Ball tampering scandal could deflate value of broadcasting rights, experts warn

Arvind Hickman
By Arvind Hickman | 29 March 2018

The ball tampering scandal could harm Cricket Australia’s efforts to secure a significant price hike in broadcasting rights, experts have warned.

Last week, Cricket Australia issued a ‘non-compliance order’ to Nine and Ten for a joint bid they lodged with the peak sports body.

AdNews understands that Nine and Ten are open to including a pay TV component, which would involve Fox Sports, in a package.

The impasse, as AdNews understands it, is over the perceived value broadcasters will receive for the price Cricket Australia would like to charge, which has been widely reported as around $200 million per annum over five years for broadcast rights of domestic international cricket and the Big Bash League.

At present, Cricket Australia receives about $120 million per annum, but this only includes $20 million per annum for the BBL, which industry sources believe is undervalued after Ten helped lift the popularity of the game to become one of the top 10 best attended sports competitions in the world.

Broadcasters want digital rights included in the mix and say they cannot afford to absorb a stiff hike in price as their advertising-funded business models are already being stretched to make money from covering the sport.

Cricket Australia recently told The Australian that it doesn’t believe the Cape Town incident would impact current negotiations, but a handful of experts that AdNews approached disagree.

'Broadcasters will cling to this'

Deakin University sport management expert Dr Michael Naraine tells AdNews the scandal could provide leverage for broadcasters to resist a huge price increase on current levels.

He believes the scandal could cost Cricket Australia up to $400 million from a target of $1 billion over five-years.

“The broadcasters will cling to this and try and use it as leverage so that they don’t have to spend as much,” Naraine says. “There has been a backlash from sponsors and fans and certainly Cricket Australia has lost a bit of brand equity.

“A conservative estimate for the rights today would probably be in that $600 million to $700 million range.”

Victoria University lecturer in sportscasting Marc C–Scott believes the timing of the incident, as well as the fact that sports rights for major global competitions like English Premier League has dropped in value for the first time in decades, doesn’t bode well for Cricket Australia.

“I think due to the timing and what Cricket Australia are dealing with at the moment, there’s probably going to be some money taken off. They’re trying to go for a $1 billion deal, which some people in the industry believes is highly unlikely. The fact this has now happened, they are really going to have to push the boundaries to get this done.

C–Scott says damage to Cricket Australia’s brand has already been done irrespective of the outcome of its investigation into the ball tampering scandal.

“For broadcasters to gain back money on the rights they need to get advertisers to invest into that brand which is Cricket Australia. It’s not just whether the broadcasters will invest, it’s whether the advertisers will hold back. It’s a domino effect,” he adds.

Sportswear company Skins executive chairman Jaimie Fuller agrees the scandal “couldn’t have happened at a worse time” for Cricket Australia.

“It’s not unreasonable that the bids that are resubmitted are going to be lower than what they originally put in,” Fuller said, adding that he doesn’t believe broadcasters will be put off by the scandal but may use it as leverage.

“They’re commercial animals and will do whatever they can and, to a certain degree, one can’t blame them."

Former NSW all-rounder and cricket marketing expert Neil Maxwell tells AdNews he would like to think the scandal doesn’t have an impact on negotiations and that the “passion people have for that brand” will keep broadcasters at the negotiating table.

The TV networks and Cricket Australia declined to comment on ongoing negotiations. 

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