The competition from Kerry Packer’s World Series Cricket in 1977 shocked the game into paying players decent salaries and running a bit more like a business.
Sport associations often pride themselves on their long traditions and roots in community sport but this can make them amateurish. For instance, too often jobs go to former players who the fans love but who might not be good as administrators.
Many sports organisations have opaque structures and rules which hide a lot of inefficiency and even corruption.
This week Swiss prosecutors laid fraud charges against Sepp Blatter and Michel Platini, two of world soccer’s most powerful administrators.
While involving private equity can potentially remedy some of these problems, it is a strategy that also comes with risks – which is why Cricket Australia should be careful.
It is a stereotype, but private equity investors are not well known for thinking long-term or respecting tradition.
For example, while test cricket is the soul of the game it is hard to make money except from the series against India and England. Private equity investors without a deep understanding of the game could be tempted to run down five-day cricket at the expense of other formats such as one-day games and T20.
Private equity might also not be best placed to invest in women’s cricket and Indigenous cricket, even though they are essential to the game’s place in the community.
It seems that Cricket Australia is aware of these risks and is looking at options which preserve its control in key areas.
For example, it could sell off its Big Bash Leagues, both men’s and women’s, which are already highly commercialised. Or it could sell off the broadcast, sponsorship and marketing rights.
These hybrid solutions might help quarantine Cricket Australia’s core operations from interference by private equity, but it will also add complexity because the different arms will probably be controlled by separate boards with competing interests.
Cricket Australia is not under the same financial pressure as some other sports but it is facing a possible cashflow crunch in the future. A report from Boston Consulting Group presented by the governing body to state associations this week has suggested that either a revenue increase or cost-cutting is required in order to avert one.
Nevertheless, three years until the end of the current broadcast deal with Foxtel and Seven mean CA can take time to assess options and it has the luxury of deciding that it can
manage without private equity at all.
It must strike a balance that allows the game to remain faithful to its traditions and its community while at the same time earning the cash it needs to survive in a competitive, global market.
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