Monday, September 28th, 2020

CA is counting the cost of an expensive week

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Take the emotion out of it and it is clear that Cricket Australia (CA) made the right call this week with the sanctions imposed on Steve Smith, Dave Warner and Cameron Bancroft. Why? Because the disgraceful act of attempting to tamper with the ball and the hiding of such act has brought severe financial consequences to Cricket Australia.

We learnt yesterday that CA’s test series title sponsor Magellan Financial Group has pulled the pin on it’s three year sponsorship deal, only eight months into the arrangement. The estimated cost to CA has been a reported at $24 million, not to mention the costs of now needing to find a replacement sponsor and the potential for any new sponsor to pay less given the brand damage cricket has suffered over the last week.

While we are yet to see whether CA loses other sponsors, some of the players’ personal sponsors have already terminated relationships. Dave Warner has lost ASICS and LG, while Steve Smith has lost Sanitarium and the Comm Bank.

Actions have consequences and the actions of Smith, Warner and Bancroft have been appropriately punished by CA. There wouldn’t be too many other professions where you can cost your employer tens of millions of dollars and walk away with just a suspension.

The cricket saga has also seen Tennis Australia grab the limelight by announcing a new five year media rights deal with Nine, ending a 40-year relationship with Seven, and thereby potentially throwing a spanner in the works of CA’s own media rights negotiation as it primary partner over summer has now jumped into bed with the other big sport in town, tennis. While this may be a blessing in disguise as CA may get competitive tension as Seven comes to the table, this remains to be seen. What we do know is that Nine has now spent a large amount of its sports rights’ war chest on tennis, so it may only look for a slice of the cricket rights (e.g. pre-Christmas cricket).

So, take the emotion out of it and you can see that a wrong decision made in a game of sport is now having wide financial consequences.

The kicker too, as former ABC Cricket Commentator Glenn Mitchell pointed out, is that if CA generates less revenue the players get paid less. The players pushed CA for a revenue share model in the most recent pay negotiations. Now the actions of two of the most senior players in the country (if not, the two most senior) are now likely to cost their colleagues valuable income.

So taking the emotion out of it shows that the decisions that CA has made have strong rationale from a business/financial analysis perspective.

In saying all of the above, this does not mean that the players who have infringed should not receive support to rehabilitate. Smith and Bancroft were visibly upset when fronting media yesterday. While their actions were financially costly, it is now time to provide a framework where they can learn to live with the actions they took.

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