18m from the Australian Cricket Strategic Growth Fund. David Peever, the CA chairman and former managing director of Rio Tinto in Australia, admitted he would like to see a less “lumpy” set of numbers.

“It is something we do think about and talk about,” Peever said. “I think we also have to accept the fact that we’re dealing with a reality in terms of the lumpiness of the revenue flow. At this stage, it’s a fact of life, but I think we would certainly prefer that we didn’t have such large fluctuations. But, knowing we have them means we have to plan over the four-year cycle and deal with it.”

Dealing with it in 2016-17 will entail renewing broadcast deals, both domestically and overseas, for international cricket in Australia, and also the Twenty20 Big Bash League, which opened up a significant, fresh revenue stream for the game down under when it attracted a $ 90 million bid from Network Ten to put the competition on free-to-air television.

Combined with the $ 500 million committed by Channel Nine for international cricket, which featured a shared digital venture between the network and CA, the 2013 deals placed the game in richer territory than it had ever previously traversed in Australia.

While there have been estimates that the BBL in particular could attract as much as an extra $ 60 million a year in the next round of deals, the stakes for CA are being raised by the level of opulence the game’s governors and decision-makers have become used to – new and greater revenue is invariably followed by new and greater ways to spend it.

There is some chance that the next set of rights will feature a split of BBL matches between free-to-air broadcasters and the pay TV provider Foxtel, at least partly as a way of sharing the escalating cost of television rights. Sport continues to be seen as a rare sure thing in the increasingly balkanised Australian television market.

More complicated is the Indian television market, after the merger between Ten Sports and Sony reduced the number of major players in competition for cricket broadcast rights by a third. To that end, discussions are underway among several nations to bundle their broadcast rights together. Whatever transpires, all present at the MCG on Thursday morning will be eager to avoid the sight of financial graphs sinking under the break even line next time around.

Daniel Brettig is an assistant editor at ESPNcricinfo. @danbrettig

© ESPN Sports Media Ltd.

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