Nobody likes a loser especially not Nine Entertainment Co chief executive Hugh Marks.
"No one wants to watch the Australian team losing," he told AFR Weekend bluntly. In all the opprobrium heaped on a humiliated Australian cricket team this past week, Marks comments are perhaps the most worrying for Cricket Australia.
The Australian cricket team's disastrous performance – it's on track to lose every match of a home series for the first time – couldn't have come at a worse time.
Cricket Australia is preparing to negotiate its next round of television broadcast rights and also sponsorship deals. Last month, Commonwealth Bank of Australia revealed it would give up its deal to sponsor the side and Test series worth about $12 million annually. Instead, it struck a deal to pay $5 million annually to support women's cricket and diversity programs.
Cricket Australia is said to be targeting $200 million annually for a television broadcast rights deal that would begin in 2018. Under the existing five-year rights agreement signed in 2013 Nine has paid $80 million annually to broadcast Tests and limited-over internationals.
Nine and rival Ten Network split the rights, with the latter paying $20 million each year for the Big Bash League. That figure now looks like the best $20 million Ten ever spent, with the Big Bash delivering a summer ratings bonanza for the broadcaster.
In this upcoming round of negotiations Nine, Ten, Seven West Media and pay-television network Fox Sports, are all expected to bid for cricket broadcast rights but possibly for the first time Big Bash could be more enticing than Test matches.
"There will be real competition for the Big Bash and we will see a real increase in rights, but Test cricket and international limited-overs will be more challenged," says Colin Smith, chief executive of Global Media & Sports, a sports rights advisory firm.
There are some forecasts that the broadcast rights to Big Bash could leap in annual value to $50 million to $70 million.
I don't like cricket oh no, I love it
Nine's Marks is not saying if he will consider dropping international Test cricket for the shorter forms of the game. "We need to look at the financial return on all the different forms of the game. Cricket is Nine, Nine is cricket. It would be a big decision for us to walk away from that summer of Australia.
"But all of those things we'll have to consider hard because it's a financial challenging environment and we need to be very disciplined about our decisions. I think we're paying more than a fair price for the rights we're getting, with all of those factors in play."
Nine is beset with its own problems of declining earnings and a soft advertising market. This past week its board faced down a shareholder backlash against executive pay at its annual meeting. In the year to June, Nine's net profit fell 7 per cent to $120.3 million.
And if that isn't concern enough for Nine there are questions being asked if television globally has reached peak sport? Marks will no doubt be aware of the worrying ratings trends in two of the most successful sports leagues in the world. In football's English Premier League – the season kicked off in August – audience numbers in Britain are down by nearly 20 per cent. In America's National Football League, viewership during the first two months of the season was down by 12 per cent, though it did bounce back after the US election.
While it's yet to be shown how deep Marks might reach into Nine's wallet for the cricket rights, some industry observers are already trying to temper down Cricket Australia's expectations. They say the sporting organisation could clinch a deal for all forms, including digital rights, for $150 million.
It's the typical argy bargy that goes on around such deals, but Cricket Australia appears to be playing the weaker hand.
Then there is the sponsorship of the Test team.
Cricket Australia had hoped to exceed the sum Commonwealth Bank had been paying by unbundling rights across the various national teams and repackaging them to sell separately at a hopeful combined higher price. The problem cricket has for what will be still be an expensive product is sponsors may rather be involved in the Big Bash, a series currently sponsored by KFC.
This past week, Australian cricket captain Steve Smith led the Test side to its fifth consecutive defeat. The team lost by an innings and 80 runs to South Africa in Hobart in less than seven sessions.
Smith described it as a "bit of a low point for myself and for Australian cricket". The chairman of selectors Rod Marsh brought forward by seven months the end of his tenure, after the Hobart defeat. Cricket Australia chief executive James Sutherland issued several mea culpas while conceding Australia was lucky to be a top 10 team at the moment – even if there are only actually 10 Test-playing nations in the world.
The change in Cricket Australia's fortunes in the space of a few months is tough for a sporting organisation, which has transformed itself dramatically as a business over the past decade. It has established a successful new and innovative Twenty20 competition in the Big Bash, has a digital joint venture with Nine and has broadened its audience base with innovative deals with technology giants Facebook and Apple TV.
As well, cricket also boasts that it has become the No.1 sport in participation terms across the country, and has increased its appeal by starting a new competition for elite female cricketers.
"The big picture is that the last three months have been a very poor three months for Australian cricket," says Sutherland. "Three months ago, we were the No.1 Test team in the world and the No.1 one-day team in the world. That's the reality of the rankings and it is a very significant fall from grace and we will need to ask ourselves some questions as to why or how this has happened?"
For now though Sutherland and the team have some breathing space as Cricket Australia is, in sporting terms, extremely financially healthy with $198 million in cash and interest-bearing deposits and $72 million in equities.
Uppermost in his mind will be improving the Test team's performance. Cricket Australia's financial future depends on it.
jstensholt@fairfaxmedia.com.au
@johnstensholt
