Selling them short: PCB’s kit deals

Published August 2, 2015
In the Adelaide Oval, Nike takes on CA
In the Adelaide Oval, Nike takes on CA

As the Indian and Pakistani cricket teams lined up at the newly re-designed Adelaide Oval in front of over 40,000 fans in the second match of the ICC World Cup, the mismatch couldn’t have been greater. India were defending champions while Pakistan were rooted to the bottom of the rankings; India were carrying their full complement of players while Pakistan had just lost their premier bowler; India’s kit sponsorship was worth in excess of $60 million while Pakistan’s kit was worth nothing.

In the Adelaide sun, it was the commercial disparity between Indian and Pakistani cricket that stood out. While the Board of Control for Cricket in India (BCCI) successfully leveraged its brand, the Pakistan Cricket Board (PCB) severely undersold what is possibly the country’s easiest-to-sell product: Pakistan cricket.

Apparel deals represent one of the cornerstones of how modern sports organisations make their money. Along with broadcasting rights, gate receipts and sponsorships, these deals are crucial streams of revenue — funds that are typically reinvested into the national team, the domestic system and board operations.

The basic dynamics of an apparel deal are quite simple. The manufacturer provides the equipment worn by the team. In return, they get brand recognition and advertisement any time the team plays, as well as revenue each time fans of the team buy replica jerseys. In recent years, apparel deals have become so influential that it is often claimed in sports such as football that certain players are only bought to “sell t-shirts.” Consequently, most apparel deals with major sporting sides involve the kit manufacturer paying considerable sums to a sports team for the right to be their official apparel provider.

The apparel deal between the Board of Control for Cricket in India (BCCI) and Nike, the world’s preeminent sporting goods company, represents one such lucrative partnership.

Cricket is Pakistan’s most marketable commodity but the current apparel deals are based on barter

Indian players at the World Cup donned jerseys that were constructed from recycled plastic bottles and were more technologically advanced than anything ever worn by the Indian team. To land the rights for producing the official Indian jersey, Nike not only paid over $60 million to the BCCI, it also launched an expensive advertisement campaign, complete with a grammatically incorrect hashtag.

At the World Cup, the Pakistani side was dressed by CA Sports, one of the pre-eminent sporting manufacturers in the cricketing world. The PCB had a long-standing apparel deal with CA; the last contract inked between the board and CA ran from 2014-2016, and was valued at around Rs35 million (with Rs 2.5 million in performance bonuses).

As per the terms of the deal, CA was to provide apparel and formal clothing items free of cost to both the men’s and the women’s national teams, the A teams, and the under-19 teams, and paying an additional sponsorship fee for this. Payments were to be made in instalments: Rs20 million in the first six instalments, followed by Rs7.5 million in the next six, and Rs7.5 million in sponsorship.

This relationship extended to the domestic sphere too: clothing and equipment used in domestic, regional, academy and practice matches were also provided by CA. But these were purchased by the PCB from them, at a cost of about Rs10million per year.

The right to be included on some of Pakistani cricket’s most valuable ‘real-estate’ — the national team jersey — was one that Hunt got for nothing more than the cost of production.

Soon after the 2015 World Cup, CA unexpectedly terminated its deal with the PCB. As per financial transaction details between the two, CA had paid the PCB a little over Rs9 million (minus formal clothing) while it had earned roughly the same amount from sales. In effect, the PCB was handing over its apparel revenue stream for no money.

At the time this piece went to press, both the PCB and CA had not provided comments on the sudden breakdown of their relationship despite repeated requests. Industry insiders suggest however that the conflict was over the PCB failing to protect CA’s copyrights in terms of allowing replica (unlicensed) apparel to proliferate.

For its part, the PCB had to quickly find an alternative manufacturer before the 2015 tour to Bangladesh, and it found one in a local company named Hunt. PCB officials had told journalists at the time that due to the hurried nature of their situation, this deal too had to be rushed through.

But the air in Sialkot — one of the global capitals of sports manufacturing — carries a different version of events.

Several sportswear manufacturers in Iqbal’s hometown, in separate meetings, complained off the record about not being able to win a contract with the PCB. The only one willing to speak on the record was Umer Malik, the owner and CEO of internationally recognised sporting goods brand, Malik Sports.

“Until about five years ago or so, the PCB’s (commercial deals) process would be to take all potential sponsors on-board and release tenders before having a bidding process. However, no tenders have been announced of late, and both the CA and Hunt deals took place without any tenders being issued,” claims Malik.

“In fact, the CA deal was based more on mutual understanding than a proper commercial process. As for the Hunt deal, I know the board claims that they didn’t have much time, but it’s a fact that my company, as well as several others, are more than capable of providing the quick production turnaround the board needed back then.

“But instead, no other manufacturer or sponsor was approached when the Hunt deal was taking place. What’s even more surprising is that Hunt isn’t even strictly involved in manufacturing; they are primarily retailers. It is my opinion that Hunt only got this deal because of their personal relationship with people working inside the PCB,” he asserts.

Regardless of why the deal went through, it was officially a barter deal. Unlike the CA deal which effectively became a barter deal, sources within the PCB confirmed that no exchange of money took place over the deal with Hunt. The right to be included on some of Pakistani cricket’s most valuable ‘real-estate’ — the national team jersey — was one that Hunt got for nothing more than the cost of production. In other words, what Hunt extracted from the PCB is unprecedented marketing and brand awareness in return for giving out free uniforms to the best athletes in Pakistan.

And that isn’t the extent of the problems with Hunt-made equipment and apparel.

Umer Malik was amongst several people in Sialkot to claim that the equipment being provided by Hunt was not up to international standards. Given that Sialkot serves so much of the world’s sporting equipment needs, it seemed surprising that the most important national jersey would be of “inferior” quality.

But these notions were given credence by a current member of the national cricket team. Speaking on condition of anonymity, he confirmed that the Hunt jerseys they wore in Bangladesh lack anti-sweat technology — colloquially referred to as ‘dry-fit’ equipment, which is the name of Nike’s brand of such equipment — that has become standard in modern sports gear.

To get some perspective on this, even the unpaid, under-resourced and under-valued members of the Pakistan hockey team wear ‘dry-fit’ shirts for their official kits.

The hockey team, which currently has a barter deal as well, also shows up the PCB’s short-sightedness in paying for equipment for their domestic needs. Thanks to increasing coverage on electronic and social media, most Pakistani domestic cricket sides get far more coverage than the national hockey team ever does. It seems preposterous that the PCB would be conducting deals in 2015 that are operating on the basic barter system.

Indeed, the PCB’s commercial arrangements across several other areas are the subject of considerable intrigue within their respective sectors. However, despite numerous requests and several off-the-record interviews, most organisations which Dawn spoke to declined to even have their names mentioned in this piece. What all of them held in common was the allegation that the PCB had made several commercial deals which seemed to be undervaluing their product.

Which finally leads to the biggest question of this affair – are these undervalued deals the result of mere incompetence, or malice? Is the PCB merely failing to see the remarkable opportunities that it has, or is it because there is more to it than meets the eye? For both the apparel deal as well as the other issues, the PCB was not able to provide comments on the various details.

And it doesn’t look like the problems are ending any time soon.

One of the reasons India has been ruling the cricketing world is the sheer economic might of its tours, something that the PCB has not been able to earn off for a long while. Things seemed to be slowly changing this year, with the PCB chairman Shahryar Khan leading efforts to secure an Indian tour to the UAE.

But yet another PCB commercial deal now seems to have jeopardized what is the biggest moneymaking opportunity in modern cricket. The (also) hastily signed television deal for the next five years with Ten Sports has put the board in a direct clash with the BCCI, which has severed relations with the channel. A month after the deal, the Indian board made clear that to the PCB chairman that it had troubles with the broadcaster, and would consider cancelling the series altogether. In reply, the PCB said it would ask for the issue to be taken up by the ICC. As things unfold, it would be interesting to see if the PCB would give up the biggest pay cheque in cricket over its TV deal.

The greater tragedy is that the only financial scandals related to the PCB that capture the public attention are the sort where it is revealed that various ex-cricketers are being paid a lot of money for doing nothing at all. However, in the grander scheme of things, such exorbitant salaries are often just mere drops in the ocean. The amounts in lost earnings due to poorly valued deals are far greater in value, and cause exponentially greater harm.

In a world where teams are increasingly judged on their financial strength as much as their on-field prowess, the PCB is putting up far worse numbers than its cricket team. Should this trend continue, there will soon be a time when the cricket team would be able to do nothing about it.

Rehan-ul-Haq is a freelance sports writer, journalist and commentator. He works as a sports analyst with PTV Sports. He tweets as @Rehan_ulhaq

Published in Dawn, Sunday Magazine August 2nd, 2015

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