November 24, 2009

Reason against brute force in the free-to-air debate

William Buckland
The battle between the ECB and the government works at two levels

The long-running controversy over UK broadcasting of England's home games erupted again last week after the Davies review into listed sports recommended that Ashes series from 2016 be added to those on List A, which by law have to be available live on free-to-air television.

In an interview on the ECB's TV channel, Chief Executive David Collier again linked the extra money that the ECB has received from Sky since 2006 to increases in spending on grassroots cricket. Elaborating a long list of investments in schools and club cricket, Collier suggested that much of this spending could be discontinued. The headline on the ECB website read: "Collier fears for grassroots cricket."

This argument is part of the persistent ECB line that Sky's money is needed to provide its two public goods, the England team and grassroots funding. That worked a treat in 2005, when the ECB had to account for itself before a House of Commons Select Committee. Neither the Committee nor the Minister, Richard Caborn, took any action to restore free-to-air.

The Davies review did not consider the economic effects of listing. That is the responsibility of Secretary of State for Culture, Media and Sport, Ben Bradshaw. The ECB now has several months to convince Bradshaw that any loss of television revenues would outweigh the benefits of listing.

The battle between the ECB and the government works at two levels. The first is reasoning, where the government has the upper hand. The second is brute force. Here, the ECB reigns supreme.

Reasons to be cheerful
The ECB, on behalf of the counties and the MCC, runs the England team. In 2008 that team made a profit of about £50 million on revenues of £100 million. Domestic (county) cricket made a loss of about £35 million on revenues of £30 million. The ECB collected most of the England money and spent it on county cricket (£38 million), the England team (£17 million) and grassroots (£12 million). The rest went into a rainy-day reserve and on bits and bobs.

ECB spending on counties easily exceeded that on England and grassroots combined. When the ECB bleats about grassroots, Bradshaw's civil servants can politely point to the vast sums it pours into county cricket regardless of its low audience appeal and the greater effectiveness of the England development pipeline in producing international cricketers.

They have three more cards. One, the viewing figures for Test cricket have collapsed by 75% since 2005, with millions of fans cut off. Two, ECB support of county cricket for 2010-2013 is to rise by a third over 2006-2009, to £40 million a year. Three, an ace: the ECB does not need Sky's money to run England and fund grassroots, which in 2008 cost it less than £30 million combined. It needs the money to sustain the present structure of county cricket.

In support of its grassroots-and-England argument the ECB persistently plays two cards. One, that 80% of its revenues comes from domestic broadcasting. Two, that it spends over 20% of its income on grassroots.

Both of these claims are contradicted in a report prepared for Sky by accountancy firm Deloitte and submitted by the broadcaster to the Davies review. Domestic broadcasting revenues in 2008, the report says, was £54 million, or 57% of ECB revenue. Grassroots spending was 13%.

The ECB's revenues are only a part of those earned by England and do not include money generated by the counties. A proper formulation would express both proportions as a percentage of whole-game revenues. The relevant figures are 40% (TV) and 10% (grassroots). Either way, professional cricket in England is much less vulnerable to a fall in broadcasting revenues than is suggested. It is also less generous to the grassroots than is claimed.

Furthermore, most grassroots funding comes from Sport England (£9 million a year of public funds from 2009) and from donations to Chance to Shine from outside professional cricket, match-funded by the government.

The ECB's two cards are not much good. If reason prevails the public interest should get a walkover.

Business model
Set against this is the ECB's strong need to keep the Ashes off free-to-air. The first concern is Sky's reaction to the loss of 100% England exclusivity. In negotiations for the 2009-2013 period, the broadcaster generously agreed to increase its annual payments from £52 million to £65 million even though there was little prospect of any other bidder getting close.

It may not be so generous when negotiations start for the next period, likely to be 2014-2017. At present, the ECB has no second contender to bid up the price, partly because it has failed to cultivate the market and keep the players in the hunt. The public attack on the BBC in 2008 by Giles Clarke cannot have helped, and nor can the complete ejection of Channel 4 in 2004 after seven strong years. Setanta / ESPN (the latter is the owner of Cricinfo) has been given nothing with which to build a position in the market.

Sky is unlikely to abandon the game, though, because 100% coverage, 95% of it exclusive, is a compelling proposition for well-funded cricket fans. However, if piqued by the loss of Ashes exclusivity, it could go as low as £40 million and probably still win. This commercial power over the game, granted to it by years of poor stewardship, is potentially a nightmare for the ECB.

If TV payments dropped significantly, then the ECB would have to hack its spending. County cricket is sacrosanct because the counties and the MCC control the ECB through board appointments. England makes all the money and costs relatively little, so is a bit safer than spending on the recreational game.

Once grassroots outlays were cut to zero, ECB executives would have to cut the budget of the England team to protect the counties. But even they know that stabbing the cash cow is not good practice and could lead to a downward spiral. They and their predecessors have successfully avoided this nightmare scenario: the Allen Stanford dalliance in 2008, the original Sky deal in 2004 and the increase in the England schedule in 2000 all helped generate the extra cash needed to maintain or increase funding for England without imperilling that of the counties.

Grassroots and the England team are under threat again now because the ECB values them less than county cricket, not because of any government decision to list the Ashes from 2016 onwards

The ECB's long-term failure to bring increasing county losses under control and put England cricket on a sustainable commercial footing means that England cuts are never far away.

Hostage situation
In his appearance before the House of Commons Select Committee in 2005, Collier raised the spectre of reduced spending on both grassroots and the England team. They are under threat again now because the ECB values them less than county cricket, not because of any government decision to list the Ashes from 2016 onwards. Ben Bradshaw and the public can expect a barrage of assertions whose effect is to remind us that the ECB has hostages and is willing to kneecap them.

Even if Bradshaw stands firm, the ECB is likely to have another go at the next Secretary of State, who may be from a different party. In fact, the ECB will have as many goes as there are Secretaries of State between now and the signing of the next television deal (2013 at the latest). That could be quite a few. A desperate government in search of votes is one thing, but it takes just a single politician and the Ashes will be straight back on List B - highlights only.

The ability and willingness to damage public goods is a powerful negotiating asset when dealing with government. In this instance, they are likely to trump any number of strong arguments held by government ministers and officials, however concerned they may be for the cricket-loving public.

In the unlikely event that Collier fails to bring home the Ashes for the ECB, I do not fear for grassroots cricket. It survives on England's superabundance of pitches and the volunteers who maintain them and cobble together teams. The ECB, thankfully, can do no real damage there.

In 2004, Darren Gough told the News of the World that "the tours just get tougher and extra Tests and one-dayers are squeezed in as we are sacrificed in the quest for more money to keep the counties afloat". In the 2009 Ashes, one of England's two world-class players only got through the series because of injections. He then retired from international cricket. The other played just two games. He is now back, but for how long?

I fear for what the ECB is doing to the England team and its players, and could yet do if it found itself £20 million or so adrift.

William Buckland is an independent consultant and author

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