An in depth analysis of the 2017 Australian Cricket Pay Dispute

Published 18 August 2017 By: Braham Dabscheck

Australian flag on white background

On 30 June 2017, a Memorandum of Understanding (MOU), a five-year deal, negotiated between Cricket Australia (CA) and the Australian Cricketers’ Association (ACA), came to an end. The parties were unable to reach a new agreement; they had spent most of the period since December 2016 accusing each other of negotiating in “bad faith[1]. In the absence of a new MOU, CA locked out (i.e. prevented from working) approximately 230 players whose contracts had expired. There were approximately 90 players who were on multi-year contracts whose employment was maintained.

On 3 August, the parties finally announced the Heads of Agreement of a new MOU.[2] The lockout lasted 33 days. It is the longest industrial dispute in the history of Australian sport. Though in saying this, there has only been one other example of such a dispute since the emergence of permanent player associations in Australia, beginning in the 1970s.[3] That was the refusal of the Matildas, Australia’s women’s national football/soccer team, to tour the USA in 2015 because of late and “inadequate” payments.[4] There is a precursor to this cricket dispute. The ACA formed in 1995 and found it difficult to gain recognition from the then Australian Cricket Board (ACB). A threatened strike in a One Day International in 1997 resulted in the ACB granting recognition and the subsequent negotiation of Australian Cricket’s first MOU in 1998.[5]

This article examines the working out and eventual resolution of this dispute, and considers its broader significance for Australian professional team sports.  Specifically it looks at:

  • The background to the dispute

  • Cricket Australia’s approach to negotiations

  • The response of the Australian Cricketers’ Association

  • The lockout period

  • The final resolution

 

BACKGROUND

The first and subsequent MOUs between CA and ACA have all been based on revenue sharing. Players will receive a percentage of revenue they are “responsible” for generating.

The 2012 – 2017 MOU operated on the basis of projected revenue and a subsequent “player pool” of income for players. There is also an adjustment ledger for extra income for players if (actual) revenue exceeds projected levels, to be paid at the end of the MOU.[6] Players were entitled to receive an additional $58 million. This was to be shared between all male players, whether Australian contract, state or Big Bash (Twenty/20), on a pro rata basis. Female players were not covered by the MOU, being employed under a separate agreement, and not entitled to any adjustment ledger payments. The willingness of CA to meet its “obligations” of $58 million under the adjustment ledger became a major sticking point in the dispute.

In October 2014, CA appointed David Peever, a former managing director of Rio Tinto Australia as its Chairman. He was the first person with a non-state cricket association background to fill such a position. According to the The New Daily, at a Perth Mining conference in 2012 he said industrial relations should be based on “direct engagement between companies and employees” without interference from “the competing agenda of a third party to extend its reach into areas best left to management”. [7] Peever appointed a number of people with Rio Tinto and other “high level” corporate connections to CA.[8]

Following the lockout Peever published an article where he expressed his outrage at the stance adopted by the ACA. He said

The suggestion that CA’s push to modify the player payments model has nothing to do with genuine issues facing the game is an insult to everyone involved at CA, including other members of the Board…the State and Territory Associations who understand and support the need for change…and all those…with messages of support because they see first-hand the chronic underfunding of the game at the grassroots level, in particular junior cricket…CA has put what in any normal circumstances would be regarded as a very generous offer on the table…The ACA has responded by not only rejecting that proposal (and recent concessions) out of hand, but by launching a campaign of such sustained ferocity that anyone could be forgiven for thinking that CA was proposing the reintroduction of slavery rather than healthy pay rises.[9] 

(Note: a full copy of Peever’s statement is available here[10])

The ACA appointed Alistair Nicholson as its CEO in September 2014. He had played over 100 games with the Melbourne Club in the Australian Football League (AFL) from 1997 to 2006. Upon retiring he had pursued a career with a sports consultancy firm before being appointed to the ACA. He replaced Paul Marsh who had moved to the Australian Football League Players’ Association (AFLPA) to secure a revenue sharing model as operated in Australian Cricket. The payment model used in the AFL was based on a salary cap of a specified monetary amount. In June 2017 the AFL and AFLPA entered into an agreement where players would receive a 28 per cent share of player generated revenue.[11]

The ACA called on the services of Greg Combet, a former Secretary of the Australian Council of Trade Unions (2000-2007), a former Member of the National Parliament and a Minister in the Rudd and Gillard Labor governments from 2007 to 2013. He came to prominence in co-ordinating a campaign that resisted an attempt by the Howard Liberal National Parties coalition government to deunionise the Australian waterfront in 1998.[12]

 

A BARRAGE OF BUMPERS: CRICKET AUSTRALIA’S APPROACH

CA decided to employ an aggressive approach in its dealings with the ACA. It sought to bypass the ACA and negotiate with players individually. This process began in December 2016 when it cancelled a scheduled meeting with the ACA because of what it regarded as an over reaction and a sign of bad faith by the ACA when it asked female players if they intended to get pregnant before signing contracts for a forthcoming tournament.[13] The matter was referred to the Fair Work Ombudsman. Its website states that pregnancy is an attribute protected from discrimination at work.[14]  The CA claimed that it had “legal advice it can submit to the Fair Work Ombudsman today that recommends that its policy – insisting women confidentially disclose pregnancy for health and safety purposes – is in abidance with employment law and would only constitute discrimination if it were abused.[15]  However, subsequent contracts with female players did not include such a clause.[16]

In subsequent meetings, CA maintained its hard line with the ACA. It refused to provide projections of future revenue as per previous MOUs. When the ACA complained about this or other matters CA accused it of negotiating in bad faith. When the ACA sought mediation, per the MOU, CA retorted there was no need to do so given ACA’s failure to participate in meaningful negotiations. Without having reached an agreement with the ACA, CA approached leading Australian contracted (Test) players with the offer of three-year deals that precluded them from playing in the Indian Premier League (IPL). Players approached the ACA who advised them to not sign any contracts until a MOU had been completed. Players did not like the prospect of losing out on “lucrative” income available from the IPL.[17]

In March 2017, CA announced details of its offer to players. Female international players’ would have their average income for the next season increased from $80,000 to $179,000 (anticipated to be $210,000 by 2021). The average income of domestic female players would increase from $22,000 in 2016/17 to $52,000 in 2017/18. As of July 2017, the Fair Work Commission national minimum adult wage is $694.90 a week, or $36,135 per annum.[18] The average retainers for male international players would increase from $703,000 to $810,000, with an average of $1.45 million by 20122; and for domestic players it would increase from $199,000 in 2016/17 to $235,000 in 2021/22. Total payments over the next five years for both male and female players would be $419 million.[19]

This $419 million figure is deceptive. Mention has been made above concerning the $58 million available to players under the adjustment ledger of the 2012-2017 MOU. CA wanted to use half of it ($29 million) to “subsidise” payments in the above paragraph. This meant that CA, in effect, was offering players $390 million. CA said that amounts in the adjustment ledger would not be paid to domestic players; they would only be available for international players. With respect to the future, a cap would be set on such payments at $20 million, with $16 million for males and $4 million for females.

As the dispute dragged on, CA told players who were on one-year contracts that their employment would be terminated and they would not receive any income unless they agreed to the terms/contracts being offered.[20] CA calculated that the threat of the loss of income would induce players to sign contracts and abandon the ACA and/or force the ACA to agree to its offer.

 

DUCKING AND WEAVING, THEN BUILDING AN INNINGS: THE AUSTRALIAN CRICKETERS’ ASSOCIATION RESPONDS

Beside the issue of gaining recognition, the 1997 dispute between the ACA and the ACB had been over Test players campaigning for higher income for domestic players. This was to provide an incentive to pursue a long-term career in cricket and ensure a steady supply of capable and hardened players to replace Test players, when they retired or lost form. This would help to maintain Australia as a leading cricket nation. This 2017 dispute was a rerun of both these issues. The ACA, and its international players, resented CA’s attempt to deny domestic players a share in the income available from the adjustment ledger. In addition, the ACA was critical of CA’s hard line approach in negotiations, the non-provision of financial data and going behind its back in approaching players individually and attempting to sign them onto contracts.

Initially, the ACA was surprised and put on the back foot by the tough stance of CA. It quickly reacted and developed a four-pronged response. First, it made a “modest” demand for a new MOU. Under the 2012-2017 MOU, players were entitled to receive between 24.5 and 27.5 per cent of revenue, depending on performance on the cricket field. This MOU did not include payments to female players. Including female players, the ACA asked for a 22.5 per cent share of revenue, with another 22.5 per cent set aside for grass roots cricket and 55 per cent for CA. As much as CA supported grass roots cricket this was a level of funding it was not prepared to allow.

A CA spokesperson said

The ACA’s proposal would make the flexibility of the revenue model even worse…No business could operate with that lack of flexibility and no other business does.[21]

Second, it established a hardship fund to help players who might experience financial difficulties if CA should proceed with a lockout. Some wealthy individuals provided the ACA with financial support, which would be paid back once the dispute came to an end, to bankroll such payments.[22]

Third, the ACA had players sign over their intellectual property rights, established a company called the The Cricketers’ Brand and sent one of its representatives to India looking for sponsors[23] This tactic not only held out the prospect of “outside” sources of revenue for players and the ACA but also precluded CA, its sponsors and broadcasters using the images of players for promotion purposes. To do so they would need to enter into commercial agreements with the The Cricketers’ Brand.

Fourth, following the release of Cricket Australia’s Annual Report for 2015/2016, the ACA mounted an attack on payments to CA executives and growth in its contingency fund. The ACA said that $5.7 million was spent on executives compared to $4.23 million on elite female players; and CA’s contingency fund increased from $10.9 million to $129.3 million over four years.[24] An examination of CA’s Annual Report reveals that between 2014/15 and 2015/16 expenditure on Operations had increased from $50.97 million to $56.68 million and on Administration from $27.15 million to $32.19 million.[25]

As the end of the MOU deadline approached, meetings were held in an apparent attempt to resolve the dispute. CA said it was prepared to allow all players to share in the adjustment ledger payment that was available to players, but was silent on whether this would be the full amount ($58 million), or only half (see above). CA also made another attempt to sign players on individual contracts. The “sharing” offer did not constitute a concession that would have any monetary impact on CA and another attempt by CA to negotiate with players on an individual basis only served to further anger the ACA. It rejected the “offer”.[26]

 

PULLING UP STUMPS: THE LOCKOUT

With the expiry of the MOU on 30 June, CA commenced the lockout and stopped paying players who were not on long-term contracts. Despite the lockout, CA enabled such players to attend training centres to maintain their fitness. CA announced an Australia A-team for a forthcoming tour of South Africa. The players decided not to tour in solidarity with their unemployed colleagues.[27] As one day followed another pressure mounted on CA from sponsors and broadcasters to resolve the dispute so that they could obtain access to players for promotions associated with the forthcoming Ashes series. Australia was due to play Test Matches in Bangladesh in August and September and One Day games in India in October. Indian broadcasters indicated that they would not be happy if the games in India were cancelled. The problem for CA was that if the Indian games were cancelled and, if the Ashes series did not proceed, in addition to its implications in Australia, not broadcasting the Ashes into India would result in substantial losses of potential revenue.[28]

 

INTRODUCING SPIN: CRICKET AUSTRALIA BLINKS

James Sutherland, the CEO of CA announced on 27 July, that CA would recommence negotiations with the ACA and if a new MOU was not reached by the following Monday, 31 July, it would enter into a formal arbitration process.[29] Arbitration could not occur without the agreement of the ACA and no one was mooted as a possible arbitrator and what would be the terms of his/her appointment. CA had been unable to peel away players from the ACA with individual contracts and was receiving expressions of disquiet from sponsors and broadcasters both in Australia and India. It decided it needed to negotiate.

An agreement was not reached by the following Monday, and no arbitration took place. A new MOU was agreed to on Thursday 4 August in which CA capitulated to the demands of the ACA. Though this is not clear from the documentation provided, CA (must have) opened its books to the ACA.

The 2017 – 2022 MOU includes female players and embraces a revenue sharing model of a guaranteed 27.5 per cent plus an extra 2.5 per cent dependent on team performances. This 30 per cent figure is based on a restricted definition of income, which is equal to the 22.5 per cent the ACA demanded hitherto (see above) on a more expansive definition of income. The income available under the adjustment ledger of the 2012 – 2017 MOU, $58 million, will be allocated to all male players, with none of it carried over into the new MOU.

Players will receive a 27.5 per cent share of income above the forecast level to be shared by both male and female players. This adjustment ledger income will, depending on revenues generated, fund $25 million from the ACA for grass roots cricket, to be matched by extra income from CA in a programme administered by both parties. The ACA’s “The Cricketers’ Brand” is to be maintained and a joint Standing Scheduling Advisory group has been established. Players will receive back pay from 1 July; CA had enabled them to attend training centres.

The income available to players under the new MOU, ignoring any possible income from the adjustment ledger is forecast to be $500 million over the next five years.[30] This is $81 million more than CA’s initial offer of $419 million; and if we exclude $29 million that CA sought to use from the adjustment ledger to “subsidise” payments for 2017 to 2022, it is $110 million higher. To the extent that cricket is a game where we like to know the final score; the ACA won this contest by an innings and $110 million.

 

COMMENT

CA embarked on an aggressive policy in taking on the ACA as the 2012-2017 MOU was about to expire. It adopted a tough and uncompromising stance across the bargaining table to shake up and disorient the ACA. To further undermine the ACA it continually sought to enter into negotiations with players on an individual basis. If this latter strategy had succeeded the ACA would have been reduced to impotence; its very existence would have been called into question.

The ACA was able to respond to these pressures. It quickly engaged its members and “educated” them to the issues involved; not one player signed a contract offered to them by CA. As with the 1997 dispute, leading players spoke out against CA and the need for solidarity. To the extent that there may not have been strong bonds between officials and members of the ACA at the beginning of this dispute, it had certainly strengthened them by the end. CA’s aggressive stance had had an unintended side effect; it strengthened the ACA’s viability as an organisation. Its ability to withstand this lockout will be remembered as a great victory, not only for the ACA, but also in the annals of player associations in Australia. In this dispute and the negotiation of the AFL collective bargaining agreement, both player associations found that engagement of their members enhances their position at the bargaining table. In the past, Australian player associations have willingly acceded intellectual property rights to their respective “leagues”. The ACA’s obtaining such rights from members enhanced its bargaining power, and may have a demonstration effect for other Australian player associations.

At another level, this dispute is an indication that Australian sport is moving towards an American model involving long drawn out lockouts or strikes, especially where there are revenue sharing models or salary caps in place.[31] The National Rugby League and the Rugby League Players’ Association are currently experiencing difficulties in agreeing on a salary cap in negotiating a new collective bargaining agreement.[32] While statisticians advise against basing general statements on one observation, this cricket dispute may be a portent of things to come in Australian sport.

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Author

Braham Dabscheck

Braham Dabscheck

Braham Dabscheck is a Senior Fellow, Faculty of Law, University of Melbourne, Australia.

Previously, he taught industrial relations at the University of New South Wales for 33 years until 2006 and established himself as an international expert in the field. Among his extensive publications are almost 80 book chapters and articles on industrial relations, economic and legal aspects of sports in Australia, Europe (including the United Kingdom), Japan, New Zealand, the United States and Zimbabwe.

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