John Wylie
Australian sport has an unequalled power to inspire, amaze and bring joy.
It also has an unequalled capacity for administrative decisions that make you wonder what the hell just happened, and why.
So it is with Australian cricket, its plans for privatisation of the BBL and the remarkable decision by Cricket Victoria to merge the Melbourne Stars and Renegades before starting a sale process.
The BBL has by no means been perfect since its launch 15 years ago, but it’s been an outstanding success, a decision of great foresight by James Sutherland and the Cricket Australia administration of the time. It’s been the single act that’s added the most value commercially to Australian cricket this century. Apart from new broadcast rights, it’s opened up a critically needed new audience for cricket and introduced many talented players to the Australian public who would otherwise have remained anonymous in Sheffield Shield and the back blocks of club cricket.
Things change and the world of T20 cricket has changed profoundly since the BBL was inaugurated. Inspired by the riches generated by the ever more powerful IPL, ultra-short-form cricket has gone global. The BBL no longer has the Australian summer window to itself, with many new competitors wanting a piece of the action and offering better deals to marquee players than what’s on offer in the BBL.
Against that backdrop, an infusion of private capital and entrepreneurship into the BBL should be a good thing, and plaudits to Mike Baird and the board of CA for pursuing it. It’s worth remembering that the best thing to have happened to cricket in the past 50 years was the arrival on the scene of Kerry Packer and his money. It’s certainly a better option today than dialling up gambling income.
But CV’s decision out of the blocks to blow up 15 years of brand investment and fan base development in the Stars and Renegades franchises before even commencing a sale process looks, frankly, impulsive and commercially naïve.
What are the possible arguments for CV’s decision?
One might be that they know something we all don’t; they’ve been running a quiet market-soundings process for months and would-be buyers of the Renegades’ licence, quite possibly Indian owners of an IPL franchise, have told them they want a fresh start.
Maybe CV thinks a new team with a new name aimed explicitly at Melbourne’s burgeoning Indian population and playing at the iconic MCG will be a hit.
It’s hard not to look enviously at the $US1.65 billion ($2.34 billion) paid recently for the Rajasthan Royals. But if the BCCI continues to ban Indian players from playing in the BBL, will local Indian fans get behind a new team simply because it has an Indian owner? Good chance they won’t.
A second possible reason might be the hope that merging the Stars and the Renegades will create more of a “one team town” franchise that’s been central to the Scorchers’ success in Perth. This misunderstands or is ignorant of the history behind the lack of silverware for the Stars, a history in which the Stars’ top talent was routinely called up for national ODI matches right when BBL finals commenced.
Being a two-team town has also hardly impeded the Sixers’ success. And is a new investor really going to put big bucks into a new Melbourne franchise with no local talent, which has been siphoned off to a new power team replacing the Stars?
Even if CV’s commercial objective is accepted, this is a strange way to run an auction process. The time-tested way to maximise outcomes and allow informed trade-offs is to keep your options open for as long as possible. Restructure your commercial offering at the end of a process if needs be to achieve a great outcome, not at the start when you have no information. Tell would-be investors, if they want CV to blow up the Stars and Renegades brands after 15 years of investment, that you’ll consider that, but only if they pay you enough to motivate you to do it.
There’s also a very good chance CV as the first seller of a BBL licence will get an inferior deal. There are no pricing benchmarks. All you’re doing is setting a pricing benchmark for other states to beat when they come to sell. The history of sequential auctions in new and opaque markets is it’s generally the sellers around a third or halfway through a process who get the best deals.
Moreover, the only thing a first buyer will know with certainty is they will be the owner of one franchise competing with seven others owned by the party setting the rules for the competition. If I was the investor facing that risk profile, I’d discount my price. Maybe they won’t and CV will look like crazy-brave heroes when a deal is done, but they’re stacking the odds against themselves. The outcome matters a lot, not just to Victorian cricket but Australian cricket as a whole. A Melbourne team is one of the most valuable franchises CA has to offer.
The question has to be asked, who’s running these auctions, and for whose benefit? BBL teams are owned by the state associations, but who gets the proceeds? If it’s state associations, is that really in the best interests of cricket? That will just make the rich states richer, and do they have the skills and temperament to manage the money for the long-term good of the game? If Cricket Australia gets the proceeds, is it really going to sit back and let state associations run sales processes on its behalf for the single most consequential commercial asset it will have for a half century?
Surely, CA needs to take back control of this process and run the process itself for the overall good of the game. Without pre-emptive decisions by others on its behalf.
When the money does come in – and all the states will, in my view, eventually cede to the compelling commercial logic for private investment – there’ll be no shortage of hands out for a slice. Given the long-term challenge for relevance that cricket faces, it needs to be reinvested in the grassroots.
This is a one-time strategic capital asset for the game, and it shouldn’t be dissipated in short-term windfall distributions, for example through a share of proceeds for the game’s elite players, many of whom don’t play much in the BBL or are approaching the twilight of their careers.
These proceeds should be invested and grown for the future of the game, not for the present or the past. Leading players with an eye to the future of the game should no doubt agree with that.
John Wylie AC is former chair of the MCG Trust and the Australian Sports Commission and founding deputy chair of the Melbourne Stars.
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