European T20 Premier League – My thoughts

I hope it works and hope it is a big success - I hope my son plays in it one day and my friends play in it this year and get well paid. But I believe it has massive barriers to its success.

In 2019 - when we started the European Cricket Network and European Cricket League - we decided to make it a club-based league - for the good of grassroots and authentic homegrown European cricket. We decided against the Franchise way because it didn’t stack up financially.

Over the last 6 years and at a cost of 39,000,000 Euro so far and counting (thirty-nine million euro, not a typo) to put on over 290 events and 7,000 matches in Europe - it has been awesome so far - but it made it very clear where the revenues were and were not. Where the hot air was and where it was not. What the costs are and where they are not. What drives people to get involved and not. We learnt a lot and continue to. We are lucky to be involved in developing cricket with the Federations, the ICC, the clubs, the players, the administrators.

European Cricket Network and the European Cricket League is just getting started - by cricket people in Europe, who know the realities, who understand the climate, the people, the places, the politics, the hardships, jubilation, the talent and the celebration. We welcome a Franchise league being announced so we can watch more cricket for a few weeks this summer and hopefully with some familiar European faces.

I built countless spreadsheets around the European cricket franchise model - with very experienced and clever people at the table - it never stacked up. No matter which way it was sliced and diced, it appeared very likely that it was a black hole and bottomless pit of cash burn and losses, essentially charity investing for the good of the game.

So, we always continued the route of supporting European club cricket and Federations and investing in them for them.

Having been in the investment/trading game since I was 15 (27 years!) - I’ve seen thousands of presentations and heard hundreds of pitches from investment bankers, CEOs and founders trying to sell something to offload all the risk to someone else (while they get paid a nice salary). In mainly tech and commodities.

I have made lots of mistakes along the way with lots of successes but the ingredients and checklist to what makes things work is always the same. Those being important questions one must ask before proceeding.

1.              Engineering: Can they make breakthrough technology instead of incremental improvements?

2.              Timing: Is this the right time to start the endeavour?

3.              Monopoly: Is it starting with a big share of a small market?

4.              People: Is it the right team to create it?

5.              Distribution: Is there a great way to not just create but to deliver the product?

6.              Durability: Will the market position be defensible 10 to 20 years in the future?

If you can get 6 out 6 - success. 5 out of 6 - can still work. Less than that struggles to survive and hits a wall of struggles. The IPL has 6 out of 6. The ICC has 6 out of 6 for their World Cups. Other cricket leagues are proof how hard it is. The ETPL has a massive hill to climb, in my opinion.

At the macro and micro level, some additional challenges I see are.

⁃                Weather, obvious one, there is a 33% chance of rain every day in those cities on those dates

⁃                Betting brands as sponsors, whether the league and teams abides by the gambling advertising laws in Ireland and Netherlands, whereby betting brands (or surrogates) that are not regulated in those countries are not allowed to be advertised on the shirts/venue branding in those countries. Will they run the risk of breaking the law in those countries and put betting brands on the shirts and around the fence?

⁃                Lack of domestic fans, we as the ECN helped on the production and broadcasting of Irish, Dutch and Scottish T20Is in recent years. The numbers were startling. There were between 500 and 900 (not a typo - literally five hundred to nine hundred) fans in each of those countries watching the streams of those matches. Literally less than a thousand people cared to watch the broadcast of their national team in these countries! The views came from Nepal, because legendary commentator Andrew Leonard was commentating, so the Nepalese wanted to watch and listen to Lenny because of his strong fanbase there!

⁃                The professional players see it as a stag-do, a jolly, a way to bolt on some cricket to a paid European vacation. Bring the WAGs on a Rosé tour. Of course, they sign up for it (with first class flights). We have experimented with this in the past; the pros take the money but don’t bring the value or their A game. They get outperformed by the European amateur who is underpaid and then the European amateur cricketer is an improved player for the experience but is left to be discarded at the end of the tournament because they don’t have many social followers or strut as good as the pros chewing gum.

⁃                Costs are always 30% higher than budgeted – in high European tourist summer – for group bookings – in a fully booked football/tennis/basketball/holiday period – buyer beware

⁃                Revenue estimations I find very tough to get above 6 figures, betting companies will ofcourse want to sponsor, other product categories as sponsors I find it a very tough ask

⁃                Broadcasters won’t pay, they will show it for free, or they may request to be paid to show it. and if they pay…, what currency do they pay in.?

⁃                INR/EUR exchange rate really hurts of late, with the fx rate at 107, continuing to climb, it means Indian investors or sponsors are being rug pulled. The INR has depreciated 22% in the past year vs the Euro. Making a European league 22% more expensive in the past year than it was for an INR based group of investors.

⁃                AUD/EUR exchange rate at 1.73 is at a historical high, it’s very expensive for Aussie investors to spend money in Europe. Up 5% from a year earlier. St. Tropez lobster goes on the card.

⁃                The EUR FX rate matters a lot… and in transaction fees and conversions with banks and service providers. Any INR and AUD will be blitzed by 3-4% just in the bank transfers (If they spend 10m Euro, it is easily estimated that 300,000 EUR in fx leakage will be going straight to the bank!)

⁃                USD earnings (if any - from broadcasters and sponsors) are not a good way to fund a EUR cost base league. If global broadcasters want to pay in USD, those earnings are 13% less than it was a year ago. Why would a broadcaster want to pay in EUR anyway and bear the transaction fees?

⁃                This is a horrible environment to have to live within and non-EUR earnings can completely upend the business model. Because there will be zero broadcast revenues from EUR based broadcasters in Europe itself. So, all revenues are international I would expect (alert: bank fees and fx risk again) and probably come in post event – where one can conservatively estimate 30% of the matches will be washouts.

⁃                Withholding Tax (WHT) in India – brutal for a European business – It is 20% in Ireland and 10% in Netherlands – which is also captured at source before arriving in Europe – will cut revenues before they even arrive by significant amounts. (WHT + fx convert + bank fees = 28% hair cut??)

⁃                The FX issue is massive and needs to be hedged out with forwards/swaps/options. If Trump gets his new Fed chairman in place and the US Fed Funds rate goes down as he hopes, so will the USD and the revenues accordingly will be severely sensitive to this fx market price action.

⁃                A stronger EUR makes it even more expensive for AUD and INR investors. (There are cheap and easy ways to solve for this).

⁃                Essentially, INR and AUD purchasing power for the event organiser, visiting fans, franchisees in Europe sucks and the Trump/Modi/ECB trade negotiation process will continue to hurt or create uncertainty. The currency and interest rate markets are a massive driver of this project from my point of view.

I know the whole we love cricket and want to develop cricket story very well. I live and breathe it with everyone else in Europe. But my calculations indicate that between 50m and 100m EUR is the required investment (cost, burn, cost, burn, bust) to put this in to being a reliable annual league – and I cannot see those values of revenues ever coming to re-finance the project – so it will be a black hole cash burning passion project for those involved, which all of the cricket fans in Europe welcome.

Seriously, where is 50-100m in revenues coming from for this league over the next ten years to cover the expense?

What I believe, from my experience, is the project will lose all its invested capital. The more years it goes, the more money it will lose. It will be a pain trade. Where we will have to watch (the cricket?) how much they are willing to sink into the venture before the cash injections dry up. Hopefully a lot, because they will need a lot.

The “must be a certain number of local players rule” – is simply a way to keep franchise player expenses low. The local players will be used and abused and instead of being paid well they will be paid in “the chance to having a stage to play on and share changerooms with”. While giving lots of money to the fly in holiday making pros who expect, expect, expect. I fear for the mental well-being of these local players when they try so hard and likely to get so little.

Young European players will not benefit from this. The European Federations will not benefit from this. Structurally, no legacy will be built or pathways will be created. It will be a short, expensive, firework (in the rain?), for a small number of spectators (500?), but no sustainable development for one of the oldest and most traditional sports in world. Where is the depth, the pathways, the structures? Where is a youth angle? Where is a women’s angle? Where is an angle at all?

The ICC, the European Federations and the ECN have initiatives like criio, cricket’scool and genuine platforms for men’s and women’s domestic and international cricket. The ECN has so far provided over 4 million Euro (no typo) directly to the European Federations and the growth can be seen in the numbers the ICC recently published. We are all proud of that.

I don’t know what magic the founders and bankers have put into their presentations and spreadsheets to sell the dream – or due diligence process worked through by investors to buy the dream - but I wish them well and hope it all works out better and faster than forecasted – but for the good of the next generation of cricketers in Europe it needs much more than a Franchise league – it needs solid infrastructure, solid pathways, solid local government support and solid summer-long engagement and opportunities.

The European Cricket Network (and its 290 events and 7,000 matches of experience) and I are ready to share our learnings and engage in dialogue to help make the ETPL, any other franchise league, or any other investment in European cricket work. As we are as excited about the future of European cricket as anyone and will keep striving towards our goal of helping be a professional and reliable partner to make cricket the number one bat and ball team sport in Europe for the next generation and beyond.

Daniel Weston

Founder, European Cricket Network