We will look at playing a five Test series against India: Kevin Roberts

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21 Apr 2020 | 06:21 PM
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Cricket.com staff

We will look at playing a five Test series against India: Kevin Roberts

The CEO of Cricket Australia also spoke on a variety of topics. Here's part 1 of the interview

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Kevin Roberts, CEO of Cricket Australia (CA) was taking questions earlier in the day in a video conference. Here's part 1 of that interview.

Why has CA has made the cost cuts they already have at this stage when nothing has happened to their cash flow?

One level, cricket is fortunate in terms of the time of year when the coronavirus situation hit. On another level, cricket is unfortunate in that, that it has hit us in the lowest point of our four-year cash cycle. So, in a pre-coronavirus world, we were already projecting that our cash and investments would reduce to about $40 million at the start of September this year and they would bounce back very quickly by the start of the India Test series to about $100 million, which is approximately the level of cash and investments we had at the end of March – just gone. So, the unfortunate reality of that is that we are estimating that we’ve taken a $20 million impact thus far.

We have to anticipate given the fast moving nature of this situation that there will be more risks than that $20 million. So $20 million would take us from low point of $40 million in cash and investment and any further shocks, will take us far lower than that. And then if you contemplate the prospect of the international season in particular being affected, we have an issue of hundreds of millions of dollars on our hands. So, it is very important that we plan very proactively for that and do everything possible to stage the season and to navigate our way through this as we go. We certainly hope the situation doesn’t go that deep and we’ll be doing everything we can to prevent it. But if it goes there and we haven’t taken preemptive action beforehand, we have nothing to fight it with. 

How are you confident that the teams will not be bringing in viruses from overseas during the T20 World Cup?

We obviously taking advice from the federal government, more or less on a daily basis and clearly, we need to be a responsible citizen, first and foremost. So, we don’t intend to put anyone’s health at risk in this situation at all – be it Australians, be it incoming touring teams. What we are very conscious of is that it is our responsibility on behalf international cricket to do everything possible to stage the event, because we might not generate financial returns from that event which are as significant as the international cricket season, but what we know is that the bigger returns from the broadcast rights around the event which are generated by the ICC are very important to all of our counterparts around the cricket world. 

So, it’s incumbent on us to do everything possible to stage and host the T20 World Cup. But certainly we’ll be acting within government advice and guidelines and we intend to do everything possible to make it happen. Bur we certainly won’t be pushing boundaries with anyone’s health, be it a cricket person or someone in the general community. 

On the possibility of playing five Tests against India

It’s such a moving feast this whole situation isn’t it? So, there’s no certainty of that for the coming season. What I can say is that the relationship between the BCCI and Cricket Australia is really strong and we’ve discussed a sheer desire to evolve to five-Test series between Australia and India in the future. Just like both of our nations play five-Test series against England. So, it's something that we’re both committed to in principle in the future. 

The big question is: Whether or not we can bring that in before the next Future Tours Program cycle in 2023. Now, we don’t know what the realistic prospect there is of that next season but certainly with a changing landscape and ever-changing one, that is moving every single day, we won’t rule out the possibility of that until we get closer to the time even though all of the planning is being done based on the four-Test series thus far.

Why you went to senior players last week and what you went through with them?

We’ve got an obligation to communicate with our people in all circumstances. The relationship between Cricket Australia and our CA contracted players is the strongest that it has been for many years and the players and everyone in Cricket Australia and the ACA can also take a lot of credit for that because that’s really been a three-way effort to improve the situation. So it is incumbent on me as the leader of Cricket Australia to share with the leaders of our national cricket teams, our captains and vice-captains, anything that is significant and communicate with them openly.

Just as I have shared with you that we are estimating an impact of $20 million on Cricket Australia thus far and we have to anticipate a likelihood of a much greater impact going forward, it was only right to share that information with the players which I did in explaining that there are a number of pieces to that, including a reduction in the value of our investments, also the fact some of our debtors haven’t paid, the fact that we couldn’t stage the entire ODI series against New Zealand and the fact we needed to support the cash flow for the T20 World Cup event through the winter months.

So that’s what I shared with the players last week to make sure that they are in a loop. Great credit to the high quality of people that we have as leaders of the Australian men's and women's cricket team, they responded with the sense of responsibility and compassion for the cricket community that we’ve all come to expect based on the high-quality people that they are with a message that it is only fair that the pain of this situation is shared across the cricket family. Great credit to the players for acknowledging that.

With the current situation, do you want to ask the players for an additional cut in their revenue and how do you expect that will be received?

 At this point of time, we are working with the ACA and communicating with the players and all parties have rightly acknowledged that it is important that we work through that privately. We respect the player payment model that is in place now and we intend to continue respecting that. Just as the ACA and players do and everyone acknowledges that in the interim we all also need some creative solutions whatever that means, it doesn’t mean disrespecting the current model at all, it just means we need creative solutions like every other organisation in society to manage through this situation respectfully towards all parties involved.

You mentioned the cash situation thing has fallen from $190-odd-million in the last four years to $26 million so far, the main outgoing has been to the players and the states. On reflection have you overpaid? And given the four-year model, it missed its chance to safeguard itself against this type of situation, given their previous cash riches?

 No, we haven't overpaid the players and the states. Much of our grants to the states flows through to community cricket. And that's absolutely aligned with what we stand for to unite and inspire communities through cricket. Players are the central figures in inspiring communities by their feats on and off the field. So the reality is we've had a situation where, yes, in 2016 on the back of the 2015 Cricket World Cup and significant financial returns from the Champions League T20 back then, Cricket Australia was sitting on cash in investments of around $270 million, which was unusually high. But we also needed a significant level of cash and investments because we knew that the following year we were facing a $50 million deficit being a low year in a four-year cycle. 

We also know that we had an obligation to make an additional payment to players of $70 million at the end of the last MOU period. So that was a $120 million between those two factors. And in addition to that, since then, in 2018 we've transferred the balance of the cricketers’ retirement account off Cricket Australia's balance sheet. And so that's an amount of $55 million there as well. So those three factors combined amount to $175 million, which very quickly explains how you move from an unusually high mark of cash and investments in 2016 of 270-odd-million dollars. And then with three key outflows, if you like, of about $175 million and then some small surpluses in the couple of years that followed, it's quite natural that we see ourselves in last year's annual report at $117 million in cash and reserves. And then that brings us to this year, which like 2016, is a significant deficit year. We were completely on track with our plan for the year until coronavirus hit. But because it's a deficit year, that $117 million in cash and reserves that you saw in last year's annual report did come down to $97 million by March this year. 

How big a paycut are you asking the states to take? Have any of them agreed and what's the process to get them to an agreement? I'm hearing reports that initially you started it about 45 percent and work down from there

We're all across Australian cricket acknowledging the possibility that the reductions might need to go to that level, but that's preemptive planning. And over the last couple of weeks, since acknowledging that the higher risk scenario of the international season being significantly affected, we've been able to work through some detail and determine that we don't need to go to that level immediately. 

What we need is a plan to take 25% of Cricket Australia's operating expenses out next financial year with a further plan to go deeper if need be, and something very similar with the states and territories so that we take the appropriate action upfront and then we have a plan B, if you like, to go deeper as required, quite similar to what we've seen in some other codes and naturally follows the thinking and the work around the player payments that naturally you'd have a smaller reduction in player payments if the season goes ahead without crowds, and a larger reduction in player payments this season in part or in full will not to go ahead. So we're working through that. It's a difficult challenge for everyone in cricket, just as this is a difficult challenge for everyone in society. But we've got to commend the states and territories for walking along this path with us and finding ways in unprecedented territory to come to sensible compromises and resolutions as to how we chart a path forward together.

David Evans is chairman of the Investment Committee. Are you satisfied with his performance?

Yes, absolutely. David's assisted by Ross Barker and we've also got Morgan Stanley involved in that. So in terms of the equities portion of our cash and investments, essentially relatively small, because our policy prescribes that we have a 50/50 balance between growth as assets as in shares and defensive assets such as fixed income and other forms of cash investment. 

And so we made a small investment in shares some four years ago of $22 million and even taking into account the recent drop in the market over the last month or more. The return on that $22 million portfolio has been over 50 percent. So the issue we've had, like everyone else who holds shares the world over is that the value of that portfolio did decline over the last month or two. But the reality is the returns have been very good over time. We had about forty one million dollars sitting inequities at the end of last financial year. And that rode up to a high point in February with the market. And then came off to the point that that $41 million at the start of the financial year last Friday was $36 million. So it's absolutely true that from the high point and has come off further than that, but excellent returns of over 50 percent in total over the last four years and an excellent job that we're appreciative of from David Ross and Morgan Stanley. 

You mentioned, obviously the need for everyone to be working together in this time. Are you concerned you've lost support and trust from the state players association staff with some of the announcements and messages from the past few days?

What we need to do is maintain that trust. And this is an unprecedented and very challenging situation for society as a whole, isn't it? And so cricket is not immune from that. And, of course, those challenging conversations along the way. And when we're sharing information and confronting decisions that no one would want to make. Who wants to be in lockdown at this point in time? Nobody. But we respect the need to be in lockdown as an example.

That's a decision that's far beyond cricket. And cricket on a smaller scale has the equivalent decisions that no one wants to confront. And sometimes it takes a number of steps to work through it. And also even to understand the situation that we're dealing with because it's just changing every single day. This is changing so quickly. And you have media reporting at both ends of the spectrum, is the coronavirus situation improving or worsening? And in many cases that's a matter of opinion but we are relying on the advice of chief medical officers to help chart a path through what this likely to mean. It's really a matter of dealing with the uncertainty, having the tough conversations and embracing those respectfully as states and territories and ourselves have. They are not the conversations that anyone wants to have but they are the conversations that we are charged with having if we want to lead and serve our sport responsibly and continue to do so.

For part 2, click here

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