Friday, 7 March 2014 00:00
World cricket has in the last month or so gone through quite the shake-up. With the recent decision by the International Cricket Council to overhaul its revenue sharing and decision making models to focus on what has been termed the ‘Big Three’ – India, England and Australia – the three biggest revenue contributors to the ICC’s coffers, getting a ‘fair and proportionate share’ of ICC revenue. Sri Lanka was represented at the meetings in Singapore by SLC President Jayantha Dharmadasa and SLC Secretary Nishantha Ranatunga, who abstained from voting in crucial elections that passed the new resolutions. According to Ranatunga, SLC proposed revisions to the new proposals put forward by the ICC and managed to get SLC the best deal they could have, given that the resolution would have been passed either way. Nevertheless things are on the up, says SLC Secretary Nishantha Ranatunga. He is confident that Sri Lanka Cricket has seen the road to recovery and that the new ICC proposals and the ‘Big Three’ could help that happen. Following are excerpts:By David EbertQ: First off all, can you give me an overview of what situation SLC’s finances are in at the moment?A:We are going through challenging times where we have spent more than what we should have spent on our cricketers. That was our main issue we feel is the reason why we are in this state and also we spent money on three stadiums. However that burden will not come to us, whatever the amounts that needs to be paid will be looked after by the Government. For example in other countries infrastructure is built by the governments or provincial governments. We have spoken with the Treasury and Sports Ministry and they have given us a very positive response on that. Basically we are getting better from what we were from probably two years back and we can take things forward in a very positive manner.
"We are going through challenging times where we have spent more than what we should have spent on our cricketers. That was our main issue we feel is the reason why we are in this state and also we spent money on three stadiums. However that burden will not come to us… Basically we are getting better from what we were from probably two years back and we can take things forward in a very positive manner. If you look at 2011 and 2012, we spent close to 70% of our revenue on our players but now by last year it has gone down to 40% and we want to continue in the same way and are looking at different options. One is to minimise the number of contracts and the other one is to get more revenue and find additional ways of making revenueIf you compare Sri Lanka and Australia it’s the same population but their per capita income is very much bigger than us $ 7,000 versus $ 70,000 I would say and the people of that country would spend $ 50 to $ 100 to watch a Test match but if we play it here, even if you have it open, you can’t get crowds. That is because our people don’t have the interest levels and ability for expenditure. So it has to improve in time to come and our marketing team is working on developing a proper marketing campaign for Test cricket in the future but as at now that is our rationale. Although we lose close to $ 20-25 million from ICC events as explained earlier, one Indian tour can give us $ 25-28 million so we can cover that. So we need to be in their good books with them to make that money"Q: So does this mean that the Cricket Board’s finances are currently no longer in the red? A:I would say we are running cricket in a very positive manner when looking two years back. It’s very difficult to answer your question because cricket is a game where when it comes to revenue, it’s periodical. If you play an ICC event like the World Cup or when we play the big boys like India, England and Australia then we get good finances but if we play Pakistan we get very little marginal profits but all the other teams are loss making tours for us. So we need to plan our cash flow based on the big tours that we get and average it and work our expenses accordingly.
Q: You said earlier that one of the reasons the board was in this situation was because of over expenditure on the cricketers themselves. What measures have you put in place to control this aspect?A: If you look at 2011 and 2012, we spent close to 70% of our revenue on our players but now by last year it has gone down to 40% and we want to continue in the same way and are looking at different options. One is to minimise the number of contracts and the other one is to get more revenue and find additional ways of making revenue.
Q: Getting on to the ‘Big Three’ issue. With the new consolidation of finances and the revenue allocation structures being handed out to individual teams, Sri Lanka is reportedly entitled to only a 0.5% share of the ICC’s earnings. Does that constitute a dip in SLC’s annual allocation or an increase?A: It’s like this, if you look at the last seven years, we got a net income of $ 55 million from ICC events. The ICC cycle works for seven years, so for the next seven years if it was the same formula we would have gotten about $ 120 million but with the new formula that they have produced we will be getting about $ 90 million.
Yes it’s an increase from what we got last year, from $ 55 million to $ 90 million but if the distribution policy was the same as for the last seven years we would have gotten $ 120 million. However it was passed with the support of eight people and we had to abstain based on certain changes that they made and we have to live with it.
Q: Does the new agreement in any way guarantee any increase of tours to make up for the calculated decrease in ICC based revenue for the Board?A:This proposal was given to us on 9 January and our Board President was requested to come with another representative from SLC and hence the President and I took part. What they told us at the meeting was they were going to relook at and propose a new system for the distribution of finances. If you look at the last seven years, the ICC made $ 1.7 billion where we got $ 55 million after expenditure and all that.
Now, in the next seven years, it has gone up to $ 2.6 billion versus $ 1.6 billion, so we will get about $ 90 million. I will get to the tours later on but how they came up with this new system of India getting more revenue based on certain criteria such as them bringing in 80% of the ICC’s revenue and hence they are getting more revenue back, after $ 1.5 billion, anything above will give them a higher percentage. Australia gets very much lesser than India though with about 3.8% and England gets same 4.5%. All the other countries get very much lesser than them probably about 1.2% is the maximum and we get about 0.8-0.9%.
Basically if you look at the rationale, for the next ten years we have gone for a tender and Ten Sports have won it; we get $ 60 million on that. One Indian tour gives us $ 28 million, one England tour gives us $ 12 million, one Australian tour gets us $ 8 million and I’m talking about net income, so these top three countries give us $ 48 million in income versus $ 60 million income what we get from everybody; so most of the other tours are loss making ventures.
A tour will cost us close to $ 3 million and when you get down India we get a revenue of $ 28 million and for example we will spend $ 3 million and our profit would be $ 25 million but when you play any another team other than these three big countries we lose money because our revenue for those countries is very much less than what we are supposed to get. There is a reason for that, revenue comes with viewership and if you look at a country like India they have 1.2 billion people, Pakistan 200 million, Bangladesh has 180 million and Sri Lanka has only 20 million.
If you compare Sri Lanka and Australia it’s the same population but their per capita income is very much bigger than us $ 7,000 versus $ 70,000 I would say and the people of that country would spend $ 50 to $ 100 to watch a Test match but if we play it here, even if you have it open, you can’t get crowds. That is because our people don’t have the interest levels and ability for expenditure. So it has to improve in time to come and our marketing team is working on developing a proper marketing campaign for Test cricket in the future but as at now that is our rationale. Although we lose close to $ 20-25 million from ICC events as explained earlier, one Indian tour can give us $ 25-28 million so we can cover that. So we need to be in their good books with them to make that money.
Q: What were the changes that SLC effected on those proposals?A:When the first proposal was given, there were financial model changes and other than that there were governance changes. According to the first proposal only the Presidents of these three countries can be ICC President. There are two committees as at now, one if finance and the other is governance, and they proposed another committee called the executive committee and according to the first proposal only these three countries could be the heads of these committees plus they said that only three of them would be in these committees plus on more from the other countries.
Then in terms of the game, they would be playing it in two leagues – Test playing countries and others – the last country in the Test league will have to play the top team in the non Test playing country league and there will be a qualification tournament to get into the Test league and if the last guy loses then they will lose Test status.
So then there was another rule which was detrimental to us that is if India is touring us and the Indian Board has a misunderstanding or a legal case with our broadcaster, they can refuse to come. So there were five or six points that were very detrimental to the game. Then we managed to have a discussion with the three countries and we managed to get rid of some of them except for the financial aspect which they were very focused on and due to their rationales – one being India having a larger viewership and hence require larger infrastructure. They have also given a criteria as to how they have calculated it for example – for India to get more revenue based on their revenue income for ICC events plus they were talking about the game’s history and the countries that started playing the game and also performance. Because of our performances we managed to get a little more than some of the other countries.
When we had the discussions we said that it was unethical for these three countries to run cricket and we managed to get rid of that. Then the issue of only the three of them heading the subcommittees of cricket, that was also taken out and we requested for it to be the big three plus another three but we only managed to get in another one more, so there will be three plus two now.
Then regarding the qualification games, none of the countries will lose their Test status but somebody at the bottom, if they beat another the other country can get their Test status. We also managed to get rid of the rule where if a country’s board has a problem with a broadcaster when touring they can refuse to participate. So due to those reasons, although we went for the Singapore meeting on 8 February with a commitment from the board not to support, we had to change our stance because it was anyway going to get passed and we managed to get these changes done. We came back and presented the new proposals to them and the Board accepted it. So these are the changes in terms of the proposals.
Q: In terms of future tours how much of an impact has the new changes made?A: Now we are negotiating with all the countries and England has already confirmed. We are in negotiations with England, India and Australia to have more bilateral games by 2023 so we are very positive that we can get some tours and will be able to run cricket without any financial constraints.
Q: The last time we met, you referred to a long term financial plan that the Board was putting in place for recovery. At what stage is that plan at the moment?A: It is currently in implementation. For two years SLC paid 25% of their ICC revenue to the players. We stopped that. That is because in general even in India, England and Australia, they contribute only 25% only their national players. So that was the killer and also we are very careful in terms of our expenditure and also out revenue models have increased that is something that we can share with you. If you look at 2002, our revenue/total income was Rs. 317 million, then from 2012 it has gone up to Rs. 7 billion. If you at other income other than TV rights within that period, it has increased from Rs. 112 million to Rs. 3.3 billion.
Now our marketing team has been very focused from around 2009 and we started increasing from then and it has gone up to Rs. 3.3 billion as at 2012. Sponsorships in 2008 which was Rs. 84 million jumped to Rs. 262 million in 2009.
So you see our model is such that when we play big players, we get big money and when we play the others, the money is not as big. So those are more like training tours. If you look at the other countries, when we go there, there is very little advantage for them because we only have 20 million people and the TV revenue from our country to them is very minimal.
So everybody needs to understand this business model; the people, the media. That’s why a lot of people are coming with various other theories without understanding the rationale of how we make money and what our difficulties are.
Pic by Upul Abayasekara