Turn BCCI into a company to stanch its many leaks
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Historian Ramachandra Guha’s missive accompanying his resignation from the Supreme Court-nominated four-member Committee of Administrators to implement the Lodha Committee reforms is only the latest piece of criticism related to the working of the Board of Control for Cricket in India (BCCI). Guha’s letter, accusing BCCI of various acts of commission and omission including preferential treatment of top stars, neglect of domestic cricket and failure to address conflict of interest issues, only serves to reiterate how little the board has changed despite a Supreme Court-mandated clean-up. While it is safe to state that the rot goes deep, it is also possible that BCCI’s very structure and configuration rules out any possibility of major change.
India’s cricket board is an antiquated body, first formed in 1928 when it was registered under the Tamil Nadu Societies Registration Act. Over time, it has evolved from the cozy monopoly of influential patrons appointing captains at will and selecting teams blatantly based on parochial terms to one that oversees a gigantic entertainment machinery generating crores of rupees every year which has placed it among the richest sports bodies in the world. Yet, in terms of its working, little has changed.
There has never been any effort to clearly define the terms of engagement, the roles of the various people involved as well as the demarcation of revenues and expenses. Witness for instance the sheer bafflement with which Sunil Gavaskar, one of those named in Guha’s letter, has reacted to the charge of conflict of interest. Rahul Dravid too must be similarly mystified. It is difficult to accept that both these men would have knowingly flouted any norms of behaviour. If, as Guha claims they did, it has to be because they were unaware of the rules.
Perhaps the time is ripe to try a completely new format for the BCCI, which is to corporatize and list it on a relevant stock exchange, while creating a separate and independent regulator for the game which ensures everyone concerned minds his Ps and Qs.
It wouldn’t be the first attempt by a sports association to seek a listing even though it is a rarity among sports leagues. In 1996, the United States Basketball League (USBL), a professional men’s spring basketball league formed in 1985, went in for a stock offering. However, the issue turned out to be a lame duck and the stock has hardly been traded in the last few years.
There are 22 publicly traded soccer clubs including Juventus, Arsenal, Ajax and Manchester United. None of them has given huge returns to investors. Manchester United, for instance, delisted in 2005 but re-entered the market in 2012, listing on the New York Stock Exchange amid great expectations. Remember this was the era of Alex Ferguson and the club was in the midst of a highly successful run. But that did little for its share price: the stock, which listed at $14, is trading at $16.95 today.
Most of the shares of these clubs have, over the years, been bought by fans and not by investors looking to make a fortune in the stock market. If BCCI were to list, the returns would be measurable not in terms of dividends or price movement but in terms of what it does to the running of the board.
Publicly listed companies have a highly empowered leadership with a board of directors to monitor the actions of the management. Since the board acts on behalf of the shareholders, issues like transparency and rule of law become important. A BCCI-owned team’s performance will directly influence its stock price, which would mean all the concomitant actions including developing grassroots cricket, nurturing all the regions and ensuring the best 11 take the field, would have to be with that objective in mind. Along with that, the finances of the board would be tightly managed with accountability at the management’s desk.
According to the Income and Expenditure Account of the BCCI for the year ended 31 March 2016 (the latest available on its website) total income for the year actually dipped to Rs1,365.35 crore from Rs1,548.90 crore in the previous year, a 12% decline. For any corporate body, that would be a matter of some concern. Cricket’s schedules are of course seasonal and an overseas tour or a multi-country event like the T20 World Cup would make the difference to the numbers.
Corporatizing BCCI would allow for a separation of its ownership from its management. While the owners would be various cricket lovers who would want to be a part of the game, what’s more important is that professional managers would not take populist decisions, but ones that ensured a well-run, profit-maximised BCCI Ltd.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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