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Cricket Australia On Commercially Risky Path With New Pay Deal, Argus Says

The businessman who "reshaped Australian cricket" said that the game has "embarked down a commercially risky path by committing ­itself to paying players a share of revenue it has yet to secure," according to Chip Le Grand of THE AUSTRALIAN. Former mining company BHP Billiton Chair Don Argus, whose "landmark" Cricket Australia review resulted in an "over­haul of how Australian teams are selected, led and prepared," said that "if cricket were a ­normal business, the pay deal would be scrutinised by financial regulators." Argus added that "any sustainable pay model would be based on earnings rather than revenue." He questioned whether players under­stood the difference and whether, in strict accounting terms, last week's in-principle wage deal had "exposed the game as a going concern." Argus said, "If you were in business and you committed an expense to a revenue base you haven't got, you could be in trouble with the regulators. It is the accounting convention and the way business goes about it: you generate revenue, then you deduct your costs and your free cash flow is the money you can actually use to develop your game." The pay deal between CA and the Australian Cric­keters' Association assumes revenue of A$1.68B ($1.33B) from broadcast rights, sponsorship and gate receipts in the next five years. With the game "yet to sell" its TV broadcast rights for "most of this period," about 80% of the forecast revenue is ­unsecured (THE AUSTRALIAN, 8/8).

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