Revealed: The ICC's new financial model
ESPNcricinfo can reveal details of the ICC's new financial model that was proposed to Full Members at last weekend's board meeting in Dubai. The models are part of a broader report, produced by an ICC working group committee, which seeks to provide the basis of a new constitution for the game.
The draft of a new constitution was passed in principle at the meeting, with seven members voting for it, two opposing and one abstaining. Members will now bring thoughts, suggestions and concerns to the table in April, which may result in changes to the draft.
The biggest obstacle will be the financial model and, in particular, the BCCI's objections to it. ICC revenues for this rights cycle - 2015-2023 - are estimated to be around US $2.5 billion. Some estimates suggest revenues may go as high as $2.7 billion. The projections in this model are for revenues up to $3 billion. These are based on the possibility of additional ICC tournaments being added to the existing cycle. ESPNcricinfo has seen the model, from which a number of things stand out.
|ICC Gross Revenues |
|2.5 billion||2.6 billion||2.7 billion||2.8 billion||2.9 billion||3 billion|
No contribution, no cost
The most controversial aspect of the 2014 Big Three financial model was the idea of contribution costs, and the realisation that not all members bring to the game an equal amount of money. What each Full Member earned in total from the ICC revenue was a percentage figure of the total revenues (the contribution cost, based on contributions made, and provided as compensation for playing in ICC events: the BCCI had a 20.3% share, ECB 4.4%, Cricket Australia, 2.7% and so on) plus an equal share of the surplus (which is how revenues had been divided until then). The seven non-Big Three boards also got an additional $10 million over eight years as part of the Test Cricket Fund.
In the new model, this breakdown of earnings is redundant as is the contribution-cost element. Instead one lump sum figure is provided for each board. But the principle behind contribution costs remains because in every projection, the BCCI gets a bigger share of the pie than every other board - twice as much, in fact, as the next.
The Big Three take a hit
In the new model, the percentage shares of the BCCI and ECB in the total pie have gone down, while that of CA remains roughly the same. But a quick calculation will tell you why the BCCI is unhappy with these models. Not only is there no real formula behind them, but the Indian board takes the biggest hit from the 2014 model.
In that model, for gross ICC revenue of $2.5 billion, the BCCI stood to earn between 17.6-18% of the revenue (between $440-445 million*). In the new model, at the same gross revenue, it gets 10-10.2%. That is a reduction in potential earnings of between $180-190 million. The percentage share does increase should the ICC's revenue increase but it isn't a large spike: if the ICC gets $3 billion as revenue, the BCCI's share will be between 11.16-11.33%.
Under the 2014 model, the ECB stood to take 5.8-6%, whereas now its share is 4.8-5%, or between $20-30 million less. CA's share was between 4.4-4.6% in the last model and is more or less the same now. As with the BCCI, their shares will increase should the ICC's total gross revenue increase. That is the case with all boards.
The ICC said in its press release after the meeting that a sense of equity played a big part in the determining of these figures. That much is clear in the fact that below the BCCI and ECB are seven boards that stand to get essentially the same share for nearly any projected value of total gross revenue.
It would seem as if the ICC has tried to preserve both a sense of contribution cost - by recognising the right of the BCCI to the largest share - and, by narrowing the gap between them and the others, ensuring a degree of equality among the boards beneath them. The problem, of course, is that there remains no set formula behind these numbers - they remain, essentially, arbitrary figures.
Welcome Ireland and Afghanistan
You will not have missed the last two entries in the first table - Ireland and Afghanistan. The status of both was discussed at the board meeting; Afghanistan's domestic multi-day tournament was given first-class status, thus fulfilling one key prerequisite to play Test cricket.
This model - as well as the Test league structure - is perhaps the clearest sign yet that there is a will to have them playing Tests, or at least be part of the big boys' club. Over eight years (with ICC gross revenues of $2.5 billion) each could earn $50-55 million.
Goodbye Test Cricket Fund
One of the redeeming features of the Big Three model was the introduction of a Test Cricket Fund that sought to subsidise unprofitable bilateral series outside the Big Three. That amounted to $10 million for each of the seven boards over the eight-year cycle. The first payments were made to these boards last year.
This move is likely linked to the introduction of a league structure for Test cricket, which, in theory, means that all bilateral contests have greater context, and thus, greater financial value and so do not need subsidising.
*Footnote: The figures in this Big Three model are different to those that appeared in the original position paper in January 2014