News site of the year

Business
  1. Home
  2. Business
  3. News
  4. Media
ANALYSIS
Save
Print
License article

Cricket's revenue problem is all in its timing

Mark Hawthorne

It's the news no one at Cricket Australia ever expected to hear.

After raking in riches from commercial television for the past four decades – ever since Kerry Packer bet the family fortune on cricket to fill hours of summer airtime – global investment bank UBS estimates Nine loses $40 million a year televising the sport.

Up Next

Who is number one pick Myles Garrett?

null
Video duration
00:48

More Sports HQ Videos

null
Video duration
00:35

Channel Nine urged to drop cricket
null
Video duration
01:30

Eels ambush Cowboys in Townsville
null
Video duration
01:29

Spurs through to Western Conference semis
null
Video duration
01:30

Score-less Manchester derby suits rivals
More videos

Channel Nine urged to drop cricket

With Cricket Australia facing a revenue crisis, analysts have told Nine to walk away from negotiations if the company's price for renewal is too high.

The recommendation from UBS cannot be more blunt. It tells Nine Entertainment Co to go get the rights to "more cricket content at no additional cost", which means bundling in the Big Bash League, or make the tough call and "step away from the cricket contract".

The thought of a summer without cricket on Nine is anathema to both the network and to legions of cricket fans. The sport is part of Nine's DNA and, after 40 years, a recording of the dulcet tones of the late Richie Benaud still ends each day's broadcast.

Related Content

But it does make for a looming crisis at Cricket Australia, which had banked on a bumper rights deal after the explosion of of the Big Bash Twenty20 competition.

The issue isn't that Nine won't bid, but that no one will bid against them.

Advertisement

The last time Cricket Australia went to the market, it netted $500 million from Nine over five years for the Test and one-day rights, and a further $100 million over five years from Ten for the Bag Bash League, thanks to a shrewd piece of business from then Ten boss Russel Howcroft.

After five years, the cricket world has flipped on its head.

The Big Bash rights are now conservatively valued at $300 million over the next five-year cycle. The rights to Test and one-day cricket are now valued by UBS at between $30 million to $40 million a year, which equates to less than $200 million.

Those numbers show how the Big Bash has cannibalised the cricket market for Test and, in particular, 50-over cricket. But they also reflect the state of the domestic television market, where advertising revenues have been in rapid decline over the past three years.

Sadly for Cricket Australia, the problem is its timing. In the current climate, the AFL and NRL have already sucked much of the money out of the sports rights market with their record deals.

Embattled Ten may not be able to raise the capital to make a substantive bid. The market capitalisation of the entire network now stands at not much more than $170 million.

The anti-siphoning laws, which lag the actual state of viewing habits in Australia, prevent Fox Sports from making a bid against a free-to-air network. And, for Cricket Australia, the future of sports viewing has not quite arrived. The telcos, which are fast becoming a major player in world sport, are not only hamstrung by anti-siphoning laws, but they do not yet have reliable enough platforms to broadcast live sport to big-screen TVs in our homes.

To cap it off, insiders at Cricket Australia say key executive Stephanie Beltrame, the tough negotiator behind the last rights deal, is on maternity leave, and may not take part in the discussions.

Without competitive tension, Cricket Australia faces an auction with just one bidder. Therein lies a disaster for any vendor needing a sale.

Related Content

77 comments

Comment are now closed