ICC news March 20, 2017 ‘New ICC finance model arbitrary, not agreeable’

Rahul Johri (left) has spelt out the BCCI’s objections to the new financial model in an email to the ICC © SLC

The ICC’s new constitution will “convert” the nature of the world governing body and “adversely affect” the autonomy of its members, according to the BCCI, one of the strongest opponents of the proposed document.

In a comprehensive communication of its preliminary observations on the proposed ICC constitution, the BCCI said the changes were “vague” and “unclear”. The BCCI expanded on its specific reservations and also provided suggestions on various aspects, including the powers of the ICC chairman, membership criteria, the make-up of the board of directors and, in greatest detail, the proposed new financial model.

“The proposed ICC constitution seeks to convert the ICC from a members’ organisation to a supra-national regulator,” Rahul Johri, the BCCI CEO wrote in the email, sent on Sunday evening to Iain Higgins, the ICC chief operating officer. “This is a fundamental change in the nature of the ICC that adversely affects the autonomy of its members.

“Further, several of the proposed changes are vague and unclear in their purport and intended operation. Given that one of the stated objectives behind the proposed changes is to bring in clarity and transparency, it is imperative that there is complete clarity on all the proposed changes so that members can properly understand the same before formulating their position thereon.”

In his email, a copy of which has been seen by ESPNcricinfo, Johri laid out the BCCI’s key observations, which include taking away the vote of the ICC chairman at the board of directors’ table (previously used as a tie-breaker), making the membership committee independent and external to the ICC, and reducing the Associate presence on the board from three to one, and including a non-voting former player.

Though these are significant, it is the BCCI’s objections to the new financial model that are of most pressing interest. The BCCI called the new model, to replace one put in place by the Big 3 in 2014, “arbitrary” and not “agreeable”.

The objections were essentially an expansion on the arguments first presented by Vikram Limaye at the ICC board meeting in February, when the new constitution was adopted in principle. Limaye, a member of the Committee of Administrators (CoA) overseeing BCCI operations currently, was the board’s representative at the February meeting and said the BCCI could not accept the financial model because it was not backed by a scientific formula.

In the new financial model, the BCCI takes the biggest revenue cut among all the boards from the Big Three model. The ICC said it was built on the basis of good faith and equity, but the BCCI said in its communication that any new model would need to be backed by “accepted and articulated principles” of finance, and importantly take into account the Indian board’s contribution to the ICC revenues.

“The ICC is seeking to change the existing financial model without having any scientific formula or technical analysis behind the proposed changes. It is a fundamental attribute of any resource allocation system to first collect information and then allocate resources based on the information, priorities and a defined methodology following appropriate principles. The move to propose changes to the existing financial model without carrying out the aforesaid exercise is an arbitrary one.”

Under the Big Three model, Full Members received a contribution cost for participating in the ICC events. The percentages were calculated based on the “contribution” of each Full Member to ICC revenues, though the real formula behind the numbers was never revealed. In the new model, as revealed by ESPNcricinfo, the contribution costs was removed and instead a set figure was allocated to each of the 10 Full Members along with two Associates – Ireland and Afghanistan. The ICC publicly said there was no real calculation behind each figure.

But Limaye in February, and Johri now, pointed out that the ICC could not repeat the same mistake twice. “Since no methodology has been articulated in support of the proposed new financial model, we are unable to evaluate the same on any recognised and/or accepted parameters,” Johri wrote. “Any discussion on the proposed new financial model has to be based on clearly articulated and acceptable principles which recognise the relative contribution of BCCI to the revenues of the ICC. For the above reasons, we are not agreeable to the proposed new financial model.”

The BCCI went on to question the accounting procedure on which financial models had been based, concerns reported by ESPNcricinfo in February. One of the main issues was the ICC’s costs for it events, which had in the 2014 model been fixed but had, in reality, increased and eaten into the revenues handed to members.

“The version of the 2014 model that supposedly reflects the reality (“Revised 2014 Model”) is actually a different model altogether and does not present an accurate and comparable picture to members relative to the existing financial model,” Johri said in the email. “As per the Revised 2014 Model, the Event Cost/Expenses has been increased to USD 610 million despite the gross revenue remaining at USD 2.5 billion as envisaged under the existing financial model. There is no explanation for this increase in Event Cost/Expenses. We need to understand why this increase in Event Cost/ Expenses has taken place.”

The new financial model, along with an amended draft constitution and governance structure, was accepted in principle by the ICC Board during the meeting in February. Seven Full Members voted in favour of the changes which were drafted by a five-member steering committee led by former ICC chairman Shashank Manohar. The BCCI and Sri Lanka Cricket were the only boards to vote against those resolutions while Zimbabwe Cricket abstained. Members were invited to send their observations on the proposals and the matter will be taken up at the next meetings in April.

But the absence of Manohar, a driving force behind the new constitution, will have an impact on how those meetings go. Manohar resigned abruptly from his post last week, citing “personal reasons”. He had met the CoA the evening before his resignation and discussed the financial models with them.

Nagraj Gollapudi is a senior assistant editor at ESPNcricinfo

[“Source-espncricinfo”]