Vijaya Malalasekera, Chairman of the Interim Committee of the Board of Control for Cricket in Sri Lanka, explains why the BCCSL changed international broadcasters, answering questions that have been asked recently by the media
BCCSL24-Feb-2002Vijaya Malalasekera, Chairman of the Interim Committee of the Board of Control for Cricket in Sri Lanka, explains why the BCCSL changed international broadcasters, answering questions that have been asked recently by the media.Question: Who first moved to terminate the contract for international television rights between the BCCSL and WSG Nimbus?Answer: The then Executive Committee of the BCCSL, which was running affairs before the Minister of Sports dissolved it. That Committee went before the Commercial High Court of the Western Province in January of 2001 and said that the contract had ceased to exist due to WSG Nimbus failing to give required bank guarantees.Q: Who signed the contract with WSG Nimbus in the first place?A: It was that same Executive Committee of the BCCSL, on 3rd December 2000. They went to court within two months of signing the contract with WSG Nimbus.Q: What happened to that court action?A: WSG Nimbus agreed to a payment schedule and the case was settled. It was agreed that if a single payment was delayed, the contract would cease to exist.Q: What happened after the present Interim Committee was appointed?A: The Interim Committee tried its best to make the relationship work. But WSG Nimbus continued to delay payments. For six and a half months, we negotiated with them to no avail. We wrote more than 60 letters to them, requesting them to pay on time. Payments are scheduled to be made for each tour played in Sri Lanka. They delayed in making payments for tours by New Zealand, India and the West Indies, one after another.Q: Did the Interim Committee consult anyone else in this regard?A: We repeatedly briefed and consulted the Minister of Sports and subsequently the Attorney General. Attorney General S. Kamalasabayson gave a written opinion that due to the delay in payments, the contract with WSG Nimbus had ceased to exist, as per the court settlement between the previous Executive Committee and WSG Nimbus. Even prior to that, Sports Minister Lakshman Kiriella had urged us to end the contract due to the delay in payments. At the Minister’s request, we had discussions with Taj Television and TWI (Trans World International).Q: Was the delay in payments such a serious issue?A: Definitely. The BCCSL is completely dependent on television revenue in developing cricket in Sri Lanka. Delays in payments directly affect the BCCSL’s ability to fund everything related to cricket in this country, including coaching programmes, developing clubs and schools, organizing tournaments, and constructing and improving grounds. The only revenue to the BCCSL was from WSG Nimbus. All our eggs were in one basket.Q: Did the Interim Committee find anything unusual about the WSG Nimbus contract?A: It’s interesting that the same English newspaper that is criticizing us for ending the WSG Nimbus contract, earlier ran a series of articles saying that the WSG Nimbus deal was corrupt and disadvantageous to the BCCSL. The Interim Committee was appointed to run the BCCSL and has a policy that we will not dig into the past. But we did find that no company by the name of WSG Nimbus applied at the time of pre-qualification of bidders when the previous Executive Committee called for bids. In fact, WSG Nimbus has a share capital of only two dollars. It is also not a subsidiary of the World Sports Group (WSG), as is popularly assumed. This was the case when we did a search in Singapore on 31st October 2001. Also, the original calling for bids was for four areas, namely TV rights, radio rights, title rights and 40 advertising boards. But the contract signed with WSG Nimbus was for unlimited commercial rights. There is also a lot of controversy over the fact that WSG Nimbus was chosen over TWI, which had made what appears to be a better offer, according to the minutes of meetings that we have discovered at the BCCSL as kept by the auditors SJ Associates.Q: What did you do next?A: We informed WSG Nimbus that the contract was no longer valid. On the recommendation of the Ministry of Sports, we then called for fresh bids for TV rights, from all companies from which the previous Executive Committee had received bids, except WSG Nimbus of course. There were nine companies plus Taj Television, which hadn’t been involved earlier. At the same time we got an injunction from the Commercial High Court of the Western Province, restraining WSG Nimbus from interfering with the new bids. Even the previous Executive Committee took WSG Nimbus to court and not to arbitration, as critics say we should have.Q: Has WSG Nimbus sued the BCCSL?A: Yes. They have filed action in the Singapore High Court as well as filed the arbitration before the Singapore Arbitration Centre.Q: What were the rights offered to WSG Nimbus?A: WSG Nimbus had been given all rights to title sponsorships of tournaments and series, international radio and TV broadcasting rights, and all commercial rights of the BCCSL. They will even receive the money from the sponsor of the Sri Lanka team, and all 70 advertising boards at grounds. The list of things they were given was endless. The BCCSL had virtually nothing left to market, except a few areas that were nowhere near as lucrative as what was given to WSG Nimbus. The BCCSL even had to pay WSG Nimbus 4,000 dollars a day to allow matches played in Sri Lanka to be televised to viewers in Sri Lanka. This is a staggering fee of approximately Rs. 40 million for the whole period. WSG Nimbus could also claim from the BCCSL all costs that they incurred in production of the TV and radio broadcasts, up to 10 million dollars. WSG Nimbus would also receive the sponsorship monies that would be paid to the BCCSL by the clothing sponsor, product sponsors, merchandizing rights, and promotional rights. The BCCSL even had to bear the cost of producing, transporting and repairing the advertising boards. In summary, what was put in the offer calling the tenders was not only what was given to WSG Nimbus, but in fact all commercial rights of the BCCSL were given in complete violation of all accepted tender procedures.What the Interim Committee offered the new bidders was only title sponsorships, international radio and TV broadcasting rights, and 40 of the 75 advertising boards which was what was put out on tender. Nothing else. We didn’t have to pay for local TV stations to broadcast matches, and we don’t have to pay any part of the production costs.Offers were called for by BCCSL which were to be forwarded to PriceWaterhouse Coopers. The offers were opened in the presence of representatives from the bidding companies, Ministry of Sports, PriceWaterhouse Coopers, and our legal advisors Julius & Creasy. Offers were evaluated by PriceWaterhouse Coopers, which is one of the world’s largest accounting and auditing firms. The offer from Taj Television was found to be the best.Q: Is it true that the BCCSL suffered a loss of 6.1 million dollars by scrapping the WSG Nimbus deal and signing up with Taj Television?A: Definitely not. The BCCSL will gain at least 1.9 million dollars from November 2001 to 2003 than we would have from WSG Nimbus. I have given a chart explaining how this is so.WSG Nimbus(US$ million)Taj(US$ millionGuaranteed fee27.1013.90Adjustments on concluded tours (10.20)0Tours not offered to WSG Nimbus (2004)0(3.16)Subtotal before adjustments to tour schedules16.9010.74Adjustments for changes in tour schedules(3.75)0Team sponsorship03.30Minimum additional costs to BCCSL (Access fee, productionand transport cost of advertising boards, etc)(1.00)0Nett revenue to BCCSL (Nov. 2001-2003)12.1514.04Q: What assistance has Taj Television given to Sri Lanka’s domestic cricket?A: They have already committed 750,000 dollars over a 3-year period to the benefit of former Sri Lankan cricketers. They will also explore the possibility of arranging `A’ team one-day tournaments in Sharjah and Morocco, to which the Sri Lanka `A’ side will be invited. They also wish to jointly stage a triangular in Sri Lanka, which Taj Television and the Cricketers Benefit Fund Series will underwrite.Q: What was the BCCSL’s experience with WSG Nimbus?A: WSG Nimbus repeatedly delayed payments, and delayed in submitting bank guarantees. They were unable to find suitable sponsors in many areas such as team sponsorship, clothing sponsorship, and hospitality packages. They have consistently acted in bad faith. They also didn’t furnish to us the sub-licensing agreements that they had negotiated.Q: Couldn’t the BCCSL have claimed interest on the delayed payments from WSG Nimbus?A: There is no provision for this in the contract signed by the previous Executive Committee. Any delay in payments means the end of the contract! Besides, how could we expect to be paid interest when the guaranteed fee was not coming on time?Q: Has Taj Television made its payments on time?A: To date, payments have been on time. The contract with Taj Television has a very favourable schedule of payments, compared to the contract with WSG Nimbus.Payment SchedulesInstallment NoWSG NimbusTaj TelevisionFee due date% of Tour FeeFee due date% of Tour Fee1st45 days prior to Tournament10%30 days prior to Tournament + Bank Guarantee for 50%50%2nd30 days prior to Tournament + Bank Guarantee for 50%10%7 days prior to Tournament25%3rd3 days prior to Tournament30%Last day of Tournament20%4thEncashment of bank guarantee 75 days after conclusion of tour50%2 weeks from last day of Tournament *5%* All payments from the West Indian and Zimbabwean tours have been received.Q: Do you honestly believe that Taj Television is a better deal than WSG Nimbus?A: We firmly believe that the cessation of the agreement with WSG Nimbus and entering into an agreement with Taj Television, is commercially advantageous and favourable financially and administratively.Q: Are you ready to face any inquiry into the matter?A: The members of the Interim Committee are men of honour and integrity who are performing a duty without any payment whatsoever, simply for the love of the game and Sri Lanka cricket. We would never intentionally do anything to harm the sport, especially Sri Lanka cricket. We have been completely transparent at all times, and have sent out a number of media releases during the last few months on this matter. We even held a 2-hour press conference last month where there were nearly 50 journalists and we answered every question. At that press conference we said that any journalist could have access to any document regarding WSG Nimbus and Taj Television. Yes, we are definitely ready to explain anything and everything that we have done, because we did it in the best interest of cricket in Sri Lanka.