CA denies ACA's digital dollars claim
Players' union launches ‘company’ linked to Australian cricketers' IP as CA await MOU negotiations to commence
24 May 2017, 06:16 PM AEST
As Australia's leading cricketers further prepare for the prospect of becoming out of contract on July 1, Cricket Australia has challenged claims that the players are being denied a slice of revenue from digital media operations.
The Australian Cricketers' Association today launched a new division of its operations that will manage and commercialise the intellectual property rights of the nation's men's and women's professional players should agreement on a new Memorandum of Understanding not be reached by the end of June.
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A bulk of the players have signed their IP rights – which include use of an individual's name, voice, signature, trademark, image and likeness – to the new entity 'The Cricketers' Brand' which can act alongside player agents to manage deals with sponsors, broadcasters and newspapers looking to access out-of-contract cricketers.
ACA Chief Executive Alastair Nicholson said the move was designed to provide structure and certainty from July 1 around issues that are currently covered by the existing MOU, but added it was also driven by concerns that players were being denied a share of CA's digital media revenue.
"Under the current MOU's revenue share model … male cricketers have thus far been allocated approximately 0 per cent of the digital media revenue received by Cricket Australia (publicly reported to be worth approximately $40 million over five years)," the ACA said in a media statement.
"Whilst the ACA is seeking to the get to the bottom of this, the players can't allow this to continue, especially given the extensive use of their attributes on CA's digital platforms."
Those platforms include cricket.com.au, which was established under a joint venture agreement with Channel Nine in the previous broadcast rights deal four years ago, and which CA noted in its original MOU proposal released last March "does not generate revenue".
That was reiterated today after Nicholson claimed players were entitled to receive "their fair share" of returns from digital media income.
"Under the digital rights joint venture (JV) agreement with Channel Nine, Cricket Australia invests in creating and maintaining digital media properties for which it is reimbursed by Channel Nine," a CA spokesman said today.
"Additionally, CA invests a further $4 million annually into the JV to develop these digital assets to extend cricket's reach and connection with cricket fans.
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"There is no net/surplus income derived by CA.
"Income generated through advertising, sponsorship and subscriptions associated with the JV, wholly resides with Channel Nine."
Nicholson denied the establishment of the new business, which is based on similar models employed in major US sports including the NFL, was a power play to exert pressure in MOU negotiations which have still not formally begun despite a deadline of less than six weeks.
"We've got the top players in the world coming out of contract, we're getting enquiries from broadcasters and sponsors around what happens so we thought it important that we say 'there is a vehicle here, if you want to come and speak to the ACA around accessing players'," he said.
However, he acknowledged that the revenue that could be derived from managing and commercialising the IP rights of leading players might also provide a source of income for the ACA, which is primarily funded by grants ($8.4 million over five years) from CA under the terms of the existing MOU.
The Association will not have access to that funding if a new MOU agreement cannot be negotiated.
Nicholson said that in the absence of an agreement, and with players out of contract, 'The Cricketers' Brand' would manage potential deals between groups of players and commercial entities looking to use them for advertising and promotional purposes, although sponsorship and endorsement deals for individuals would remain the domain of the player's accredited agent.
He would not rule out players seeking remuneration for media interviews once they were no longer contracted to CA, claiming broadcasters and newspapers would "not necessarily have to pay for it, but there's a company (The Cricketers' Brand) that can do that and we work through that on a case-by-case basis".
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It is also understood there are significant taxation advantages for high-profile sportspeople who hold valuable image rights and have those rights managed by a private entity.
That's partly because, if the entity that earns that revenue on the sportsperson's behalf is a company, it is taxed at the corporate tax rate which is notably lower than the marginal tax rates applied to individuals.
Nicholson confirmed today that 'The Cricketers' Brand' is a privately owned company that "sits under the ACA banner", and one that he hopes will retain a role to manage licensing agreements and the growing opportunities in digital media if a new MOU is struck and even though a majority of the players' IP rights would revert to CA when that happens.
He said the ACA's overriding ambition was to successfully conclude a new deal with CA, but the recent announcement of an Association's player support fund to provide additional financial assistance to players who might find themselves out of contract along with the establishment of 'The Cricketers' Brand' was recognition that an agreement might not be reached.
"We think it's necessary because of the uncertainty going on at the moment," Nicholson said today.
"We haven't been able to progress the negotiations, we're six weeks away from the best cricketers in the world being out of contract.
"Our objective is to try and get an MOU signed by June 30, but I think that it's really important that we provide some certainty.
"There's no doubt that the players' IP is a really important part of the game, the digital revenues are an important growth part of the game so of course we want the players to get their fair share.
"The IP covers the (players') image and attributes, but there's also appearances and things like that that come under it as well."
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Under the current MOU, player contracts prevent them from entering into commercial agreements with direct competitors to CA's corporate partners while requests for media interviews are managed by CA or (in the case of domestic players) state associations or BBL/WBBL franchises.
In addition, players holding CA contracts – along with a number of other men and women cricketers (including some former players) – earn a range of marketing points when they take part in promotional activities including advertisements, junior coaching clinics, sponsors' events and filming or photographic sessions (not including general news commitments).
These marketing points are then calculated according to individuals' independently calculated 'marketability' and the players are then paid a proportionate share from CA's pool of marketing funds worth $3.6 million in the current financial year, and $16.5 million over the five years of the current MOU.
CA today echoed the ACA's call that resolution of the ongoing stand-off remained a priority, but pointed out that the Association's insistence that the current revenue sharing model – which CA is looking to modify – be retained was the reason why negotiations were not progressing.
"Cricket Australia remains ready and willing to begin negotiations and remains confident that an agreement can be reached once they begin," a CA spokesman said.
"The only reason that these talks have not begun is because the ACA is insisting that certain pre-conditions be met.
"That goes against the basic principle of good-faith negotiations, and could not be used in any mediation.
"Cricket Australia has placed a ground-breaking offer before the ACA, which will mean cricket is able to offer women the opportunity to have a fully professional sporting career at both international and domestic levels, while the men will continue to be among the country's best paid sportsmen.
"It retains the Revenue Share Model (in modified form), but provides greater flexibility for Cricket Australia to invest in our grassroots, particularly junior cricket."