The United Cricket Board of South Africa (UCB) has been bailed out of its financial troubles by an extra R25-million of sponsorship money.
The game’s leading sponsors are stumping up an extra R25-million this year to help stabilise the UCB’s rickety finances, which had it on the brink of a financial crisis a few months ago.
The sport faced a predicted loss of between R27-million and R48-million for the last financial year and Haroon Lorgat, the outgoing treasurer, was moved to warn the general council that “if we don’t create a new, sustainable business model, then we have 18 months before we go out of business — maximum”.
Don McIntosh, the financial manager, said: “The combined reserve position at the start of the 2004/05 season was approximately R38-million. If we went about business accepting a R48-million loss, we would be bankrupt by around February 2006. Due to us not owning land or buildings, lenders will not be falling over each other to assist us.”
The UCB somehow posted a R16-million profit at its AGM two weeks ago. After the comments of Lorgat and McIntosh, whose hands were on the purse strings, it did not make for unmitigated confidence.
But a ray of light has been provided by commercial manager Steve Elworthy, who has been busy reselling the game in the boardrooms of cricket’s most loyal backers.
The 2006/07 season will feature tours by India and Pakistan, and a cut from the ICC Champions Trophy and the World Cup in the West Indies. With the television exposure, and the UCB’s earnings from broadcasting rights, sponsors are eager to get their share of the South African team.
The departure of MTN to the 2010 Soccer World Cup fold caused a wobble, but the other members of the triumvirate that has dominated the sponsorship of South African cricket — Castle Lager and Standard Bank — have been asked to reach deep into their pockets, while the UCB has restructured its sponsorship framework.
The UCB recently decided to follow overseas trends by seeking separate sponsorship of the team and the event. The English team is sponsored by Vodafone, but they play in the NatWest Series or the npower Test series, and South Africa wants to follow suit in order to secure more cash.
Standard Bank, whose marketing policy is moving away from event sponsorship, was convinced to remain the one-day event sponsor for one more year. SAB-Miller will continue Castle Lager’s backing of both the Test team and the home series they play in, while South African Airways is about to come on board.
UCB sources have claimed that over the next three years, R300-million of sponsorship will pour into its coffers, R25-million rand more a year than previously.
That’s quite a lifeline, but not one that allows the UCB to bungee jump with impunity. The challenge it faces is to tighten financial controls and crack down on the wastefulness that caused the initial flutters. A financial indaba, originally scheduled for the week before the AGM but postponed because of the SAA strike, will still be held.
Lorgat told the board: “Our needs, costs and demands are greater than our income. I told the general council that we could wait until our backs were really to the wall before we did something, or we could do something now before we reach that crisis point.
“We will look at everything, from the national team to club cricket and whether we should drive a combie instead of flying.” — MPW