Pay model shift benefits grassroots: Sutherland
CEO explains why Cricket Australia wants to modify existing revenue sharing model, with the sport's overall wellbeing at the crux of the desired change
27 May 2017, 10:36 AM AEST
It is the urgent need for "many hundreds of millions of dollars" to be pumped into the game's grassroots that underpins Cricket Australia's push to modify the current revenue sharing model which is at the heart of the stand-off with players and their union, according to CA's Chief Executive James Sutherland.
Sutherland has detailed the rationale behind the governing body's proposal to redefine the way revenue is distributed to players for the first time in 20 years by introducing a model that he believes better serves the contemporary needs of cricket's overall well-being.
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The Australian Cricketers' Association staunchly opposes the new plan, which would see international men's and women's players share in surplus revenue up to $20 million but payments to domestic cricketers capped at increases of 18 per cent (men) and 150 per cent (women) over the next five years.
As a result, negotiations between the two parties to forge a new Memorandum of Understanding (due to take effect from July 1) are yet to begin and CA has indicated it will not consider alternative contract arrangements for a bulk of the men's players and all of the women who will be out of contract if no deal is reached.
In an opinion column penned for The Australian today, Sutherland noted that the sharing model that was originally enshrined in 1997 – whereby all contracted men's players share around 25 per cent of cricket-related revenue – had served the game well when cricketers were poorly remunerated in comparison to the wealth that the game generated.
But he claimed it now "risks starving other vital parts of the game" and modification was needed to address the "chronic underfunding of grassroots" cricket, with the current revenue share model placing encumbrances on the way CA was able to allocate existing funds and create new income streams to invest in the game's foundation.
At present, CA and the various state and territory administrations spend 71 per cent of their money on elite-level cricket (from international fixtures, domestic red and white ball competitions and talent pathway programs) with 17 per cent allocated to the costs of running the game, Sutherland said.
That leaves 12 per cent for grassroots cricket, although under its new MOU proposal CA is looking to re-allocate at least an additional $25 million from operating expenses as well as generate up to $51 million through modifications to the current revenue share model, all of which will be invested in grassroots.
"Cricket Australia is responsible for the health of the game at every level, not just the elite competitions, which is why we have begun a difficult conversation with our professional players about the way they are paid," Sutherland wrote.
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"The model was created in 1997, when players were poorly paid, but now our top male players are easily the most highly paid team sportspeople in Australia.
"Our international men saw their payments go up 63 per cent over just the past five years, and our domestic male cricketers (Sheffield Shield and BBL) saw their payments increase by 53 per cent.
"The key mechanism for these increases for the men is a guaranteed percentage of revenue, set at 24.5 per cent but up to 26 per cent depending on various financial circumstances.
"That's revenue before costs, which immediately creates problems for us as a business.
"If CA were to invest $100,000 in a new project and that generates $115,000 of revenue, you would think we would have a profit of $15,000 to invest back into cricket.
"But because the players get a share of revenue rather than profit, they would be entitled to 24.5 per cent of the $115,000, leaving Cricket Australia with just $86,825 of the original $100,000, an actual loss of $13,175.
"It effectively means that any investment CA makes needs an unrealistic profit of 32 per cent – just to break even.
"This is an untenable situation for any business.
"It should also be stressed that CA is a not for profit organisation, where every dollar we generate needs to be ploughed back in to supporting and growing the game."
To highlight the need for large-scale investment in the grassroots game, Sutherland cited the recently completed audit of sporting facilities throughout Australia undertaken by CA which found that less than 20 per cent of the cricket pavilions across 7,750 city, suburban and regional playing fields currently meet the needs of female players.
In addition, he claimed less than 40 per cent of cricket pitches at those venues satisfy the minimum width requirements for pitches "which is really important for developing confidence in young bowlers", and more than half of those facilities do not have adequate nets to support the training needs of a cricket club.
As a result, Sutherland has foreshadowed that overcoming the chronic under-funding of grassroots cricket will require "an investment over time of many hundreds of millions of dollars", and that is why CA is looking to modify the existing revenue share model in the new five-year MOU.
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He also said claims that the revenue sharing is best practice in other professional sports such as America's NBA basketball represented an erroneous comparison because – unlike Australian cricket – the NBA is committed to funding only its national men's and women's competitions.
It does not administer the US national teams nor is it responsible for the health and wellbeing of second-tier competitions (the equivalent of cricket's Sheffield Shield and domestic limited-overs tournaments), under-age teams, development squads, coaching programs and the game at grassroots.
In its own MOU proposal, the ACA also advocates a significant increase in spending on grassroots cricket, claiming a model that splits revenue three ways – 55 per cent to CA to administer the game, 22.5 per cent to players and 22.5 per cent to grassroots – would deliver $585 million over five years to the game's foundation.
While the percentage share for player payments is slightly reduced under that plan, the ACA have proposed a broader definition of 'revenue' as it is currently understood that would deliver a total of $585 million to contracted men's and women's players compared to CA's proposal of a maximum $419 million in player payments.
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The ACA's figures are based on independent modelling of CA's projected income for the next five years, but given that around 80 per cent of that revenue currently remains uncontracted CA believes that forecast total of $2.6 billion is significantly inflated and describes it as "little more than guesswork".
CA also points out that under the ACA's revised revenue definition in their proposal, 22.5 cents in every dollar spent by parents on junior registration fees for junior players would flow back to the nation's professional cricketers.
The union describes its alternative revenue sharing model as a 'win, win, win' for cricket and claims it prioritises investment in grassroots cricket while also maintaining the revenue sharing model that has underpinned the game's success and harmony in Australia over the past two decades.
"We've talked about the fact that the revenue sharing model is the way to go forward, but what's important is the flexibility that we've got underneath that," ACA Chief Executive Alistair Nicholson said this week.
"And also, if Cricket Australia or the game is wanting to invest in new businesses to grow the game where that (flexibility) sits, and that's similar to what happens in an (American football) NFL-type model.
"So the players are not necessarily saying 'revenue share or nothing else', it's this revenue sharing model with flexibility underneath.
"Players aren't necessarily asking for anything more than they haven't had, and I think most Australians can understand that's a fair request and the game is going quite well.
"We feel like we've got a very responsible position but we do want to get it (the MOU deal) done."