Coronavirus crisis exposes black hole in Cricket Australia's finances | Sam Perry

In the first weeks of the pandemic, lovers of cricket in Australia might have concealed a little guilt. While the winter codes flailed, it appeared cricket would be spared the immediate hellfire of Covid-19. And whatever your level of financial literacy, or your view of Cricket Australia’s long tail of hawkish administration, just about everybody believed that the organisation was rich.

However, many weeks later, long after Eddie McGuire publicly begged the AFL membership base and rugby league floated NRL Island, Australia’s summer game now appears mired among the winter codes in its financial desperation.

Whereas two weeks ago there were assurances of “enough equity and agility within the business to absorb” the immediate financial impact of the coronavirus, CA has now stood down 80 per cent of its staff until July, effectively saying that unless it does so, the lights will go off in August. Chief executive Kevin Roberts said the body had already lost $20m during Covid-19 and that “hundreds of millions” more would be in jeopardy if India failed to tour this summer. On the face of it, these are the signs of an organisation in dreadful financial shape.

While those wanting to comprehend the subsequent figures might be wishing they’d pursued a finance degree, you don’t need to be a PwC graduate to justifiably wonder how both cricket, and its rival codes, are in such bad shape. How does Australia, which after Switzerland is the second-wealthiest nation in the world per-capita, find three, possibly four, of its most popular codes in dire straits mere weeks into the shutdown?

Of course, nobody saw the pandemic coming, especially in its speed and scale. But put crudely, Cricket Australia’s poor overarching cash position has been worryingly exposed, now that the music’s stopped. As Warren Buffett put it, “only when the tide goes out do you discover who’s been swimming naked”.

Beyond the financial technicalities of Cricket Australia’s balance sheet, it is clear we are witnessing a scenario endemic of broader, longstanding issues of governance across all sports in Australia, and the cultures that pervade. It is often forgotten that Cricket Australia is a not-for-profit organisation, receiving taxpayer funds, that administers the game on behalf of the Australian people. By extension, its constituents are entitled to wonder why a not-for-profit has tied a percentage of its reserves up in risky equities, or, why a not-for-profit was engaging with risky equities in the first place. As Peter Lalor pointed out in The Australian recently, by contrast, the AFL – long regarded as the commercial standard-bearer in Australian sport – has declared zero stock market exposure. It will be curious to learn who governed these decisions at Jolimont, and whether or not Cricket Australia was relying upon these reserves to give it a return into investment markets like equities to pay future return payments to players.

Indeed, this is the other lens through which many are viewing the issue. With national contracts slated to be announced by 30 April, there is a familiar sense of disquiet brewing among the players and their representative body, the Australian Cricketers’ Association. Despite CA’s public assurances otherwise, the ACA currently remains out of the loop, and after three years of cordial relations, the players body now finds itself second-guessing Jolimont’s next move. There’s a suggestion that Cricket Australia’s dramatically altered posture may be designed to clear the path for a renegotiated player-pay deal, so purportedly parlous are the game’s finances. While the current arrangement sees the players take a share of the revenue – riding its highs and lows – some believe CA may be preparing to propose a pay cut over-and-above the existing agreement. The extent to which such a move would be a function of the pandemic or poor administration appears entirely dependent upon who you ask, and it may be too early to judge.

If this is CA’s play, it would amount to staggering brinkmanship on its part. While some were initially willing to entertain the possibility of a public bluff, it would be hard to believe an organisation would sit down most of its staff in order to achieve these negotiated ends.

When Roberts was asked to describe his aims for the relationship with the ACA in 2018, the term he used was “deepening”. On that note, now might be an excellent opportunity to demonstrate the depth of that relationship, when the going is tough. A deep relationship might be one where he says to ACA CEO Alistair Nicholson, “Alistair, we’ve got a problem”. However, with eight days until national contracts are due to be announced, CA’s books are closed and the ACA believes there is little transparency, both of which were communicated by fast bowler Josh Hazlewood during, strangely, one of CA’s own recent media conferences.

It all paints a fairly bleak picture for head office, for whom it appears one of two things are happening: its finances are either regrettably bad, which should be cause for great concern, or possibly we’re seeing an extraordinary negotiating position, for whom the standing down of staff is merely a tactic.

And as the imbroglio plays out, many involved in cricket’s grassroots will be left to watch on, wondering what this means, and whether or not cricket this summer is viable for them and their communities, now that the music has stopped.

source: theguardian.com

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