Cricket Australia reveals bleak financial outlook for the game as investments take major hit
When the head coach of your national cricket team is told he is now a part-time employee you realise just how much Australian cricket is in a perilous financial position.
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Australian cricket is reeling after revelations the game is in a perilous financial position on a day when almost all staff were stood down — even head coach Justin Langer was told late on Friday he is now a part-time employee.
The Australian revealed on Friday that the organisation has lost a significant part of its reserves on the stock market and is facing a cash crisis.
Chief executive Kevin Roberts has warned people the money will run out by the end of the August. Two weeks earlier, staff were assured the game could weather the crisis, which has hit when there is little cricket activity, but there is anxiety about the future position and little fat to live on.
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After working a range of scenarios for the next financial year, Cricket Australia has settled on projecting a 50 per cent loss of income.
The administration understands that key broadcast partners will not make the second of their six-monthly payments due on September 16 if the Test series against India is cancelled.
The two networks paid $1.2b for rights to the cricket over six years.
Fox Cricket and the Seven Network made the last payment on March 15, days before the crisis hit. Cricket, unlike the football codes, was assumed to have dodged a bullet because its season had concluded, but the situation ahead looks increasingly perilous.
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All but essential staff have been stood down until the end of the financial year on 20 per cent of their salaries, with assurances they would be assisted if they did not qualify for JobSeeker payments.
Roberts addressed them all via video on Thursday, revealing the changed situation, saying he was working 16 hours a day for them.
He and other executives had taken a 20 per cent pay cut. All executive general managers and much of senior management are understood to have been kept on.
Senior players were warned the game was in a perilous situation and facing difficult times ahead on Tuesday following a board meeting.
Players are bracing themselves for a major pay cut on top of losses they expect to assume because of the revenue share model they fought so hard to retain.
The chief executive is understood to have rung Tim Paine, Meg Lanning, Steve Smith, Pat Cummins, David Warner, Aaron Finch, Rachel Haynes and others to warn there could be a crisis ahead if drastic action wasn’t taken.
Players are anxious they are going to be made to give up money owed to them because head office has got itself into a difficult position given that their salaries are already tied to revenue fluctuations.
Coaches too are expected to feel the pinch with most expected to be stood down, but players are protected as their wages are calculated as a share of cricket revenue which hasn’t been affected.
Cricket was exposed to market fluctuations through its investment strategy, it’s 2019 annual report revealing $90.2 million in local and overseas shares. The financial report claimed just $26.6 million in cash reserves, down from $83.8 million the previous financial year and almost $200 million in 2016.
The dwindling reserves reflect the cyclical nature of cricket’s revenue cycles — the game works on a four year economic cycle.
The AFL has $184 million in cash reserves and declared no stock market exposure.
Cricket would not confirm a figure for the market losses and disputed a $15 million figure in earlier stories, claiming it was considerably less, but others are adamant the loss is greater.
Cricket was reported to be seeking a $200 million line of credit, although there has been criticism of the move from within the game.
The lay offs are a shock given the game’s biggest revenue streams have not been affected by the international crisis.
Only a handful of games against New Zealand, a tour of Bangladesh and a women’s tour of New Zealand have been cancelled.
If the summer series were cancelled the game would be in serious trouble, although a number of contingency plans are in place if India cannot tour.
Cricket had been on a cost-saving drive in recent years as it refocuses its operation to support more grassroots cricket.
The states have also been informed that they will have to make major cuts to operations, but have hit back, saying there is no need to panic.
Some states told The Australian they were perplexed as to how head office got in this situation and counselled a calmer approach.
Only South Australia has stood down staff so far.
Staff at Cricket Australia who spoke to The Australian were angry that management was paying itself 80 per cent of its wage when they were on 20% and shocked that things changes so quickly after they had been reassured the game was in a good state.
The organisation released a statement on Thursday afternoon soon after staff were told of the impending cuts.
“Cricket Australia — like all sporting bodies — is planning for a return to training/play although no one is certain when this will be possible at this stage, and many scenarios are being considered,” a spokesperson said.
“We are conscious of the impact this will have on Australian Cricket and are working hard to manage that proactively.
“We have made the decision during this period of isolation, where activity has naturally been reduced, to stand down our people on reduced pay (with the exception of a skeleton staff) effective 27 April for the remainder of the financial year.
“We will continue to seek advice from medical experts and relevant government agencies to ensure the health and safety of our people, volunteers and communities, and to return to business as soon as possible.”
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“We are conscious of the impact this will have on Australian Cricket and are working hard to manage that proactively.
“We have made the decision during this period of isolation, where activity has naturally been reduced, to stand down our people on reduced pay (with the exception of a skeleton staff) effective 27 April for the remainder of the financial year.
“We will continue to seek advice from medical experts and relevant government agencies to ensure the health and safety of our people, volunteers and communities, and to return to business as soon as possible.”
Originally published as Cricket Australia reveals bleak financial outlook for the game as investments take major hit