Commercial partner of USA Cricket worried about the organization’s future due to its current financial state.
Commercial partner of USA Cricket worried about the organization’s future due to its current financial state. Co-founder of American Cricket Enterprises (ACE) and parent company of the upcoming Major League Cricket (MLC) T20 competition Vijay Srinivasan, told ESPNcricinfo that ACE and MLC are worried about USA Cricket’s precarious financial situation. USA Cricket’s debt has been a problem ever since the board lost six figures when the three-match ODI series at home against Ireland had to be canceled because of Covid-19 last December. But it was brought up again in a letter that USA Cricket interim board chairman Atul Rai sent to all members last week. The next AGM is on October 9.
Srinivasan’s take
“We are quite concerned at the current state of the finances at USA Cricket. The fact that the ICC has had to withhold funding, that gives us a lot of concern. We are here to help them out. As long as it’s constructive, positive engagement, we want to work with USA Cricket to find a way to help them work through this current financial crisis,” Srinivasan said.
Srinivasan is especially worried about the fact that Rai’s letter brought up the fact that board employees, including players on the national team, have not been paid. This is even though ACE has given a lot of money to USA Cricket that has been set aside for this exact purpose.
Srinivasan said, “Contractually we have an agreement that guarantees them a minimum of $8 million over the first 10 years of the agreement. Now where we are today is that we’ve already spent close to $5 million in the first three years directly to USA Cricket, which is close to $1.4 million dollars above what we are contractually obligated to spend.”
“Since 2019, we’ve spent $1.7 million dollars on player payments directly to players. So, when we read things in Atul’s mail that they are not able to pay player salaries, it’s a little bit concerning given that we currently pay seven of the players on the USA men’s team.”
The give and take
Srinivasan says that ACE has also given USA Cricket an extra $800,000 in “discretionary funding” that is not part of the $8 million contract. But Srinivasan says that even with this extra money, the details of the problems that Rai wrote about in his letter caught his attention.
Ireland series was the main reason why things went wrong. What started out as a big deal for the USA turned into a financial disaster when the three ODIs were canceled because of a Covid outbreak in the Ireland team.
Even though USA Cricket did not have any debts at the time, it did not have enough cash on hand to host the Ireland tour, so ACE had to help. As part of ACE’s business deal with USA Cricket, the contract says that ACE will handle all business-related tasks for ODIs and T20Is that the USA hosts. But when the chance to work with Ireland came up, ACE had some concerns about how much it would cost to put on the series. As a result, several board sources said that ACE did not give their full support to move forward with the event.
The hesitation by ACE
Srinivasan confirmed that ACE was hesitant, but he said it was because of how much it would cost to put on the event during the Christmas holidays in Florida, which is a high-cost place to visit at that time. Costs also went up because of the bio-bubble rules that were in place at the time.
“Let me be completely clear on one point. The opportunity to play and host a Full Member was super exciting for us,” Srinivasan said. “As we got more details… we felt that the projections were too rosy and that it would fall well short of being a break-even event. We felt that the revenue projections were not realistic, so the shortfall would be much larger than they expected us to cover. And the timing of it and the location of it, we felt the costs were going to be too large to fund.”
“So what we did say was that we would forego any of our revenue shares. We said USA Cricket could keep 100% of the revenues and we would provide an advance – since their feeling was that they could break even on this – and when you get revenue back, just pay us back.”
Payments by ACE
In the end, Srinivasan said that ACE gave him a $150,000 advance on payments that would be made in the future. ACE also paid for two staff members to help run operations and logistics for the series while they were there. But only the two Twenty20 Internationals were played, which led to big losses.
“Ultimately they came in far, far below even what we thought they would come short of,” Srinivasan said. “The way this arrangement is meant to work is they find a Full Member or multiple Full Members to come and we would fund all of that. The exposure is meant to be ours and then we would monetise it, commercialise it and if there is a loss, that’s our loss to bear. This was unique in the sense that we were not willing to do it given all the constraints. So we said if this is something you still want to go ahead, you do all of it. We’ll front you the cash to pull it off, but you keep all the revenue. But the exposure is also yours.”
“We haven’t been paid back that [$150,000]. Technically it would offset against future payment in our agreement. This is part of this holistic discussion that needs to happen. Our goal is not for USA Cricket to be in financial distress.”
A negotiating stance
As for board chairman Rai’s claim that the original deal negotiated between USA Cricket and ACE needs to be changed so that it “works for all parties,” Srinivasan said that Rai was just taking a negotiating stance. Rai voted in favor of the deal when it was signed in May 2019, when he was still a board director.
“We are going to pay them 5% gross of all our cricket commercial activities, whether it be Major League Cricket or anything we do,” Srinivasan said. “We pay them 5% off the top. We take 100% of all the costs, we take 100% of all the losses. All the exposure is ours. So I think it’s an immensely fair deal where you have no exposure, you have no risk and you get a significant chunk of top-line revenues across all commercial activities that MLC will be doing.”
“So I think all that collectively, with the ICC’s funding and with what we’re doing, my view is that USA Cricket is by far the best resourced member in the Associate world at least. Given that, I think it is of a little bit of concern that they find themselves in this situation. But having said that, we are here and we would love to engage with them and see if we can help them out of this situation.”