April 20, 2017

What's wrong with revenue-sharing, CA?

Tim May
The model has been in existence for nearly two decades and has served players and board well. Why end it now?
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Domestic players form the bulk of the money-spinning Big Bash, so why would they want to sign an MoU that doesn't look after their interests? © Getty Images

As someone intricately involved in the formation of the partnership between the Australian Cricketers' Association and Cricket Australia, it surprises me that CA is proposing to end the revenue-sharing player payment model that has brought great benefits to cricket in Australia and the players for nearly 20 years. The justification it has offered for trying to upend the system appears to be without any foundation at all.

Since the first Memorandum of Understanding was signed in 1998 between the newly formed ACA and the Australian Cricket Board (as it was called then), less than a quarter of Total Cricket Revenue has been used to pay male state and national players. The rest of the game's revenue, the overwhelming majority, has been at the governing body's disposal, for administration, game development and whatever else it has deemed necessary to make cricket bigger and better.

I haven't been on the executive of the ACA for 12 years, but have kept a close eye on Australian cricket through my past role as CEO of the Federation of International Cricketers Associations (FICA) and more recently as an interested observer while on cricket committees for the ICC and the MCC.

The ACA has always been committed to ensuring the game stays genuinely healthy, and has always held that the players' percentages should allow plenty of resources to be available to develop the game. The ACA represents the interests of not only the present generation of cricketers, but past and future generations as well.

Without doubt, revenue sharing has underpinned a period of great expansion in Australian cricket, bringing major successes on the field and turning the sport into a multibillion-dollar industry. It has achieved this despite challenging and changing sporting and commercial landscapes.

But now CA wants to get rid of this system because, as it declared, it has "done its job" of making cricketers the best paid team sportspeople in Australia.

There is a fundamental flaw to this logic. The model has not done its job. It is doing its job, and that job is to keep cricket healthy, growing viewership and participation year on year in one of the world's most competitive sporting markets. It's doing its job of keeping players aligned to the establishment when they now have very attractive options to leave and play exclusively for overseas franchises. It's doing its job of motivating experienced players to stay on at domestic level and help usher through new generations so our international teams stay strong. It's doing its job of providing vast resources for CA to use to fund grass-roots programmes and promote the game to new audiences. The job will never be done. It's a work in progress.

The model has not done its job. It is doing its job, and that job is to keep cricket healthy, growing viewership and participation year on year in one of the world's most competitive sporting markets

The revenue-sharing system has proved its success in many ways, not least by promoting joint responsibility for the game's welfare and building trust between the elite players and administrators. And even if, as CA says, it has made cricketers the best-paid team sportspeople in Australia, wouldn't we want that to continue?

I fear that doing away with this model could unravel years of hard-won trust and gains. While the new proposal includes some big improvements for women players, for whom the only way was up, it seeks to introduce a capped international surplus bonus for Australian-contracted players only, leaving all other first-class cricketers to be locked into a wage.

This is particularly grating for domestic players, as a series of new broadcast-rights contracts are to be signed in the next 18 months, including a new Big Bash League deal that is publicly projected to reap about three times the value of the first deal, signed in 2013. CA has done a great job administering the BBL, but without the players there is no competition. Yet these very players are now being told they no longer should share revenue from the league they have helped build. Understandably they are not happy at all.

I have lived in the US for the past 12 years and seen revenue-sharing at work on much larger scales than in Australian cricket. Each of the major sports here - NFL, NBA, MLB and NHL - uses the model in one way or another; all with percentage allocations to the playing group at a much higher level than the 26% of Australian Cricket Revenue the cricketers get. (Australian Cricket Revenue is the agreed portion of the Total Cricket Revenue out of which players are eligible to be paid.)

Why do they use this model? Because they all know it makes economic sense to keep one of your largest expenses variable. If money comes in, everyone benefits. If it doesn't, everyone shares the hit. CA, in its own submission to the ACA, stated that only 20% of its revenues for the next MoU period have been bedded down. In other words, 80% of its income over the next five years is uncertain. Why wouldn't it want to link player payments to variable income?

Cricket Australia has worked hard to build a healthy, trusting relationship with its players, which is at risk of collapsing if the revenue-sharing model is axed © Getty Images

The uncertainty of projected revenues was one of the main reasons that the ACB agreed to the introduction of the revenue-sharing model in the first place. It's of massive benefit for them. Ask any business if they would like to make their largest expense variable and I suspect they would jump at the chance. For CA to imply that the shared risk-and-reward ideology is outdated is nonsense. Far from being obsolete, it is more relevant now than perhaps any time in the past 20 years.

Scheduling disputes, unforeseen circumstances and uncertainty around ICC distributions can play havoc with projected revenues, placing CA in danger of not being able to meet other obligations, such as development of the game. In 2008, when the Indian team threatened to go home after the Sydney Test, CA faced a revenue black hole amounting to tens of millions in TV rights.

Uncertainty to do with global issues is a genuine concern. These days we have heightened security challenges and the spectre of terrorism. There is the possibility the international cricket schedule could be affected, leaving Australia in a bind. These are valid and sensible current arguments to keep player expenses in line with the fluctuations of revenue.

To some, it may seem that Australia's cricketers have been on a pretty good wicket. Certainly, there is a level of public perception that the nation's elite players are a privileged bunch, and paid handsomely to do something they love. But the reality is that, for the majority - who don't reach the top - careers are often brief and tenuous, and their pursuit means players miss out on educational and other career opportunities. That's why the option of playing in worldwide T20 competitions instead of committing to traditional establishment cricket is an important factor to consider in this MoU.

The fact is, this will be the first agreement to be formed at a time when players have genuine choices about how they pursue their careers. There is no longer one buyer in the market. Players can head to the Indian Premier League, English cricket, the Caribbean Premier League or wherever else. There must be some players right now around the states thinking: "I'll be better off playing in these satellite tournaments around the world. There's less pressure, I'll get to spend more time with my family and I won't have to put up with this ridiculous scheduling and other associated pressures."

Cricket boards need to tread carefully and think things through. If they're going to come down heavily and walk away from an enduring agreement that has kept relative industrial harmony, they do so with a very high risk of a backlash from players. Which brings us to CA's motive. I believe it simply doesn't want to pay the players more than it suits it. It has a good feel about the value of future rights revenues and will have done its sums on how much would go to the players under the revenue-sharing model.

For the past two decades CA and ACA have built a culture of players and administrators working together to grow the game and share in its success - but now with this success moving to a new level, one party no longer wants to play ball.

The stakes here are high. CA's position threatens to set back by decades the relationship between players and administrators. To change the system so radically, it needs to provide a valid and compelling argument. The onus is on the board, not the players. CA needs to explain why, for 20 years, the revenue-sharing model has worked so successfully and yet now it suddenly can't work. It's a tough one for it because, as far as I can see, there really isn't a valid argument.

Tim May, the former chief executive of the Australian Cricketers Association and FICA, is now the present-players' representative on the ICC Cricket Committee

Comments have now been closed for this article

  • Tony on April 26, 2017, 3:00 GMT

    If I worked for a small to medium company, even if I had unique skills, would I expect to be paid on a revenue-sharing basis? No of course not. Why should cricketers be any different? They are already extremely well paid as it is, many would say over-paid. And the fact so many are bad sportsmen on the field (sledging, bad sports, abusing opponents etc) means they can't justify it from a point of view of being ambassadors for the game, either (actually they are turning people off the game when they act like that). Yes, Tim May might argue cricketers have a limited shelf life and should be compensated extra-well for that - but so do many occupations. He's basically saying they should be paid much more to compensate them for lost education and career opportunities. Rubbish, they have those opportunities already, look at other professional players who have completed degrees while playing. Pay them well yes, but don't be greedy!

  • philgr8017989 on April 24, 2017, 1:57 GMT

    Some perspective would create some balance to this article.

    Suggesting that a payment model can last forever is foolish. World Series Cricket revolutionised cricket and player payments in the late 70s and 20 years later the current structure was developed...here we are 20 years on. A revenue based model is littered with financial risk.

    For Tim May to say it 'works in America' tells us nothing about what works in Australia or for cricket in this country or for the future health of the entire game in Australia.

    Cricket Australia's role in the last 20 years has changed immensely. Their role in the guardianship of Australian cricket across the states and the investment into game development, pathways, women's cricket, all abilities cricket, cultural expansion will continue to grow.

    CA represents all cricket in Australia, the ACA represents a small percentage. The world has changed, the game has changed and the payment model needs to change. Time to move on Tim, it 2017.

  • kgriga5592721 on April 21, 2017, 23:40 GMT

    If the players want to share the money made from cricket this should be based on a profit share arrangement, not a revenue share, and in return the administration should provide the players with more input into the administration costs.

  • Jose on April 21, 2017, 10:13 GMT

    Agree Bob. First, we have to wait & see the details, before we can come up with a judgement. But any 'incentivasation', as you have done with the boys who work for you, is always good. Whatever field it is.

    Any disscentivasation, of course, by the very definition is just that. I hope, they don't forget that SS is like the farm land you own from which anh which alone you can reap the crop, you can deploy as the so-called lifters"!

  • rob on April 21, 2017, 6:19 GMT

    @ Jose: Profit sharing makes sense, no two ways about it. My own business is just a family one but I split the profits with my boys. I only have a few casual workers and I get them through an agency so I don't actually pay them, I pay their bosses and then it's their problem :) .. Anyway, with this move by CA, it really does make me wonder what the hell they are up to. To be fair though, I haven't seen their proposal yet. I'd like to think they'll look after their bread and butter but Tim May mentions a 'wage' for f/c cricketers. Unless it's a pretty decent one that sounds like a stroll back to the 70's. Surely CA isn't that crazy. .. I think I'll be watching this space. It sounds like quite a big deal actually.

  • Jose on April 20, 2017, 10:54 GMT

    A few lessons from the business world:

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    1. If everyone gets a share in the profits/loss (whatever is the %) that creates a sense of ownership /belonging within everyone, and ALL will work towards a common goal.

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    2. If many are given FIXED WAGES & OTHERS alone can get a share in the P/L , you are dividing them into two camps - "WORKERS" & "OWNERS"! Owners will continue to be motivated to let the firm grow, while the workers may settle down to do just the minimum work to meet the contractual obligations.

    That is effectively is a case of "divide & rule"- a fertile ground for "employer- employee conflict", a potential IR powder keg. Who wants n IR issue?

    Wants to know more, just study the WI story of recent times. The "adversely affected employees" will turn out to be "bounty hunters", a sort of "guns for hire", around the world

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    3. When the sales/ profits are likely to be down, owners love to share the whole pie!

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    4. If it is on the up, upside is just for a few of us!

  • akash on April 20, 2017, 9:23 GMT

    From what is written by Tim May it appears that the payment system in Australia is good enough and also accepted by the players. It should not only be continued in Australia but others like BCCI can also evolve a similar system of payment based on percentage of total revenue/profit earned instead of fixed slabs and divisions mainly based on seniority. Performance based bonus payments can also be included.

  • david on April 20, 2017, 8:31 GMT

    One of the best articles ever seen on this site .. A relief to have something of substance rather than tittle tattle about the IPL or someone's views on why so and so is SO good .....zzzzz..Mr May is/was a great Administrator of the game

  • Aditi on April 20, 2017, 8:10 GMT

    Excellent article. Thank you for explaining it so thoroughly and clearly.

  • Shamil on April 20, 2017, 7:08 GMT

    Thank you Tim May for highlighting these important aspects of commercialisation and sports administration.

    It appears that in all countries the Cricket Board Administrators think they are more important than the players.

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