Financial problems for Cricket South Africa

Is South African cricket heading for financial ruin?

There are certain rumours doing the rounds that Cricket South Africa (CSA) is heading for difficult financial times since the departure of the former Chief Executive Officer, Haroon Lorgat, at the end of 2017.

Lorgat may not have been the ideal leader, as we saw with his tenure at the International Cricket Council and especially his altercations with India. However, Lorgat, professionally being a chartered accountant, did an outstanding task as CEO for South African cricket, especially with regard to finances. He brought about financial stability and growth. When he left CSA had R1,4 billion in reserves. This was built mainly on budgeting the dollar very conservatively compared to the real trading value.

Since he left the position 14 months ago, CSA have spent a billion rand of its reserves and now have only about R400 million in reserves. This might sound like a healthy position but for an operation of CSA’s size this will put pressure on budgets and especially cash flow.

CSA is forecasting losses of R654 million the next four years years and it is rumoured that this could be as much as R900 million. They will have to increase their revenue and cut operational costs if they are to survive.

The first area that they will have to address is the Mzansi Super League (MSL) that was launched last year on free-to-air television, the SABC. Even if the viewership was much larger than on SuperSport, they received no revenue. It remains a strange commercial decision, even disastrous. Also, this decision has placed their relationship with SuperSport at risk, with the international and domestic broadcasting contract expiring at the end of this season. They will have to renegotiate with SuperSport against the background of giving the MSL to the SABC for nothing.

South African crowds for all cricket have been in decline for years, resulting in gate revenue no longer playing a significant role in their revenue streams (unlike in years gone by). The Pakistan and Sri Lankan tours have been poorly attended. With England touring next summer, CSA can look forward to improved gate attendances but the result will have very little impact on the forecasted losses.

Sponsors also seem to be a growing problem for CSA, with SA Breweries only agreeing at a very late stage to a one-year contract to sponsor Test cricket. Sunfoil, which sponsored Test cricket for a decade, did not renew their contract even though England is due to tour next summer. Also, Momentum has given notice that after this season they will no longer be sponsoring one-day cricket, both internationally and domestically.

If the financial challenges are as big as is believed, then CSA will need to start cutting costs at all levels. They have a very big staff compliment at CSA, while all the operations and activities happen at the provincial unions. Also, they have many other functions that are very costly, like ‘A’ team tours, women’s cricket, youth cricket, coaching and development levels. Are they all an investment in and critical to the future of the game in South Africa?

CSA will need to restructure and start running an organisation that is cost effective and not bloated if they want to avoid a Zimbabwe cricket or Eskom situation developing.

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