Australian cricket facing $100m cash crisis, report warns

Australian cricket is financially unsustainable without significant cost-cutting or revenue increases, according to a confidential report presented to the states and territories this week.

The detailed report from Boston Consulting Group, commissioned by Cricket Australia, projects a negative cash flow of $90 million over the next three years, an average of $30 million a year, if nothing changes.

This is despite being halfway through a record $1.18 billion, six-year broadcast agreement, which sources claim was $300 million above expectations.

The BCG report comes after the upheaval of last year’s financial chaos during the COVID-19 pandemic, which resulted in major executive and staff changes, with Nick Hockley replacing Kevin Roberts as CEO.

Chairman Earl Eddings was eventually ousted the day before Cricket Australia’s annual meeting last month.

Cricket Australia used the extra broadcast revenue to invest heavily in grassroots cricket, particularly for women and girls, and the Women’s Big Bash League.

Troubled waters: Cricket Australia CEO Nick Hockley. Credit: Getty

That investment has borne fruit, with the number of girls playing cricket up more than 17 percent and the WBBL the fourth highest rating sports league in the country, men or women, on a per-game basis behind the men’s Big Bash, the AFL and the NRL.

There have been some particularly big losses for Cricket Australia over the past two financial years which have hurt the bottom line.

With the Ashes series in Australia fast approaching, the UK television rights deal ended up being well short of expectations. Sources claim that BT Sport, which had the rights, and their main competitor, Sky Sports, both “ran dead”, leaving BT with the deal at a $40m cost reduction.

There was also a $40m loss on a contract for overseas television rights. Cricket Australia sent Sony an invoice, only to be told that a mistake had been made by CA and that significantly less money was owed.

Silver lining: The strength of the Women’s Big Bash league, and women’s cricket in general, is a positive for Cricket Australia.Credit: Getty

Local free-to-air television rights broadcaster Channel 7 publicly harangued Cricket Australia in an effort to achieve a significant rights reduction in a conflict which resulted in court action.

Following arbitration, Channel 7 was awarded $5.3m, an amount significantly less than the original discount offered by Cricket Australia. Fox, which has more cricket content than Channel 7, including exclusive rights to Twenty20 and one-day internationals, received greater compensation.

COVID-19 biosecurity costs amounted to almost $30m last year, including chartered planes, to ensure the season went ahead as scheduled, particularly the Twenty20, one-day and Test series against India.

Another $20m in biosecurity costs have been projected for this season, with the Ashes as the central feature.

Asked if Australian cricket was unsustainable, Hockley told the Herald and The Age that Cricket Australia had $70m in reserves and had been hit with $50m in unforseen COVID costs.

“What we’re now working to do is to pull together to build a strategy that’s going to set us on a path to sustainability and make sure we’re insulating the game against any future financial shocks like we’ve just experienced through COVID,” Hockley said.

“We need to ensure that cricket is on a strong, sustainable, financial path. This report gives us a very clear fact base of all the activity, where all the costs are across the network, making sure that we’re directing our investments to those activities which are going to drive the strongest return.

“We’re a not-for-profit [organisation] and our purpose is to grow the game at every level. We’ve been able to reinvest in those areas of growth. That includes growing the sport for women and girls, and the WBBL is without question certainly the pre-eminent women’s cricket league in the world.

“We’ve also invested significantly in growing the game at a community level. If we apply the same level of focus to making sure that cricket is really welcoming to and representative of the whole cross-section of Australian society then there’s the opportunity for further growth if we’re engaging culturally diverse Australia.”

While the demise of Eddings has resulted in a more inclusive and accountable Cricket Australia under interim chairman Richard Freudenstein, there is tension between the governing body and the state associations over who should fill the financial black hole.

Freudenstein called a meeting of states and the Australian Cricketers’ Association on Thursday to discuss the issues, something Eddings had refused to do all year.

The states agreed to a 12.5 percent cut last financial year and a further 7.5 percent this year, equating to a $22m reduction across the six states, although Eddings attempted to explain this financial year’s cut as a 5 percent increase.

Under an agreement between CA and the states, CA must examine their cost base first.

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