Stokes plays hardball on $350m sports rights bill

Kerry Stokes’s Seven West Media is applying the blowtorch to sports bosses at it looks to slash the $350m it was to spend on rights this year.

Seven CEO James Warburton, left, with Seven West media boss Kerry Stokes. Picture Nikki Short

Kerry Stokes’s Seven West Media is applying the blowtorch to bosses of Australian cricket and the Olympics in the wake of the coronavirus, as the network looks to slash the $350m it had earmarked to spend on sports rights this year.

Seven insiders have told The Australian’s Media Diary there is now a “big question” in terms of Seven’s rights to the cricket, with network chiefs looking at “all of our options” in relation to cricket and the Olympics.

The network has been poring over the fine print of its contracts with cash-strapped Cricket Australia and the International Olympic Committee, with the network believing some of the clauses in its sports rights contracts will almost certainly be breached because of changes to scheduled events.

It is understood that at biggest risk is a twice-yearly $40m payment due to be made by Seven to Cricket Australia in September as part of the six-year contract with cricket’s governing body for Seven to screen Tests and the Big Bash tournament.

The renegotiation comes as chairman Mr Stokes returns to Sydney this week after isolating at his Perth home.

The billionaire had been in lockdown earlier in his Beaver Creek penthouse in the US state of Colorado but was granted an exemption from hotel quarantine on his return to Australia.

Before the pandemic, Seven had the biggest amount earmarked for sport of any free-to-air network this year, with $100m pencilled in for the Tokyo Olympics, $100m a year for AFL and $80m for cricket.

But once production costs were included, the total costs would have been even higher: $130m for both the Olympics and the AFL, and $100m for cricket.

Cuts are imperative for Seven, at a time it is valued by the market at a fraction of the value of these rights at $128m — an amount dwarfed by its debt load of more than $500m — and when Seven is applying for the federal government’s JobKeeper program.

Seven sources say the network’s big concern with cricket is that until there is an effective vaccine for COVID-19, there will continue to be a hard lockdown of Australia’s international borders.

This could not only effectively hobble the proposed upcoming four-Test series between Australia and India — supposedly featuring the clash between Virat Kohli and Steve Smith for the title of world’s best batsman — but also deprive the Big Bash League of most of its international star power.

Even if Australian state borders are freed up by that point, the international lockdown could turn the 2020-21 Big Bash into a largely domestic T20 series, leaving it as a pale imitation of BBL predecessors that featured global names such as Chris Gayle, AB de Villiers, Dale Steyn and Rashid Khan.

Seven is believed to have made a $40m payment to Cricket Australia last month, as part of its contract signed in 2018.

The cricket renegotiation comes at a particularly critical ­moment for Cricket Australia boss Kevin Roberts. He faces huge pressure after The Australian’s ­recent revelations that the governing body has a huge hole in its ­finances after it blew millions on the stockmarket.

But Cricket Australia is not the only sporting body under pressure. Seven will also not be making the bulk of the $100m it was due to pay to the IOC in June and July.

It is understood the final payment was due to be made to the IOC on July 24, the day of the Tokyo Olympics opening ceremony. But Seven now believes it has ample grounds to renegotiate the amount it pays for the Tokyo Games in 2021, with pandemic ­experts playing up uncertainty the event will even go ahead a year late.

Seven does not appear to be as hellbent on cutting its spending on the AFL as with cricket and the Olympics, perhaps because of its long-term close relationship with the sport. But it could still stand to save millions on its deal, given that the AFL seems to be taking a much more cautious approach to restarting its season than the NRL, which is looking to recommence its ­season on May 28.

In recent weeks, Nine chief executive Hugh Marks has been looking to make savings on the NRL. Mr Marks has already taken a public hard line, having last month released a provocative statement to the Australian ­Securities Exchange revealing that Nine would save $130m if the rugby league season were cancelled.