January 18, 2010

A taxing question for the BCCI

Does cricket make money to exist or exist to make money? The BCCI's dispute with the Indian tax authorities throws the old question into focus again

The name Kerry Packer is often invoked in the context of modern Indian cricket, the revolution being led by the BCCI being paralleled to the made-for-television spectacular conceived 33 years ago by the Australian plutocrat. It turns out that the parallels run deeper: like Packer, the BCCI doesn't like paying tax.

Packer spent much of his life fighting a running battle for the Australian Taxation Office, on the premise that anyone who didn't minimise their tax "wanted their head read". Now the BCCI is being challenged over tax exemptions claimed on the basis that its promotion of cricket is a "charitable" activity - a proposition as sustainable as the idea that the United Nations is about democracy, or that India is about curry.

Chances are, of course, the issue will fade away: someone will talk to someone, and some luckless official will have his arse kicked. The BCCI, insouciant as always, is simply saying nothing, leaving the Times of India to surmise that they "don't seem too worried". But to go with its challenge, the tax authorities have issued a fascinating and scathing assessment of the BCCI that raises a host of questions cricket has been studiously avoiding.

"The Board of Control for Cricket in India [BCCI] has become totally commercial and all its activities are being carried on commercial lines," argues additional director of exemption Rita Kumari Dokania. "Cricket is only incidental to its scheme of things. It is more into prize money for every run or wicket, which is nothing short of a gimmick."

The BCCI has apparently twice altered its constitution to broaden its permissible activities - to, as Dokania adds, an utterly unsurprising end: "The conduct of certain activities and receipt of income from these activities clearly show that these activities are totally commercial and there is no element of charity in the conduct of BCCI. The characteristics of volume, frequency, continuity and regularity of the activities accompanied by profit motive on the part of the assessee have been held to indicate an intention to continue the activity as business." To the actual promotion of Indian cricket, the tax authorities estimate, the BCCI allocates just 8% of its stupendous revenues.

On the detail of the assessment, it is impossible to comment, because the BCCI's financial statements circulate only among its members - which, again, hardly savours of an open, inclusive and public-spirited institution. But the taxation position of the BCCI resonates with the philosophical dilemma of all modern cricket administrations, which can be condensed to a single question: does cricket make money in order to exist, or does it exist in order to make money?

Cricket in its history has done both, sometimes simultaneously, although generally one or other predominates. When English cricketers first came to Australia 150 years ago, it was primarily to make money; when Australian cricketers began reciprocating those visits, it was chiefly to satisfy a colonial longing to express both rivalry and fealty. Generally speaking, however, the boards of control that came to administer international cricket in the first half of the 20th century ran rather like the cricket clubs that provided their governance models, treating money as a means to an end rather than an end in itself. They did not build up reserves, they did not acquire assets, they did not even seek to maximise returns. On the last of these, in fact, did the diffusion of cricket depend. Had return on funds employed been a paramount concern to Australia and England, they would simply have played each other every year. There was a general acceptance that spreading the game was A Good Thing - even if it was not always done with grace and judgment or without a whiff of condescension. Nor was this creed honoured without a certain hypocritical piety, for honorary administrators believing themselves best placed to judge what constituted cricket's benefit looked severely on players agitating for better than subsistence incomes. If there was an end, however, it was chiefly that of national honour: on-field success, particularly in Test cricket. And the surprising aspect of this model is that, although some boards knew financial exigencies and some players led hardscrabble existences, there was always enough money to go round.

Everyone can suggest a date when this model bumped into modernity: 1963, with the abolition of amateurism; 1977, with the incursion of Packer; 1987, with the coming of the World Cup to the subcontinent; 1995, when the Indian supreme court freed the BCCI from the archaic Telegraph Act, enabling it to sell broadcasting rights to the highest bidders. But a very deep Rubicon was clearly crossed when the BCCI invited corporates to participate directly in the commercial exploitation of Indian cricket by owning IPL franchises, essentially issuing them licences to participate in a massively lucrative oligopoly. Reliance, India Cements, Kingfisher, Deccan Chronicle and other owners are not solely motivated by profit: ego, vanity, competitiveness, a gluttony for glamour, and even a spirit of adventure play a part. But a philanthropic concern with the long-term welfare of cricket? Would Shilpa Shetty have bought a minority interest in the Rajasthan Royals if she had expected its value to dwindle? And even if you did not regard the IPL as being about the enrichment of a privileged commercial and media elite rather than of cricket per se, the idea of the BCCI operating with charitable intent is so preposterous that only… well… a well-heeled tax lawyer could argue it.

There isn't a cricket board in the world reluctant to prostitute itself to Twenty20, with the most aggressive being those who need the money least: the England Cricket Board, happy to snuggle up to any spiv with a big billfold and a new helicopter, and Cricket Australia, eager to squeeze the Sheffield Shield for the sake of an even Bigger Bash

Yet these questions should not only be piled at the BCCI's door. There isn't a cricket board in the world reluctant to prostitute itself to Twenty20, with the most aggressive being those who need the money least: the England Cricket Board, happy to snuggle up to any spiv with a big billfold and a new helicopter, and Cricket Australia, eager to squeeze the Sheffield Shield for the sake of an even Bigger Bash. The BCCI at least had a rival, the Indian Cricket League, to counteract; the ECB and CA have no such rationale, except for some glib management-speak about "growing the game", building "new markets", tapping "cricket consumers", whereupon expenditure will presumably rise to meet income. To the question of how much money cricket needs in England and Australia, the answer seems to be: always more. This is the logic of late capitalism, mouthed unthinkingly; mixed with vestiges of muddle-headed paternalism and sentimentality, it persuades administrators that they are somehow acting in "cricket's best interests".

Running cricket in the era of KPIs and TRPs is a great deal more complicated than in the days when what mattered was winning the next match, the next series, the next tour. The temptation to set great store by perceived financial acumen is a great one - it provides a straight answer to the straight question of "How are we doing?" In fact, in key business disciplines such as disclosure, corporate governance, financial controls, strategic planning and contractual fidelity, the administration of cricket worldwide is generally abysmal. Until a week ago, the most recent set of ICC accounts on its website was for the year of 2007; there are now three cursory pages for 2008. But when the Pakistan Cricket Board and the West Indies Cricket Board are among your rivals, it's not that difficult to look good by comparison.

All the same, the game's administration is becoming so absorbed in what it is doing that the reasons it is doing it seem to be slipping from consideration. It takes a reality check from a disinterested observer, in this case India's tax authorities, to convey the essence of change, as distinct from the fact of it. And for all that he perceived a "little bit of the whore in all of us", Packer himself grasped that not everything of value could be priced. What, an interviewer once tackled him, would he have given to represent Australia at sport? A million dollars? A billion dollars? "Anything," he said. Nobody had to ask him whether that was before tax or after tax.

Gideon Haigh is a cricket historian and writer

Comments have now been closed for this article

  • J on January 20, 2010, 23:14 GMT

    @johnnypedals: Welcome to the real world. All superpowers ALWAYS think about themselves first. no exceptions. I actually found only few comment to be full of nonsense.

  • abinanthan on January 20, 2010, 22:36 GMT

    Why didn't the author of this article list down the Cricket boards of other test playing nations which are different from BCCI when it comes to Tax evation in the name of 'non-profit' or 'charitable' organization? At least that would have educated us readers before passing any judgements!!

    BTW der Johnnypedals, what exactly is the relation between BCCI paying/not paying tax to Indian govt and so called vulgarizing Test cricket?!!

  • Soumen on January 20, 2010, 11:50 GMT

    Stop Modi Circus, save Cricket

  • John on January 20, 2010, 2:40 GMT

    Most of the comments in reply to this article are nonsense. The behaviour of the BCCI is not a purely domestic matter, to be commented on only by Indians. As the global cricketing superpower, the BCCI ought to act in the best interests of the game, but is only capable of acting in a crass, commercial manner. It has repeatedly shown contempt for test cricket and continues to vulgarise the game. It is good to hear an esteemed writer speaking out in the face of this power, cricket administrators around the world should be embarrassed of their continued obsequiousness.

  • Gaurav on January 20, 2010, 0:18 GMT

    Dear Gideon, Its common sense that any person/organization in this entire world will try to save on tax as much as possible. You do it and so do I. So do Sachin, Ricky and everyone else. In fact, you should have also included CA and SLC in the article, who were earlier ACB and BCCSL and changed their name to save on tax. Name change saves tax? Surprising isn't it. But they were so greedy that they changed their age-old names to save some precious dollars. As for the BCCI bashing, everyone is entitled to have his/her opinion. So wont pass my comments on that.

  • Steve on January 19, 2010, 21:41 GMT

    Although this article does point the finger at BCCI, there are digs at the ECB and CA so don't get too upset. Any major institution that tries to pay next-to-zero tax and then exploit the market so that the 'little' people pay instead needs to be investigated - totally agree with what Dhanno says.

  • Bheem on January 19, 2010, 11:37 GMT

    Dear Gideon, this could have been an interesting article, but sadly it just ends up being another in a series of your jousts at Indian entities. The Indian cricket system does have big flaws (though it is far better than some other countries' systems...such as the WI), but for an Australian writer to (seemingly) make it his life's mission to keep targeting it is really quite unsavoury. How about writing some articles showcasing your expertise and critique of English and Australian cricket administrations (current and historical, as you value history)...or is a balanced critique of the world game / administration too much to expect?

  • Swami on January 19, 2010, 8:19 GMT

    There is a good chance that 2010 soccer world cup may not be telecast here in Singapore next year. Reason .. FIFA got 15million for 2006 WC and they suddenly want 100 million from the broadcaster here for 2010 WC which they have refused to pay. Gideon would do well to research commerce in all global sports and put cricket in perspective, rather than take off on his usual BCCI rant.

  • Navneet on January 19, 2010, 6:37 GMT

    Well if someone looks at Gideon's past history of writing articles on cricinfo, one would know where his biases lie. He is always more interested in writing negative stuff about BCCI, IPL, India etc. cricinfo might not publish this comment but it still doesnt take away the feeling that an Aussie has no business to be talking about how things work in India.

  • Navneet on January 19, 2010, 4:36 GMT

    Mr Haigh I am not sure why an Australian would be questioning BCCI on India's matters of taxes. Shouldnt you be more concerned about things happening in Australia, if you want a clue let me know

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