The contracts crisis January 15, 2003

A conflict of interests

The piece below was first published in Wisden.com in January 2003, shortly before the ICC World Cup.

The last decade-and-a-half has been a time of transformation for cricket. Big money has flooded into the game, fueled partly by the satellite television boom in India, and cricketers who once barely got by now rake in the big bucks. Cricketing boards have benefited too, drawing in revenues that have made them resemble big corporations more than modest sporting bodies. A new era - of the commercialisation and professionalisation of the game - has begun.

In such a period of transition, teething problems are inevitable, and the ICC Contracts Crisis is the first major instance of an old order stumbling in trying to find its footing in a new age.

What is the Contracts Crisis all about really? What is this Ambush Marketing that ICC is trying to protect its sponsors from? Why do the only the Indian players have a problem with them? Where does the BCCI fit in and whose side are they really on? In the war of words between the three parties, what constitutes a principled stand and what is merely self-serving rhetoric? Wisden.com lays it all out below.

The Parties involved

ICC The International Cricket Council (ICC) is the governing body of the game, just as FIFA is of Soccer and the IOC of the Olympics. Each of the Test-playing nations is a member of ICC, and there are a lot of associate members as well. ICC is currently run by its president, Malcolm Gray, and its chief exceutive officer, Malcolm Speed.

BCCI The Board of Cricket for Control in India (BCCI) is India's cricketing board. Their president is Jagmohan Dalmiya, an administrator known for his outstanding commercial acumen and a canny grasp of realpolitik. He enriched the BCCI in the late 80s and early 90s by capitalising on the opportunities that India's satellite television boom presented. After making the BCCI the richest cricket board in the world, he became president of ICC in 1997, and filled up its coffers as well. But he had a bitter falling out with ICC's old guard, who could not stand his Machiavellian ways of functioning. Gray and Speed hate him and the feeling is mutual.

GCC Global Cricket Corporation (GCC) bought the rights from ICC to become sole marketers of the World Cup. They then sold these to individual event sponsors on behalf of ICC. In the current Contracts Crisis, they represent the collective voice of the event sponsors.

The Indian players Why are the Indian players more affected by the ICC contracts than players of any other country? Simply because the Indians, by far, have the highest volume of endorsements. And commercial deals that involve the rights of players affect them far more than others.

The heart of the matter: Ambush Marketing

What is it? When a corporate body signs up as an event sponsor, it holds exclusive rights, in its product category, of associating with the event. Thus, it gets logo associations, visibility at venues, and the right to use the event as the focal point of its marketing campaign. When a rival corporation attempts to hijack it by implying an association with the event, that is known as Ambush Marketing.

An Example During the 2002 Soccer World Cup, Pepsi, which had lost out the official sponsorship to Coke, ran commercials that showed a few top football stars with the subtitle "Tokyo 2002" appearing before them. This subtitling implied an association with the event, which only Coke could legally claim, and Pepsi had to withdraw the ads. This was possible because FIFA made sure that its event sponsors had Ambush Marketing protection.

Where did ICC overstep the line? ICC has the right to sell the event rights to sponsors and guarantee protection for them because they own the event. But it does not own the players, and it has no business offering their commercial rights to third parties or trying to monitor their use of it. ICC did just this, telling its sponsors that they would have the right to use the images of the players in their advertising for the duration of the event and for six months after, and that the players would be barred from endorsing a rival brand in the product category of the event sponsors from a month before to a month after the event.

This was both unethical and unlawful, because ICC effectively sold something that it did not own. To return to the example given above, while Pepsi's "Tokyo 2002" commercials were stopped because they implied an association with the event, which FIFA owned and Coke had bought the rights for, their commercials with David Beckham merrily ran throughout the World Cup, inviting protests from nobody. Naturally. Beckham's commercial rights belonged to him, and not FIFA.

A dilemma for the players Barring the obvious fact that ICC had no business cashing in on the players' commercial rights, these contracts also presented a practical legal dilemma for the players. Many of the top Indian players had existing contracts with various corporate bodies. Some clashed with the event sponsors of the ICC tournaments. Virender Sehwag, for example, endorses Coke. But the moment he signs the ICC Contract as originally set out, he is giving Pepsi the right to use his image all through the tournament and for six months after, and he is also guaranteeing them that Coke will not run his commercials for the time periods specified in the contract. Thus, he immediately contravenes his existing contract with Coke. Legally, therefore, he cannot sign the ICC Contract unless those terms are modified.

Where the BCCI messed up The BCCI, not understanding the ramifications of its contract with ICC (the Participating Nations Agreement, or PNA), and perhaps not reading the fine print at all, signed it. In effect, thus, it promised ICC what ICC had promised the event sponsors: the players' commercial rights. But just like ICC, the BCCI did not own these either; the players did. And by the time the players made a stand, the BCCI was in no-man's land. It claimed that the ICC Contract was illegal and a restraint of trade, both of which were true; but it was equally true that it was a signatory to this contract and thus a party to the illegality. The stand it eventually took on principle was the correct one, but it had lost the moral right to take that stand.

The flow of events

The ICC Champions Trophy Compromise The crisis broke in the middle of 2002, before the ICC Champions Trophy in Sri Lanka in September, which was the first event where the new ICC contracts were applicable. August was a busy month for the Indians, as they wound up their series against England at the same time as they negotiated their way out of the Contracts Crisis. Dalmiya eventually engineered a compromise, promising both ICC and the Indian players that if they bent a little, he'd work something out before the World Cup. Both sides gave in reluctantly, having decided not to budge from their positions later. The Indians agreed to ask their individual sponsors not to use them in their advertising during the event and for 16 days, instead of the 30 ICC demanded, before and after it.

The World Cup impasse Both ICC and the players stood firm after the Champions Trophy, and December 31, the last date for all the boards to submit their squads for the World Cup, loomed as a likely flashpoint. Dalmiya bought time by submitting a team conditionally, demanding that the contracts issue be put up for non-binding third-party mediation, to determine its legality. ICC refused, and was contemplating going to the Court of Arbitration for Sport (CAS) for arbitration. In the meantime, the players met their January 14 deadline for signing the contracts, but only after deleting the controversial clauses from the contract, which resolved nothing at all. The GCC, meanwhile, reportedly indicated that it might be willing to accept modified terms, but the sponsorship amount would then come down from US$ 550 million by about US$ 100 million. They denied this on record, but such a commercial compromise seemed the most likely end to the impasse.

What Wisden.com believes The players made a mistake by agreeing to compromise for the ICC Champions Trophy. They should have taken a stand on principle and refused to compromise at all. If ICC sold Sachin Tendulkar's house in Bandra (which is an apt analogy, because like his house, his commercial rights are his personal property), he would not bargain about how many rooms it could keep. He would tell ICC, on principle, to get lost and not mess with what it did not own. Had the players done this in August, and even missed the Champions Trophy, the matter would surely have been resolved well before the year was out. India is the biggest market the event sponsors are targeting, and the sponsors themselves would have taken the lead. And had legal arbitration taken place, the courts would probably have returned a judgement citing the very phrase used by the judge when Kerry Packer beat the establishment in 1977: "restraint of trade".

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