Cricket Australia $40m broadcast bungle

It has not been a good month for Cricket Australia, which has just had to admit to a $40m error in its budget weeks after losing its chairman.

Cricket Australia boss Nick Hockley revealed the pandemic had cost $50m

Tough financial times just got worse with Cricket Australia discovering a $40m shortfall in its budget for the 2022 financial year thanks to a bungled broadcast deal.

The Australian can reveal that member states were informed of the embarrassing error last week. While the details are not exactly clear it appears the head office erroneously believed it was due $150m for the rights in the Indian market, but the figure was actually significantly less.

Cricket Australia signed a six-year broadcast deal for rights in the subcontinent with Sony Picture Networks India in 2017.

Broadcast rights are a cornerstone of cricket’s finances in the country and have been a source of angst over the past 12 months.

Any ugly fight with the Seven Network erupted last year and ended with Cricket Australia returning $5.3m to the broadcaster — significantly less than the figure demanded.

The real damage was done, however, in the public criticism directed by the broadcaster at CA.

CA denied suggestions it had hidden the recent error until after the annual general meeting on October 15.

Chief executive Nick Hockley revealed on the Cricket Et Cetera podcast in June that the pandemic had cost $50m in the last financial year. Additional costs due to quarantine arrangements accounted for more than half of that.

Revenue projections were a major source of angst during the pandemic with NSW leading the charge in rejecting calls for wholesale cutbacks early in 2020.

Chief executive Kevin Roberts eventually lost his job after the fallout when he stood down staff and some states used the opportunity to take an axe to their workforce. The projections proved pessimistic with the game essentially breaking even despite major outgoings because of the pandemic.

It is believed the shortfall in the broadcast deal occurred when a contract was changed but not updated and confusion over the number of games delivered.

CA looks to again be preparing its member states for tough times ahead with a report by Boston Consulting Group examining a change to the financial model.

The report also contains revelations of the $40m error for the organisation, whose revenue in the last financial year was $414.7 million.

CA believes, however, that the shortfall in the budget will be made up for by crowds returning this summer to most Ashes Tests.

While the states are exasperated by the way business is being run at head office they are relieved their funding for the financial year will not be cut.

It has not been a happy time for the Melbourne based organisation. Former chair Earl Eddings was forced to stand down on the eve of the AGM when he lost the support of Western Australia.

CA is now operating with Richard Freudenstein as an interim chair while it attempts to identify somebody to take over the role.

The broadcast rights landscape is evolving and has moved significantly since CA earned a six-year deal worth $1.2bn with Seven and Foxtel.

Those sorts of deals are expected to be a thing of the past and there are concerns the income stream will diminish significantly.

News this week that Indian cricket earned more than $2b from the sale of two new franchises for the Indian Premier League has reignited interest locally in that approach.

There was a push when the Big Bash League was in its infancy to sell franchises to private investors, but that was eventually rejected.

The IPL auction saw 22 companies purchase tender documents but only nine submit bids, including controversial mining group Adani.

Corporate giants RP Sanjiv Goenka Group and CVC Capital Partners’ bids were 160 per cent and 250 per cent above the BCCI’s base price for the new Lucknow and Ahmedabad franchises.

The franchises have a 10 years to pay the entire amount, which will go into the BCCI’s coffers and see the competition expand alarmingly.

International cricket has already created a window for the tournament, which will expand to a 74 match model next year.