The Financial Impact of World Series Cricket on Australia’s State Cricket Associations, 1974–1982

Abstract

World Series Cricket (WSC), a breakaway competition established by the Australian media proprietor Kerry Packer that operated between 1977 and 1979, was arguably the biggest shock to occur in world cricket. While there is some commentary about the financial cost of WSC, there has been little empirical analysis on the monetary effects of WSC on State Cricket Associations affiliated to the Australian Cricket Board (ACB). Analysis of state cricket association financial reports between 1974 and 1982 shows the substantial negative financial impact of WSC, and a relatively quick recovery through increased post-WSC distributions from the ACB. Non-financial information highlights the initial negative, then positive, feelings between the ACB and WSC.

Keywords:

• World Series Cricket
• Kerry Packer
• federated sports networks
• annual reports
• State Cricket Associations

World Series Cricket (WSC) was a professional cricket competition that operated in Australia in 1977/78 and 1978/79, in direct competition to the elite level cricket programs offered by the Australian Cricket Board (ACB), and State Cricket Associations (SCAs).¹ Although the two years of WSC transformed cricket, through annual player contracts, triangular one-day (and ‘Supertest’) tournaments, floodlights, coloured clothing, helmets and other innovations, Stefan Szymanski and Tim Wigmore observe that WSC retained ‘a strange conservatism’, based on Packer’s insistence on nation versus nation matches.² Packer did not want to destroy international cricket; his objective was gain exclusive broadcast rights. Moreover, he did not consider creating city-based franchises that would later prove so profitable in the Twenty20 (T20) format. Richard Cashman writes that after two years of WSC, ‘the war had damaged establishment cricket to such an extent that it readily agreed to Packer’s terms’.³ Test cricket resumed, with WSC players now eligible; the ACB retained the triangular format for its one-day competition, called the ‘World Series Cup’. The effects of WSC are widely acknowledged in contemporary research.⁴ However, there is little financial analysis of the competition itself, and no research evaluating the financial reports of SCAs during this time to determine the impact of WSC.

Australian cricket was a participatory federated sports network. A federated network consists of a single Federated Management Organization (FMO) and multiple federation affiliates.⁵ In a federated network, each affiliated organization is conceptually and legally distinct from the FMO, and each affiliate will have their own disparate goals. The goal of the FMO is to act in the collective interests of the affiliates. In a participatory federation, affiliates are active in federation management, not only through affiliate-FMO interactions, but also through their involvement with each other regarding network-wide issues. Affiliates often have default representation on the board of the FMO. In independent federations, there is little or no interaction between and amongst affiliates, and FMO directors will not hold office in one of the affiliates. In Australian cricket, the FMO was the ACB, while the federation affiliates were the various SCAs (New South Wales Cricket Association [NSWCA], Victoria Cricket Association [VCA], Queensland Cricket Association [QCA], South Australian Cricket Association [SACA], Tasmanian Cricket Council [TCC], and Western Australia Cricket Association [WACA]). While SCAs were affiliates to the ACB, these affiliates were simultaneously the FMO for their state-wide network of member organizations. Hence, there is an interdependent network of federated networks incorporating cricket clubs, regional cricket associations, SCAs and the ACB. To some extent at least, the ACB was beholden to the SCA affiliates. In any federated network, the relationship between the FMO and their affiliates is central to the systemic governance of sport.⁶ It is usual for the FMO to have a legal and corporate identity that is separate from that of its affiliates. In sport, the FMO is often the governing body, with its purpose to act in the collective interests of its affiliates. ‘The FMO generally allows considerable day-to-day operating autonomy for affiliate organizations’, observes Keith Provan, ‘but all affiliates must act on behalf of the interests of the federation as a whole, at least regarding those issues that are managed by the FMO’.⁷ The participatory nature of a federated network is manifest in its governance structure: a delegate model in which the FMO’s peak decision-making group (board of directors) consist of affiliate representatives.⁸ The directors of the ACB were delegates representing the SCAs, ensuring that ACB policies would likely favour the SCAs. With few exceptions, understanding the distribution of revenues within federated networks of sport organizations has escaped scholarly attention.⁹

Leagues may act as monopolies, especially in regional or distance-protected markets where there is no direct competitor. They may benefit through the exercise of market power where a single firm is the most efficient form of production.¹⁰ In some cases, an organization’s monopoly (or at least dominant market power) in a variety of sports (including rugby league, cycling, baseball, basketball, Association football, American football, and ice hockey) is challenged by a competitor.¹¹ In cricket, the historic primacy of international competition allowed controlling bodies to use market power to keep player payments low – before the proliferation of T20 franchise cricket, international qualification rules restricted player mobility.¹² The emergence of a competitor to challenge dominant market power meets comfortably the threshold of an organizational shock – ‘a clearly distinguishable and jarring event’ or an environmental jolt.¹³ From an institutional perspective, an environmental jolt creates ‘a period of prolonged and widespread crisis in which actors struggle to reconstitute all aspects of social life’.¹⁴ Just as a rival sport league represents a shock or jolt, so too is any merger and other form of reconciliation that may occur between rival leagues.¹⁵ All members of the federated network – both the FMO and its affiliated organizations – feel this shock.

In the context of a participatory federated network, information in annual reports show how the shock of WSC affected the SCAs. The eight-year period from 1974/75 to 1981/82, separated by three years prior to WSC, two years of WSC, and the three years after the WSC-ACB truce, demonstrate the financial vulnerability of affiliate organizations in federated sports networks to disruptive events. Two seasons of WSC, in direct competition with establishment cricket, diminished revenue streams from Test cricket, placing the SCAs in a difficult financial position. The post-WSC partnership with Packer’s companies was to the advantage of the ACB, and in turn the SCAs.

The ACB: Structure, Governance, and Financial Model

Cricket has long been associated with the Australian way of life. At the elite level, ‘cricket is a highly visible national sport with its participants often promoted as an embodiment of the Australian identity’.¹⁶ Having evolved in England with formal rules drawn up in 1744, cricket was transplanted to the Australian colonies.¹⁷ In Australia’s three largest nineteenth-century cities, Melbourne, Sydney and Adelaide, ‘a professional elite and a rising middle class founded the first cricket clubs.¹⁸ Formally and informally, the game was broadly popular, but although these clubs were democratic organizations, their membership fees were prohibitive for working-class men.¹⁹ As in England, the game was controlled at the outset by gentlemen who embraced the ideal of amateur competition.²⁰

The first steps towards establishing a federated network to govern Australian cricket took place in the early 1890s. Formed in 1892, the Australasian Cricket Council (ACC) regulated international tours and arranged inter-colonial matches. The Melbourne Cricket Club had hitherto played a major role, lending players money to organize international tours. Malcolm Abbott notes that the establishment of the ACC took place because some SCAs were jealous of the players’ power in Australian cricket.²¹ The SCAs also wanted to profit more from international tours, which at the time benefited players financially. The ACC also began the colonial-based Sheffield Shield in 1892–1893, a competition that continues to this day.²² The ACC disbanded seven years after its formation due to ongoing conflict between the States, communication issues due to the distances and lack of meetings, and the players’ desire for independence.²³

The second attempt at establishing a federated network occurred in 1905, with the formation of the Australian Board of Control for International Cricket (ABCIC). The 1906 constitution allowed for three representatives from New South Wales, South Australia and Victoria, and one from Queensland. Tasmania was included in 1907, as was Western Australia in 1913.²⁴ The ABCIC sought to control international cricket (including the appointment of Test umpires) and the laws of the game in Australia, while leaving administration of the state-based competition to the SCAs.²⁵

In the early twentieth century, cricket became bureaucratized, with the game influenced by rules (regarding player payments and status), contracts, and legislation (such as prohibitions on Sunday play). The ABCIC and the various SCAs were ‘gatekeepers’ – with formal authority to act as guardians of the game’s traditions and defining acceptable forms of production and participant interaction.²⁶ The SCA influence remained strong due to its participatory federation model. In 1973, the ABCIC changed its name to the ACB; in 2003, the ACB was renamed Cricket Australia. This was not simply a name change. Rather it reflected a modification in the responsibility and manner of governance of Australian cricket. The ACB introduced a systematic brand structure to give all levels of cricket an opportunity for an integrated look and voice. It also amalgamated with Women’s Cricket Australia.²⁷

Throughout its history into the mid-1970s, the ACB and SCAs did not seek to fully leverage cricket’s commercial potential. Rather, the organizations acted as guardians of the sport’s amateur and artistic traditions.²⁸ Consequently, the ACB was not financially strong, possessed few tangible assets and remained somewhat of a peripheral actor, disadvantaged by power asymmetries between it and the SCAs. In effect, the ACB was a clearinghouse because it distributed most of the money made from cricket – particularly international cricket – to the SCAs.²⁹ The ACB divided its distributions to the SCAs into 14 parts, with the NSWCA, VCA and SACA receiving more than the other SCAs.³⁰ Distributions from the SCAs then went to Junior and Senior Clubs through various grants and competitions.³¹

Test cricket was central to the financial model of the SCAs. These matches generated revenue to sustain both the ACB and the SCAs. ‘Profits from Test matches in Australia are welcome adjuncts to our income’, reported the SACA in its Annual Year Book for 1966/67. ‘In fact without profits from the MCC Tour in Australia … the Associations accounts would have shown a loss’.³² During the two seasons of WSC, the VCA reinforced the importance of Test cricket:

Test cricket is currently the only level where the staging of matches is profitable. The profits so derived are essential to the future of the game – for they are used by each state association to finance cricket activities at all levels embracing coaching administration, inter and intra state competitions and the general development of the game.³³

The SACA and WACA controlled their own grounds (the Adelaide Oval and WACA Ground) and consequently received a direct share of the revenue from any cricket played there. Test matches at the Melbourne Cricket Ground (MCG) and Sydney Cricket Ground (SCG) generated large revenues, but the VCA and NSWCA shared these with the MCG and SCG trustees. The Brisbane City Council owned the Brisbane Cricket Ground (the ‘Gabba’), and so benefited from games played there. Each state cricket association that hosted international cricket received a share of gate revenue, with the remaining money pooled by the ACB and shared with the SCAs via annual ACB distributions. The 1976/77 Australia-Pakistan Test series shows the complexity of this arrangement. The SACA received over $18,000 (almost 20% of total gate takings) from the Adelaide Oval. The VCA, which hosted the second Test held at the MCG, received much less proportionally ($26,802, less than 12% of the total gate) because the MCC trustees took a large share. The ACB distributed $48,215 to the SACA from the pooled revenues linked to the Pakistan tour, while the QCA received $36,715 despite not hosting a Test. The VCA and SACA received similar ACB distributions that year ($75,135 and $72,047).³⁴

Television broadcasting of Test and Sheffield Shield cricket was a major source of revenue to the ACB and SCAs, although its full potential was not realized as cricket officials saw broadcasting as a vehicle of education and promotion. The Australian Broadcasting Commission (ABC) initially claimed the right to cover big cricket for free, arguing that it was a valid extension of the free press.³⁵ Both the ABC and commercial radio stations provided nationwide live commentaries from 1932 in return for a ‘nominal’ fee.³⁶ The technological revelation of Test match broadcasts captured the imagination of the populace.³⁷ Reflecting the power of the SCAs in the ACB’s governance, the ACB directed these revenues to the host SCA. The continuing popularity of cricket during the 1950s, combined with the saturated national market for radios, meant that the radio rights fee increased.³⁸ Television broadcasts of Sheffield Shield matches began soon after its launch in Australia in 1956 and the ACB again resolved to put the matter of television in the hands of the SCAs. The first Test match was broadcast in 1958, and the ABC provided local cricket broadcast live in each capital city, with highlights packaged for distribution to regional areas.

Television continued to drive the game’s commercial and cultural transformation during the 1970s. The 1970–1971 Test series between Australia and England was the first broadcast live from one state to the rest of Australia (including Western Australia). An estimated average of one million viewers watched this series each day on ABC Television.³⁹ Annual income from television rights increased and cricket was occupying more television time than ever before. The broadcast rights were $35,000 in 1968/69, $70,000 in 1970/71 (England series) and increased to $170,000 in 1975/76.⁴⁰ Broadcasting revenues were directed to the host SCA, and were a significant form of revenue. In 1976/77, the SACA income for ‘broadcasting’ was $38,919, the VCA $42,407, the NSWCA $22,750, and the QCA $17,326.⁴¹

Sponsorship historically provided limited funds to the ACB. With growing television audiences, the Benson and Hedges Tobacco Company became the major sponsor of first-class cricket in 1973.⁴² In 1977, the deal from Benson and Hedges was $350,000 for the ACB, significantly more than the current broadcast rights fee.⁴³ Again, the SCAs were the main beneficiaries, and the distribution of sponsor revenue varied according to the number of games played in each state.⁴⁴

The market structure of elite cricket in Australia would change dramatically in 1977. In May that year, news broke of the emergence of WSC, a new competition that would shock the ACB, the SCAs and almost everything related to international and professional cricket throughout the world. Consequently, the financial model of Australian cricket – Test match cricket providing revenues for the ACB and SCAs – would be crippled.

The WSC and the ACB at War

In 1977, media proprietor Kerry Packer signed most of Australia’s leading cricket players, and many others from around the world, to play in WSC, a breakaway competition that would be telecast on Packer’s Nine Network. Gideon Haigh reported that cricket ‘was altered … in ways that would not have occurred under its previous institutional structures’.⁴⁵ The VCA noted that ‘the cricket world was stunned to read the news that a company … had contracted 35 of the world’s top cricketers’.⁴⁶ The titles of authored books about WSC (The Cricket Revolution; The Cricket War; A Game Divided; Cricket Outlaws) bear testament to its seismic impact.⁴⁷

WSC was both a breakaway competition insofar as it utilized players (but not teams) from existing cricket organizations, and a ‘rival league’, given it competed with the competitions organized by cricket’s traditional governing bodies, most notably the ACB.⁴⁸ Keen to enhance the quality and quantity of sports programming, in 1976 Packer sought to acquire the rights to televise Australia’s home Test matches. Despite Packer offering more than eight times the value of the ACB’s contract with the ABC, the ACB declined. Apoplectic at the ACB’s decision to accept a three-year contract with the ABC worth only $210,000, having himself offered $1.5 million, Packer famously proclaimed that it was ‘every man for himself and let the devil take the hindmost’.⁴⁹

Packer contracted elite players from Australia, England, Pakistan, South Africa, and the West Indies. At a time when elite cricketers were barely semi-professional, the substantially greater financial remuneration offered by WSC, with annual contracts rather than match fees, was very attractive.⁵⁰ ACB stakeholders rallied to support the ACB. The International Cricket Council declared that WSC matches would be without first-class status and banned WSC players indefinitely from Test match and first-class cricket. The SCAs banned WSC players from district cricket and practising with state squads.

Packer took action in Britain’s High Court to stop the cricket’s traditional governing bodies from inducing the players to break their WSC contracts.⁵¹ The case was heard over seven weeks and created global interest; although Packer won, WSC was unable to use the term ‘Test match’, call their team of Australians ‘Australia’, or even use the official rules of cricket (which were the copyright of the Marylebone Cricket Club).⁵² WSC was also shut out of traditional Australian cricket venues. The response of WSC was to lease grounds that were designed for other sports, such as VFL Park in Melbourne, Football Park in Adelaide (both owned by Australian Rules football leagues), Gloucester Park in Perth (a harness racing track), and the Sydney Showground.⁵³

The first WSC game in December 1977 was a five-day ‘Supertest’ between the WSC Australians and WSC West Indians, at VFL Park. Historians agree that the cricket was excellent, the stadium large, the crowd small (2,847 on the first day, in a stadium with 77,000 seats), and the atmospherics awful.⁵⁴ The official Test match played in Brisbane at the same time between India and a weakened Australia attracted far more spectators. The VCA did not miss the opportunity to criticize WSC:

It is now a matter of record the series was poorly patronised by the public. On Friday 2 December 1977 the first ‘Supertest’ began at VFL Park Waverly [sic] between the WSC Australia and WSC West Indies in front of a crowd of less than 2,000 people. Yet just on two years previously substantially the same group of cricketers played on the MCG before more than 85,000 people. Such was the Melbourne public’s disaffection with the Cricket Revolution.⁵⁵

WSC subsequently placed greater emphasis on one-day cricket, and night cricket, securing access to some established cricket venues in the second season.⁵⁶ The war would soon swing dramatically in Packer’s favour. A capacity crowd of 44,377 watched the first day-night match at the SCG.⁵⁷ With its progressive marketing, WSC grew in popularity, while the ACB matches against England and Pakistan failed in many respects to capture public imagination.

The 1977/78 Australia-England series, in the first year of WSC, significantly affected the ACB financially. Cashman observes that the ACB’s tour profits were slashed by more than half ($400,000 for five Tests in 1977/78 compared to $1.13 million for six Tests in 1975/76).⁵⁸ Packer and his related companies fared little better. Gideon Haigh reports that the two-year WSC budget was $12 million, and for the first year it ran at a loss of $3 million; others noted that WSC lost $34 million over the two seasons.⁵⁹ In 1977, the grateful players gifted Packer an autographed cricket bat. Packer responded that most of the money for WSC had come from his own pocket: ‘You probably don’t understand how much I’m going to treasure this. It’s gotta be the world’s most expensive cricket bat. I’ve put $2.9 million into this bat and you guys so far’.⁶⁰ Perhaps the only initial beneficiary were the players, given their increased remuneration and improved employment conditions.⁶¹

The cricket war was intense but relatively short. The two sides reached a truce in May 1979. The VCA was buoyant, reporting that the reconciliation would benefit the whole of the Australian cricket:

Australian Cricket once again has rosy prospects. The events of the past two years must be left there – in the past! The Association is fully committed to playing its part in making this agreement work and calls on all players, officials and the public to rally behind a reunited Australian team.⁶²

Packer’s Channel Nine network was awarded the rights to telecast Australian cricket, and a Packer company, PBL Marketing Pty Ltd, was awarded a 10-year contract to promote and market the game.

What Do the Annual Reports Reveal?

The impact of WSC on the revenues and profitability of the SCAs is analyzed through the financial data (receipts, payments, surpluses and deficits) and narratives from the annual reports produced by five SCAs: NSWCA, VCA, SACA, QCA, and the WACA.⁶³ Independent auditors signed off all of these financial reports as true and correct. Annual reports of sporting clubs are useful in the sense that the financial information presented assists stakeholders in decision-making processes. Narratives of annual reports also provide rich non-financial information to support the financial details.⁶⁴ The annual reports used in this study were obtained from the Melbourne Cricket Club and NSWCA Libraries. The analysis incorporates eight financial years (1974/75 to 1981/1982), broken into three phases: three years pre-WSC; two years of WSC; three years post-WSC).

Total Revenues before and during WSC

Table 1 presents the revenues and surplus/deficits for the five SCAs between 1974/75 and 1981/82.⁶⁵ All SCAs experienced decreased revenue during the two seasons of WSC. For every SCA, revenue in the first year of WSC (1977/78) was below that of the year before. The QCA was the most impacted, with revenues sliding by 61% from $149,183 to $58,289. The QCA declared that season ‘proved to be the most challenging one since bat was first taken to ball’.⁶⁶ The revenue fall for the VCA was 43% on the previous year, with lower reductions recorded by the WACA (18%); NSWCA (17%) and the SACA (15%).

Table 1. Total revenue and surplus (deficit): Australian State Cricket Associations 1974/75–1981/82 ($’000, current prices).

	Pre-WSC			WSC		Post-WSC
	1974/75	1975/76	1976/77	1977/78	1978/79	1979/80	1980/81	1981/82
SACA
Total revenue	372.8	523.9	473.9	409.4	515.2	652	692.4	965
Net surplus (Deficit)	84.5	107.8	33.2	−40.4	23.1	55.5	57.6	187.9
NSWCA
Total revenue	304	332.8	241.7	200.8	200	402.9	510.8	688.9
Net surplus (Deficit)	102.6	81.6	−70.7	−184.9	−158.9	3.5	44.9	123.9
VCA
Total revenue	262.7	607.5	405.9	227.5	268.3	426.7	451.5	574.9
Net surplus (Deficit)	150.2	225.5	207.3	−111.6	−90.5	160.6	228.2	281.2
QCA
Total revenue	139.4	201.7	149.8	58.3	109.2	234	238	344.6
Net surplus (Deficit)	65.9	114.1	34.9	−108.1	−78.9	13.3	−4.8	81.4
WACA
Total revenue	429.8	471	435.2	354.4	462.4	547.9	657.6	853.4
Net surplus (Deficit)	208.4	199	120.8	−38.2	−24.3	30.2	52.5	17.9

Sources: See text.

During the second season of WSC, revenues of all SCAs increased except for the NSWCA. However, only the SACA saw revenues increase above 1976/77 levels. The impact was noted in the narratives of the annual reports. For example, the VCA reported that:

The past twelve months has been a period of great challenge and difficulty. The private promotion of cricket by WSC continued and made noticeable advancement, particularly in the area of public support for night cricket.⁶⁷

The QCA also noted that:

Following the loss sustained in the past two years by the Association, it is imperative that a solution be found to the present state of affairs pertaining to cricket in Australia if the game is to survive as an international sport.⁶⁸

Because of the federated network, the SCA revenues mostly impacted by WSC were ACB distributions. The ACB distributions in the two WSC years were lower for the SACA, NSWCA, VCA and the QCA (the WACA did not record a line item for ‘ACB Distributions’ as revenues). In 1976/77 the ACB distributions made up 39.5% of revenues for the QCA; 29.5% for the NSWCA, and 18% for the VCA, yet these fell to 11% in 1978/79 (QCA); 22% (NSWCA) and 7% (VCA).

WSC cricket had a significant impact on the attendances of ACB organized cricket. Cashman notes that crowds for the six Ashes Tests in 1978/79 (370,574) were much smaller than the numbers attracted to the two previous Ashes series: 616,196 (in 1970/71) and 777,333 (in 1974/75).⁶⁹ Decreased attendances at ACB matches resulted in revenues from hosting local Test and state-based matches being significantly lower for all SCAs during WSC than those recorded in 1976/77. The NSWCA was impacted the most, registering losses on ‘Net Proceeds of matches played in Sydney’ in both WSC years.⁷⁰ The QCA also recorded losses on cricket played in Queensland of $27,996 in 1977/78, and $34,839 in 1978/79.⁷¹ The VCA recorded net proceeds from local matches of $250,231 in 1976/77, yet this fell to $13,608 in 1977/78.⁷² WACA revenue from both international and state cricket fell from $125,693 in 1976/77 to $13,608 in 1977/78.⁷³ The WACA warned that ongoing finances would be affected severely if spectator numbers remained low:

The Association’s position requires careful thought and administration in the coming year in view of the continuing opposition commercial series and its attraction to certain sections of the cricketing public. It is most essential that maximum public attendances are obtained not only in Perth but throughout Australia to ensure a satisfactory flow of public monies into the sport for the future development of aspiring and talented young cricketers and the long term benefit of the game, in general, at all levels.⁷⁴

Surplus/Deficit before and during WSC

The revenue decreases during WSC resulted in reduced SCA surpluses and significant deficits. The WACA was very clear in what caused this, noting that ‘the loss for the year was generally attributable to the decline in income from international cricket and unquestionably to the advent of the commercial cricket entrepreneur’.⁷⁵ All SCAs would incur deficits at least once during WSC. The SACA incurred its only deficit of the period (-$40,421) in the first year of WSC, and noted that ‘for the first time since 1960/61, the Association’s accounts showed a loss for the year and this was due to a considerable fall off in income generated from cricket sources’.⁷⁶ The NSWCA incurred two deficits, the loss being greater in the second WSC year. At approximately $344,000, the NSWCA two-year total loss was the largest of all SCAs. The VCA lost approximately $200,000 during WSC, while the QCA lost nearly $190,000. In 1977/78, the combined losses of the SCAs was approximately $481,000; while in 1979/80 this was reduced slightly to $350,000. The total losses made by the SCAs to the WSC was approximately $831,000 (excluding the SACA profit in 1978/79). After its second consecutive deficit, the WACA noted ‘the loss for the second successive year was again attributable to a decline in income from international cricket due to the continuance of commercial interests and the subsequent divergence of the cricketing public to alternative matches’.⁷⁷

Post-WSC

In the year following the truce, all SCAs reported an immediate increase in total revenues. This increase was even greater in the second and third year post-WSC. In 1981/82, all SCAs reported significant revenue increases compared to the last year of WSC.⁷⁸ All SCAs also recorded a surplus in the immediate year after WSC. In the third year post-WSC, the surpluses of the SACA, VCA, and NSWCA were higher than any period.

The rise in revenues and the return to surpluses of the SCAs was largely attributable to higher attendances (and therefore gate takings) from international and interstate cricket. The NSWCA made a deficit of $3,455 in 1979/80 for ‘net proceeds from matches played in NSW’, while two years later in 1981/82 this had become a surplus of $108, 966.⁷⁹ Similarly, the QCA’s deficit of $34,839 in 1979/80 for ‘proceeds from matches played’ became a surplus of $36,355 two years later.⁸⁰ States also benefited from higher ACB distributions. In 1978/79 the VCA received $21,579 (being 7% of total revenue) while in 1980/81 this increased to $118,191 (26% of total revenue).⁸¹ In 1978/79 the QCA received $12,220 (11% of total revenue) compared to $168,287 (44% of total revenue) in 1981/82.⁸² The WACA annual reports show an increase in ACB distributions from $101,663 in 1979/80 to $134,108 the next year.⁸³ The QCA noted the significant increase in profits in 1980/81, due to ‘… large attendances at International matches, particularly the one day internationals and the substantially increased pool of distributions from the Australian Cricket Board’.⁸⁴

WSC and the Financial Model of Federated Sports Networks

This paper examines the financial impact of WSC on Australia’s SCAs – an issue previously not covered during the turbulence of Australian cricket. The first key finding is that WSC initially placed the SCAs in a parlous financial situation. SCA revenue was largely dependent on Test match cricket, and the emergence of WSC diminished the commercial viability of Tests. Consequently, the amount of revenue from hosting Test match cricket and from ACB distributions was significantly lessened to the SCAs.

The second key finding is that the post-WSC partnership between the ACB and Kerry Packer’s media companies ultimately increased SCA revenues and profitability. SCA profits increased in the three seasons following the ‘truce’, largely due to increased ACB distributions, increased sponsorships, and proceeds from local matches – particularly the shorter one-day events. This is somewhat ironic, given the SCAs’ initial vigorous opposition to WSC. Not only did the SCAs blame WSC for their own financial position, they contended that WSC would have a negative long-term impact on the game of cricket, and its governing organizations. However, there is widespread acknowledgement that WSC transformed cricket from a semi-amateur pastime to a fully-fledged professional sport, replete with well-remunerated players.⁸⁵ In essence, Australia’s cricket administrators were jolted into reality by WSC.⁸⁶

The WSC-ACB-SCA story highlights a number of issues for financial models in federated sports networks. These issues relate to the income dependence (i.e. the concentration of income sources) of the affiliates on the FMO.⁸⁷ When a revenue stream is compromised (or severed) by a disruptive event, financial vulnerability (or financial distress) is almost certain.⁸⁸ This calls upon the organization’s financial resilience, defined as ‘the ability, or capacity, of an organization to bounce back to at least its original financial performance level after a disruptive event’.⁸⁹ In terms of income dependence, the SCA-SACB relationship was not unique. In England, the financial health of country cricket clubs suffers from an overreliance on ongoing grants from the England and Wales Cricket Board.⁹⁰ In Australia, ACB distributions were central to the SCAs, and financial vulnerability was recognized as a problem by the SCAs early in WSC. The VCA warned ‘It is clear that any action which reduces the profitability of Test cricket must have serious consequences for the games future’, and ‘The very existence of a privately promoted series in rivalry to first class must mean a division of public support and a diffusion of television revenue and support from commerce’.⁹¹ This paper shows that when the dominant market position of federated networks is challenged by a competitor and a shock such as WSC occurs, the repercussions are experienced by not only the FMO but also its affiliates.⁹²

A further issue relates to a new entrant into the federated network. In the case of the SCAs, the words ‘private promoter’ and ‘commercial cricket entrepreneur’ were used pejoratively with reference to Kerry Packer and his unwelcome entrance into Australian cricket.⁹³ The narratives in the annual reports also describe unworkable relationships with WSC culminating in the ‘complex’ and ‘costly’ court case between the ACB and WSC in regards to calling matches ‘Tests’ and the use of WSC players for state and club matches.⁹⁴ The QCA lamented this impact on profitability stating ‘the high legal expenses paid by the Australian Cricket Board in litigation with the private promoter exhausted the funds available for distribution to State Associations’.⁹⁵ Relationships were strained between traditional cricket and WSC resulting in negative feelings, which is reflected in prior organizational research.⁹⁶

After two years of what was a ‘widespread crisis’, a positive outcome was the ability of the ACB to work with the newly established marketing company previously associated with WSC.⁹⁷ The SCAs applauded this relationship, which benefited all federation affiliates. The QCA noted ‘it is pleasing to record the harmony and co-operation which existed between the two bodies in what was a crucial and critical inaugural period’.⁹⁸ Further, the VCA noted that their favourable financial result was due to Packer’s PBL Marketing and ‘the extensive use of the ACB and WSC logos’.⁹⁹ By working with WSC, the ACB and the SCAs were able to generate sufficient growth within the game.¹⁰⁰

This paper relies exclusively on the annual reports of the SCAs, and their supporting narratives. There are some limitations to the analysis. Even when comparing the annual reports of like organizations, differences occur: the financial years of the SACA, VCA, and WACA ended on June 30, while those of the other states ended on May 31. There was some inconsistent approaches to describe receipts, for example the WACA would report a one-line item for ‘ACB Distributions which included sponsorship and television rights’, while for the VCA there was a separate ‘ACB Distribution’, and another item for income from ‘Television Rights’. These differences make it difficult to individualise some revenues such as ‘Sponsorship’, ‘ACB Distributions’, and ‘Television Rights’ for each SCA of each of the years of the analysis, and is why aggregate financial information (Total Revenues and Surplus and Deficit) has been reported in Table 1. Where comparisons of line items allow, these have been explained and differences highlighted.

The analysis concludes in 1981/82 as it coincided with a recommendation from the ACB auditors that changed the format and presentation of the financial statements and resulted in the details of some individual income and expenditures for the present study not being itemised. Finally, the study period was a time of rising inflation, averaging 11% per annum between 1974 and 1981, which contributed to the increase in profits by the SCAs. For example, the SACA net surplus in 1981/82, $187,900 in current prices, is $175,700 in constant 1974 prices – 12% of the increase in surplus in that period is due to inflation.¹⁰¹

Lessons for the Future

Historically, cricket in Australia was very much a conservative sport, in which the SCAs wielded considerable influence in the governance of Australian cricket. The advent of WSC in 1977 did not just transform cricket in Australia, it also heralded a time of unstable revenues and expenditures for the SCAs.

This paper relies primarily on annual reports – sources not previously used in the analysis of WSC and its effects in Australia. From these annual reports, the summarized financial information (of revenues and surpluses and deficits), outline the negative and positive effect of WSC on the SCAs. The non-financial narratives provide rich commentary of the poor and then positive working relationship between the SCAs and WSC. Both the annual reports and the commentary within, add significantly to the literature on the historical impact of WSC.

Finally, the narratives of Australian cricket are incomplete without considering the contribution of the SCAs. This is arguably the case for all other sports. Sports historians are therefore encouraged to consider the federated structures of Australian sport, and the relationships between and amongst the organizations within them for further research opportunities.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Abdel K. Halabi

Abdel K. Halabi is an Associate Professor in Accounting at the Federation Business School, Federation University Australia, and a Visiting Associate Professor at the University of Witwatersrand, South Africa. He has a special interest in accounting history as it relates to sporting organizations.

Geoff Dickson

Geoff Dickson is Director of the Centre for Sport and Social Impact at La Trobe University. His research interests include sport management, sport governance, and sport marketing.

Lionel Frost

Lionel Frost is an Associate Professor in the Department of Economics at the Monash Business School, Monash University. He has published extensively on urban and economic history in Australia and the Asia-Pacific Region.

Notes

1 The ACB is currently known as Cricket Australia. For simplicity and the purposes of historical authenticity, the term ACB is used.

2 Stefan Szymanski and Tim Wigmore, Crickonomics: The Anatomy of Modern Cricket (London: Bloomsbury Sport, 2022), 17.

3 Richard Cashman, ‘The Packer Cricket War’, in The Cambridge Companion to Cricket, ed. Anthony Bateman and Jeffrey Hill (Cambridge: Cambridge University Press, 2011), 100.

4 See, for example, Damion Sturm, ‘From Idyllic Past-Time to Spectacle of Accelerated Intensity: Televisual Technologies in Contemporary Cricket’, Sport in Society 24, no. 8 (2021): 1305–21; Daniel Brettig, Bradman & Packer: The Deal That Changed Cricket (Melbourne: Slattery Media Group, 2019); Steve Greenfield, ‘New Competitions and Contracts: Sports Entrepreneurs and Litigation from a Historical Perspective’, The International Journal of the History of Sport 35, nos 7–8 (2019): 727–44; Michael Ward, ‘ABC Television and the Development of Televised Cricket’, Sporting Traditions 35, no. 1 (2018): 79–96; Bernard Whimpress, ‘On Cricket’, Sporting Traditions 34, no. 1 (2017): 51–62.

5 Geoff Dickson, Trevor Arnold, and Laurence Chalip, ‘League Expansion and Interorganisational Power’, Sport Management Review 8, no. 2 (2005): 145–65.

6 Ian Henry and Ping Chao Lee, ‘Governance and Ethics in Sport’, in The Business of Sport Management, ed. John Beech and Simon Chadwick (Essex: Pearson Education, 2004), 25–41.

7 Keith G. Provan, ‘The Federation as an Interorganizational Linkage Network’, Academy of Management Review 8, no. 1 (1983): 79.

8 David Shilbury, ‘Competition: The Heart and Soul of Sport Management’, Journal of Sport Management 26, no. 1 (2012): 1–10.

9 Daniel Plumley, Rob Wilson, Robbie Millar, and Simon Shibli, ‘Howzat? The Financial Health of English Cricket: Not Out, Yet’, International Journal of Financial Studies 7, no. 1 (2019): 1–17; Robbie Millar, Dan Plumley, Rob Wilson, and Geoff Dickson, ‘Federated Networks in England and Australia Cricket: A Model of Economic Dependency and Financial Insecurity’, Sport, Business and Management. https://doi.org/10.1108/SBM-09-2021-0100.

10 Daniel A. Rascher, Joel G. Maxcy, and Andy Schwarz, ‘The Unique Economic Aspects of Sports’, Journal of Global Sport Management 6, no. 1 (2022): 111–38.

11 John C. Bradbury, ‘Monopsony and Competition: The Impact of Rival Leagues on Player Salaries During the Early Days of Baseball’, Explorations in Economic History 65 (2017): 55–67; Rodney Fort, “Major League Baseball Is Just Like McDonald’s? Lessons from Unrecognized Rival Leagues’, in The Oxford Handbook of Sports Economics, Vol. 2: Economics Through Sports, ed. Stephen Shmanske and Leo Kahane (New York: Oxford University Press, 2012), 227–46; Huang-Yeo Hong and Florence R Sullivan, ‘Towards an Idea-Centered, Principle-Base Design to Support Learning as Knowledge Creation’, Educational Technology Research and Development 57, no. 5 (2010): 613–27; XiaoGang Che and Brad R. Humphreys, ‘Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America’, Review of Industrial Organization 46, no. 2 (2015): 127–43; Sara L. McGaughey and Peter W. Liesch, ‘The Global Sports-Media Nexus: Reflections on the “Super League Saga” in Australia’, Journal of Management Studies 39, no. 3 (2002): 383–416; Lloyd Freeburn, ‘A Breakaway League in Professional Cycling: Issues for the Governance and Organisation of the Sport’, International Sports Law Journal 13, nos 3–4 (2013): 193–210; Anthony Macedo, Marta Ferreira, and Paulo Reis Mourão, ‘A Literature Review on the European Super League of Football – Tracing the Discussion of a Utopia?’, International Journal of Sport Policy and Politics 14, no. 3 (2022): 563–79.

12 Szymanski and Wigmore, Crickonomics, 18–20.

13 Thomas W. Lee, Terence R. Mitchell, Lowell Wise, and Steven Fireman, ‘An Unfolding Model of Voluntary Employee Turnover’, Academy of Management Journal 39, no. 1 (1996): 5–36; Gina Cattani, Simone Ferriani, and Andrea Lanza, ‘Deconstructing the Outsider Puzzle: The Legitimation Journey of Novelty’, Organization Science 28, no. 6 (2017): 965–92.

14 Neil Fligstein and Doug McAdam, A Theory of Fields (Oxford: Oxford University Press, 2012), 12.

15 Aju J. Fenn, ‘Competing Leagues, Mergers, and Expansions’, in The Oxford Handbook of Sports Economics, Vol. 2, ed. Shmanske and Kahane, 1–12; Ping Chao Lee, ‘Political Clientelism and Professional Baseball in Taiwan: The Merger Between the Two Leagues in 2003’, International Review for the Sociology of Sport 47, no. 4 (2012): 475–91.

16 David Utting, ‘Multicultural Cricket? National Identity and the Australian Cricket Board’s Annual Report’, Journal of Australian Studies 39, no. 3 (2015): 362–80.

17 Wray Vamplew, Pay Up and Play the Game: Professional Sport in Britain 1875–1914 (Cambridge: Cambridge University Press, 2015); Richard Cashman, ‘Symbols of Unity: Anglo‐Australian Cricketers, 1877–1900’, The International Journal of the History of Sport 7, no. 1 (1990): 97–110; Peter A. Horton, ‘“Padang or Paddock”: A Comparative View of Colonial Sport in Two Imperial Territories’, The International Journal of the History of Sport 14, no. 1 (1997): 1–20; Warwick Frost, ‘Heritage, Nationalism, Identity: The 1861-62 England Cricket Tour of Australia’, The International Journal of the History of Sport 19, no. 4 (2002): 55–69.

18 Richard Cashman, Paradise of Sport: A History of Australian Sport, Revised ed. (Sydney: Walla Walla Press, 2010), 19.

19 The Melbourne Cricket Club did not allow women to become members until 1983.

20 See Szymanski and Wigmore, Crickonomics, 112–5.

21 Malcolm Abbott, ‘A Long-Term View of Australian Cricket Payments’, Sport in History 34, no. 1 (2014): 113–33.

22 On January 1, 1901, the colonies were federated, forming the Commonwealth of Australia.

23 Jack Pollard, Australian Cricket: The Game and the Players (Sydney: Hodder and Stoughton, 1985).

24 The number of delegates provided by Queensland and Western Australian representation increased to two each by 1974.

25 Pollard, Australian Cricket, 67–73.

26 April L. Wright and Raymond F. Zammuto, ‘Creating Opportunities for Institutional Entrepreneurship: The Colonel and the Cup in English County Cricket’, Journal of Business Venturing 28, no. 1 (2013): 51–68.

27 Megan Stronach and Daryl Adair, ‘“Brave New World” or “Sticky Wicket”? Women, Management and Organizational Power in Cricket Australia’, Sport in Society 12, no. 7 (2009): 910–32.

28 Wright and Zammuto, ‘Creating Opportunities’. See also Vamplew, Pay Up and Play the Game.

29 Richard Allen, ‘Off-Field Team Plays a Vital Hand’, Australian Financial Review, https://www.afr.com/companies/off-field-team-plays-a-vital-hand-19900406-kam7o (accessed May 22, 2021).

30 Pollard, Australian Cricket.

31 For example, the SACA, Annual Year Book (1975/76) noted that ‘Grants to District Clubs’ amounted to $20,500, while the WACA, Annual Report (1975/76) reported that ‘Grants to District Clubs’ were $15,000.

32 See SACA, Annual Year Book (1966/67), 28.

33 VCA, Annual Report (1977/78), 21.

34 Data obtained from SACA, Annual Year Book (1977/78), VCA, Annual Report (1977/78), and QCA, Annual Report (1977/78).

35 See Ward, ‘ABC Television and the Development of Televised Cricket’.

36 Gideon Haigh, The Summer Game: Australian Test Cricket 1949–71 (Melbourne: Text, 1997), 49.

37 Frazer Andrewes, ‘“They Play in Your Home”: Cricket, Media and Modernity in Pre‐War Australia’, The International Journal of the History of Sport 17, nos. 2–3 (2000): 93–110.

38 Bob Stewart, ‘Radio’s Changing Relationship with Australian Cricket: 1932-1950’, Sporting Traditions 19, no. 1 (2002): 49–64; Bob Stewart, ‘Seeing Is Believing: Television and the Transformation of Australian Cricket 1956-1975’, Sporting Traditions 22, no. 1 (2005): 39–56.

39 Ward, ‘ABC Television and the Development of Televised Cricket’, 86.

40 Ibid., 90.

41 Data obtained from SACA, Annual Year Book (1977/78), and VCA, QCA and NSWCA, Annual Reports (1977/78).

42 Russell Jackson, ‘The Joy of Six – the Benson and Hedges World Series Cup’, Guardian, https://www.theguardian.com/sport/blog/2014/nov/25/the-joy-of-six-the-benson-and-hedges-world-series-cup (accessed May 22, 2022).

43 Abbott, ‘A Long-Term View of Australian Cricket Payments’.

44 In 1977/78 the sponsorship revenue for the SACA was $37,500, NSWCA $23,371, and QCA $23,746.

45 Gideon Haigh, The Cricket War: The Inside Story of Kerry Packer’s World Series Cricket. (Melbourne: Melbourne University Press, 1993), 308. See also Abbott, ‘A Long-Term View of Australian Cricket Payments’.

46 VCA, Annual Report (1978/79), 17.

47 See, for example, Eric Beecher, The Cricket Revolution (Melbourne: Newspress, 1978); Henry Blofeld, The Packer Affair (London: Collins, 1978); Haigh, The Cricket War; Peter McFarline, A Game Divided (Melbourne: Hutchinson, 1977); Alan Lee, A Pitch in Both Camps: England and World Series Cricket in Australia 1978-79 (London: Stanley Paul, 1979); Austin Robertson, Cricket Outlaws: Inside Kerry Packer’s World Series Revolution (Sydney: Macmillan, 2017).

48 Freeburn, ‘A Breakaway League in Professional Cycling’.

49 Beecher, The Cricket Revolution, 28; Cashman, ‘The Packer Cricket War’, 103.

50 Haigh, The Cricket War.

51 Greenfield, ‘New Competitions and Contracts’, 727–44.

52 Cashman, ‘The Packer Cricket War’.

53 See Lionel Frost, Margaret Lightbody, Amanda Carter, and Abdel K. Halabi, ‘A Cricket Ground or a Football Stadium: The Business of Ground-Sharing at the Adelaide Oval Before 1973’, Business History 58 (2016): 1164–82.

54 Cashman, ‘The Packer Cricket War’, 106.

55 VCA, Annual Report (1977/78), 19.

56 Robertson, ‘Cricket Outlaws’.

57 The actual attendance was estimated at more than 50,000, as the gates were thrown open when capacity was reached, with thousands queuing outside. See Cashman, ‘The Packer Cricket War’, 108.

58 Cashman, ‘The Packer Cricket War’, 107.

59 Haigh, The Cricket War; Joyce Greig and Mark Greig, Tony Greig: Love, War and Cricket (Sydney: Macmillian Australia, 2013).

60 Haigh, The Cricket War, 160.

61 Braham Dabscheck, ‘The Professional Cricketers Association’, Sporting Traditions 8, no. 1 (1991): 2–27.

62 VCA, Annual Report (1979/80), 19.

63 Tasmania is not included in this study. While the TCC was affiliated to the ACB, it did not host any international cricket during the period, and played a reduced roster of Shield cricket. ACB distributions were negligible until 1982 when the ACB granted Tasmania full membership to the state cricket competitions (For details, see Ric Finlay, ‘Cricket’, Companion to Tasmanian History (2005), https://www.utas.edu.au/tasmanian-companion/biogs/E000238b.htm (accessed February 2, 2022).

64 See, for example, Vivien Beattie, Bill McInnes and Stephanie Fearnley, ‘A Methodology for Analysing and Evaluating Narratives in Annual Reports: A Comprehensive Descriptive Profile and Metrics for Disclosure Quality Attributes’, Accounting Forum 28, no. 3 (2004): 205–36; Helen Irvine and Michelle Fortune, ‘The First 25 Years of the Queensland Rugby Football League: Claims to Legitimacy in Annual Reports’, Accounting History 21, no. 1 (2016): 48–74; Abdel K. Halabi, ‘Social Responsibility by Australian Football Clubs in the 1890s’, Journal of Management History 25, no. 3 (2019): 384–400; Josephine Maltby, ‘Hadfields Ltd: Its Annual General Meetings 1903-1939 and Their Relevance for Contemporary Corporate Social Reporting’, British Accounting Review 36, no. 4 (2004): 415–39.

65 Data for this table was obtained from NSWCA, Annual Report (1974/75–1981/82); QCA Annual Reports (1974/75–1981/82); SACA, Year Books (1974/75–1981/82); VCA, Annual Reports (1974/75–1981/82); WACA, Annual Reports (1974/75–1981/82).

66 QCA, Annual Report (1977/78), 4.

67 VCA, Annual Report (1978/79), 17.

68 QCA, Annual Report (1978/79), 4.

69 Cashman, ‘The Packer Cricket War’, 108.

70 In 1977 the loss was $21,186; in 1978 it was $57,669 (NSWCA, Annual Reports).

71 QCA, Annual Reports (1977/78, 1978/79).

72 VCA, Annual Reports (1977/78, 1978/79).

73 WACA, Annual Reports (1977/78, 1978/79).

74 WACA, Annual Report (1977/78), 4.

75 Ibid., 16.

76 SACA, Year Book (1977/78), 42.

77 WACA, Annual Report (1978/79), 14.

78 The increases in the revenues were 87% (SACA), 250% (NSWCA), 115% (VCA), 210% (QCA), and 84% (WACA).

79 NSWCA, Annual Reports (1979/80, 1981/82).

80 QCA, Annual Reports (1979/80, 1981/82).

81 VCA, Annual Reports (1978/79, 1980/81).

82 QCA, Annual Reports (1978/79, 1981/82).

83 WACA, Annual Reports (1979/80, 1980/81).

84 QCA, Annual Report (1981/82), 23.

85 See Dabscheck, ‘The Professional Cricketers Association’; Whimpress, ‘On Cricket’; Ward, ‘ABC Television and the Development of Televised Cricket’.

86 Keith A.P. Sandiford, ‘The Professionalization of Modern Cricket’, The International Journal of the History of Sport 2, no. 3 (1985): 270–89.

87 Elizabeth Green, Felix Ritchie Peter Bradley, and Glenn Parry, ‘Financial Resilience, Income Dependence and Organisational Survival in UK Charities’, Voluntas 32, no. 5 (2021): 992–1008.

88 Inigo Garcia-Rodriguez, M. Elena Romero, and Marcos Santamaria-Mariscal, ‘The Role of Boards in the Financial Vulnerability of Nonprofit Organizations’, Financial Accountability and Management 37, no. 3 (2021): 237–61.

89 Xintong Chen, ‘Nonprofit Financial Resilience: Recovery from Natural Disasters’, Voluntas 32, no. 5 (2021): 1010.

90 Plumley et al., ‘Howzat?’.

91 VCA, Annual Report (1977/78), 21.

92 See Lee et al., ‘An Unfolding Model of Voluntary Employee Turnover’.

93 VCA, Annual Report (1977/78), 20; SACA, Year Book (1978/79), 43; WACA, Annual Report (1977/78), 2.

94 See VCA, Annual Report (1977/78), 20, and NSWCA, Annual Report (1977/78), 90.

95 QCA, Annual Report (1977/78), 4.

96 Bradbury, ‘Monopsony and Competition’; Fort, ‘Major League Baseball Is Just Like McDonald’s?’, Hong and Sullivan, ‘Towards an Idea-Centered, Principle-Base Design’.

97 Fligstein and McAdam, ‘A Theory of Fields’.

98 QCA, Annual Report (1979/80), 4.

99 VCA, Annual Report (1979/80), 23.

100 Plumley et al., ‘Howzat?’.

101 Calculated using https://www.rba.gov.au/calculator/.