Howzat possible? Cricket Australia says big hits will keep coming | #riskmanagement | #security | #ceo


Yet, as Roberts mapped the outgoings, the mounting pressure on its broadcast and corporate partners and the impact of the sharemarket crash on Cricket Australia’s investment fund, his projections showed that the dollars could disappear quicker than a legside full toss.

“It was certainly plausible that our cash and investments could track down to zero at the end of August, absolutely,’’ Roberts says. “Which is why we’ve had to take the action that we have.’’

Cricket Australia chief executive Kevin Roberts.Credit:Getty Images

Not everyone in cricket is convinced. Two of the game’s most influential stakeholders, the professional players and state associations, are sceptical about the depth of the financial crisis and the explanations given so far by Cricket Australia.

They have asked to see more detailed financial information before they agree to Cricket Australia’s proposal to cut player payments and grants to the states by a quarter.

Roberts warns the game must prepare for a “new normal” after the pandemic with significantly reduced revenue. At a minimum, Cricket Australia is seeking to cut 25 per cent from its operating costs and for the states and players to accept a proportionate cut.

It is also planning for things to get a lot worse.

“What we have done is to make sure we have a plan for cricket to withstand a 50 per cent reduction in revenue if we need it to,’’ he tells The Age and The Sydney Morning Herald.

“It is not suggesting things will get to that point but it is ensuring we don’t retrospectively find that we haven’t planned appropriately for what we could be facing in the following financial year.

“Part of this was dealing with issues that have occurred already and part of it is making sure that cricket can withstand the issues that may come at us next season.”

This Rumsfeldian mix of known and unknowns has made for a muddled explanation as to how a game so flush with cash could get to this point. As the chief executive of one corporate partner put it, “the numbers don’t stack up”.

Within Cricket Australia there is acknowledgment that even without the pandemic the organisation’s cashflow would have cut uncomfortably close to the bone this winter. A game which generated total revenue of $486 million in FY 2019 was predicted to get down to its last $40 million.

This wild fluctuation in cash flow, although a product of the vagaries of the international touring schedule, the disparate drawing power of England and India compared with other nations and the seasonal nature of cricket revenue, prompted Cricket Australia before the COVID crisis to consider a capital working facility – a secure line of credit from a bank – to better manage its financial peaks and troughs.

“It is evident that in addition to holding reserves we need an ongoing, working capital facility to buffer against the significant ups and downs,’’ Roberts says.

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When Roberts added in the potential impact of the pandemic, the board backed his decision to bring in an experienced corporate toe-cutter Paul Reining, to take charge of finances at Jolimont.

The Cricket Australia crisis management team comprises Reining, who previously helped Roberts restructure the financially stricken sports apparel company 2XU, chief operating officer Scott Grant, CA chairman Earl Eddings and board members Paul Green and Michelle Tredenick.

Eddings is the managing director of a risk management company, Green a KPMG partner and Tredenick a board member of the Insurance Australia Group and Bank of Queensland. Cricket Australia’s long-serving chief financial officer Todd Shand, having resigned in January, agreed to stay on to help weather the crisis.

There are four parts to cricket’s plan for financial survival; to secure a working capital facility, to cut the organisation’s operating expenses, to reduce grants to the states and to reach agreement with the players’ union for an “amended player payment model.”

The most dramatic step taken so far is Cricket Australia’s decision to stand down until June 30 about 80 per cent of its staff. Cricket Australia has registered for the federal government JobKeeper scheme but is uncertain whether it will apply. It will pay affected staff either 20 per cent of their wages or the JobKeeper amount of $1500 a fortnight, depending which is higher.

Roberts and his executive team have accepted a 20 per cent pay cut and a waiving of all performance bonuses for this financial year.

Roberts says the mass standing down will preserve about $3 million of expenses but the decision is less about saving money than spending it responsibly.

COVID restrictions means that, for many Cricket Australia staff, there is simply not enough work to do. Roberts said that Cricket Australia, a not-for-profit organisation, can’t keep paying people full time salaries to not work.

“People wouldn’t have been engaged in many cases at all and in some cases, part time, in the normal activities that would happen in this period of the year. We’ve had two tours cancelled. We have various training programs cancelled and other activities cancelled. That is what led us to this particular point.”

Roberts is less clear on why the COVID lockdown, an episode which began after Cricket Australia had staged all but one of last summer’s international matches, triggered a financial crisis within the game.

According to Roberts, the net impact of the pandemic so far is a $20 million reduction in Cricket Australia’s cash and investment reserves. The grounding of international and interstate travel, including a women’s tour to South Africa and men’s tour to Bangladesh, has saved CA about $20 million. This means that, since March, the pandemic has stripped in the order of $40 million from CA’s accounts.

Where has the money gone?

There was a loss caused by the cancelled one day international against New Zealand and Cricket Australia has needed to find more money to bankroll the operations of its T20 World Cup organising committee, which must keep preparing for the possibility of a tournament this summer but can’t raise funds through ticket sales or events.

Roberts says the largest single loss to Cricket Australia, about $10 million, is from a sharp depreciation of its investment fund since February. However, that loss will only be realised if Cricket Australia is forced to sell its shares. Roberts remains hopeful that it won’t.

The final, COVID-related hit to Cricket Australia’s finances nominated by Roberts is “bad debtors”; the prospect of corporate partners and other debtors being unable to meet their payments. Cricket sources say the assumed loss from bad debtors is estimated to be close to $20 million.

Roberts is unwilling to disclose the details of Cricket Australia’s sponsorship arrangements but says the full impact of the pandemic on the sports market is still to be felt.

India are due to tour again this summer - but possibly to empty grounds.

India are due to tour again this summer – but possibly to empty grounds.Credit:Scott Barbour

“What has been incurred thus far is not the lion’s share of it. We are obviously anticipating an ongoing impact, like many organisations, in terms of our debtors. We are looking at the current trends and anticipating what that means in the current months.”

This is the looming, billion-dollar question for cricket and other professional sports.

India is due to tour this summer but if they come, they will almost certainly play before empty stadiums. The last time India played a Test series here, nearly half a million people walked through the turnstiles.

The difference to Cricket Australia is about $50 million. The difference to sponsors and broadcasters is potentially of even greater significance.

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