Don't let FOMO fool you: Selling Big Bash teams is a bad idea

Sydney Morning Herald

3 days ago

Cricket Australia certainly has a challenge to grow revenue. Its commercial revenue – sponsorship, ticketing, hospitality etc – has been flat over the past five years, and its domestic media rights deal is essentially flat until 2031. Selling stakes in BBL teams will deliver an infusion of cash.
The problem is that selling capital assets such as the BBL is a one-off. It sacrifices future revenue for a lump sum today. Since CA's costs won't reduce, it will still need that revenue in future years.
The only way to do this is to invest the proceeds of sale into something that generates at least the same return as the BBL.
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Effectively, this means the proceeds of sale need to be sequestered, put into the Future Fund and invested in other revenue-generating assets, most likely outside cricket.
This might happen, or might not. As governments worldwide show, the temptation to spend tomorrow's money today can be overwhelming.
Best to reduce costs, run at a surplus over the cycle, invest the proceeds wisely and host more World Cups.
That brings us to the fear of missing out.
The arguments for:
Everyone else is doing it, so why shouldn't we? In particular, the England Cricket Board has sold stakes in the Hundred for seemingly good prices – especially the team based at Lord's.
The IPL includes private owners, and is a success, so perhaps this is causation as well correlation?
The IPL clubs are globalising and, if they end up contracting players to their franchises across the world on a 12-month basis, the BBL might miss out on having these players involved unless the IPL owners also own BBL teams.
BBL clubs might not be able to afford players in demand from other privately owned leagues played in the same window.
The core hope is that someone will overpay for the revenue streams CA would otherwise be receiving, or that they can generate more revenue or profit than CA and the states can. The core fear is we need to sell now or be left behind.
It's possible a foreign owner can make more money from BBL clubs from overseas sources than CA can, but only if the BBL effectively becomes the Australian leg of a global T20 tour controlled by IPL owners and private equity firms. Think Sydney Knight Riders rather than Sydney Sixers.
The question for CA is whether this will help it to grow the game in Australia more effectively than retaining full ownership and control. This seems unlikely. CA and the states are focused on growing Australian cricket and understand the participation and consumption markets better than anyone; foreign BBL owners are not, and won't ever, be focused on this. Nor is Boston Consulting Group.
CA's flagship product, international cricket, also runs parallel to the BBL. CA has the ability to manage its schedule to maximise the audience for all formats. This will become far more challenging when private owners are solving only for BBL. And CA will not exercise the same degree of control over Indian billionaires as the Board of Control for Cricket in India does. The BCCI is in effect an arm of the Indian government; CA is not.
The nub of the issue appears to be 'If we sell the BBL now we can get top dollar. If we don't, the IPL owners will compete with it and take the players'. This is already happening to a degree, with parallel tournaments over summer in South Africa and the Middle East. Is it therefore better to surrender, to take the money and run?
The answer in my view is no. It is a mistake to think the BBL is popular because of specific players. Players come and go and always will. And the BBL makes stars as much as stars make the BBL.
BBL is popular fundamentally because it is cricket, it is T20 and it is played in the perfect timeslot – every summer night. Its standing among global T20 leagues is largely irrelevant to Aussie fans. As, frankly, is the IPL.
It is also a mistake to think the IPL is better-run. It simply operates in a far bigger market.
Which brings us to cricket politics.
The argument for:
Key figures are in favour of it.
The 'privatise' faction has existed in Australian cricket since at least 2011. However, its incentives must be carefully examined.
If I am a leading player, player agent, or players' union, I want as much competition for players as possible – except when it comes to restrictions on overseas player slots in the BBL. More owners and more competitions are better. So privatisation is good. CA's incentives are the opposite.
If I am associated with a potential investor or stand to make money from a transaction, I want privatisation. CA needs to discount these perspectives accordingly.
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And if I am an executive or director who wants to be seen to 'do something', or 'leave a legacy', or just do something new, I might want privatisation. That requires a good hard look in the mirror. Administrators are only temporary custodians of the game.
The real question for CA is what is best for Australian cricket fans, and the grassroots clubs and associations that ultimately own the game. Publicising the report would help us decide for ourselves. That is the right next step.