Private capital investors may be the beneficiaries of a Cricket Australia broadcast deal that is set to provide the smallest rights value uplift for the game in more than 30 years.
Foxtel, Ten, Nine and Seven have all been involved at various stages in negotiations for Cricket Australia’s latest broadcast rights package which includes Test matches, one-day internationals and the Big Bash League. Offers from broadcasters have so far maxed out at around $1.5 billion over seven years, which compares to the $1.18 billion, six-year deal done with Fox and Seven in 2018.
Pat Cummins celebrates one of his five second-innings scalps on the green Gabba pitch.Credit:AP
But yearly fees of around $200 million would fail to keep pace with inflation relative to the $197 million per year agreed in 2018, pushing the governing body to look seriously into the possibilities of raising private capital. The New Zealand Rugby Union made a similar move earlier this year when it sold a stake in its commercial rights to US private equity firm Silverlake.
CA, its state association owners and the Australian Cricketers Association formed a committee late last year to investigate private investment. Its members include the next CA chair Mike Baird, Cricket NSW chair John Knox, ACT Cricket chair Greg Boorer, and ACA chief executive Todd Greenberg.
Senior cricket sources told The Age and The Sydney Morning Herald that the progress of rights negotiations will have a direct bearing on how aggressively CA, the states and the players pursue private capital.
A major bank is also involved in the private equity talks in an advisory role, although its identity remains a closely guarded secret.
One senior source, who spoke on condition of anonymity in order to speak candidly, said that global private investment in sport had risen to such an extent that cricket could no longer ignore the possibility.
“It’s all happening globally, and it’s either going to go around us, through us or before us,” the source said.
Since it ended a 15-year “peace treaty” with Kerry Packer in 1994 that was replaced by a series of conventional commercial deals with broadcasters, CA has seen its rights value rise significantly each time.
The most recent jumps – from $275 million in 2005 to $590 million in 2013 and then $1.18 billion five years later – were driven largely by the generation of competition beyond the longtime alliance with Nine, first with Ten taking on the Big Bash League, then Foxtel and Seven following up.
However, the prospect of a new deal that offers little or no extra cash on top of the level reached four years ago will only add momentum to a vocal cadre of advocates for privatisation of CA’s commercial wing.
Following three years of ugly public attacks on cricket by its free-to-air broadcaster Seven, the game’s negotiators are dealing with a market that is still competitive but not at the dollar value CA would have preferred to see.
This is a reality drawn even more sharply when contrasted with the massive deals signed this year for the Indian Premier League (US$6 billion over five years) and the ICC’s global events schedule (US$3 billion over four years).
While the BBL has been trending down in audience size since 2016, international cricket has drawn rising viewership over the same period. Test match broadcast audiences had grown by around 40 per cent in four years since the 2017-18 summer, while white ball matches have attracted record subscription numbers to Foxtel and Kayo, raising questions about how many might have watched on FTA.
Privatisation is a prospect that would cause heated national debate, as fundamental as the question of whether current administrators have the right to sell off a piece of a game long considered to be held in public trust.
Under that scenario, CA would perform a carve-out of its entire commercial operation, responsible for broadcast rights, sponsorship and marketing, and likewise sell a portion to private equity for a fee as high as $1 billion.
This would mimic New Zealand Rugby’s recent sale of a stake of its commercial wing to the sports private equity firm Silver Lake for $200 million, in return for 5-8 per cent of the game’s commercial returns over a fixed period.
Such an outcome would take Australian cricket back to the sort of arrangement it existed under for the first 15 years after the World Series Cricket revolution, when Packer’s PBL Marketing held the exclusive commercial rights to the sport until 1994.
Any private equity deal would require the constitutional approval of CA’s state association owners.
CA declined to comment.
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