ADDRESS BY
THE MOST HONOURABLE P.J. PATTERSON, ON, OCC, PC, QC
JAMAICA STOCK EXCHANGE
BEST PRACTICES AWARDS CEREMONY
“COMMERCIAL DEVELOPMENT OF WEST INDIES CRICKET”
AT
THE JAMAICA PEGASUS HOTEL
DECEMBER 4, 2013
SALUTATIONS
· Appreciate kind invitation to be Guest Speaker at your 9th Annual Best Practices Ceremony.
· Confess not having mastered the art of saying ‘No’.
· Reasons for overriding my Staff
CONGRATULATIONS
· Long recognized the importance of developing our creative potential as a lynchpin for economic growth
· Core of Presentation in G. Arthur Brown Memorial Lecture –
· Will continue to emphasize whenever that creative industry constitute an area of competitive advantage allowed to meet and speak with those who can make it happen
· I am always delighted to be involved in a Ceremony such as this which encourages and recognizes efforts in every field of national endeavour with those who insist on Best Practices I heartily congratulate the deserving Recipients of Awards to be presented tonight.
Let me begin with an early disclaimer:
I am Chairman of the Cricket Tournament of the T-20 Caribbean Premier League and
Not the Chairman of the CPL. That Chairman needs to have deep pockets.
The Governance Report
I intend to shy away from sharing the “vast experience” of my work as Chair of the Governance Committee on West Indies Cricket. It ranks among my most disappointing. The central thrust of the Report was “rejected” – the more polite would say “ignored”.
The centerpiece was to build a more modern and responsive structure beyond the current Shareholders in order to permit meaningful representation of the major Stakeholders – The West Indian people – to whom everyone claims West Indies cricket belong.
In the course of our work and extensive consultations, the Commissioners did acquire a wealth of knowledge and wish to share a portion of this with you tonight.
In recognition of its importance and the role your profession as stockbrokers can play, my text is about the Commercial Development of W.I. cricket.
Let me now proceed to roll the wicket:
Cricket – More than a Sport
Cricket began as an elitist sport sponsored by the aristocracy for their enjoyment and for the benefit of the few who came from well-to-do backgrounds. It was played by the Maharajahs in India and in the colonies by plantation owners and their ilk. In the Caribbean it was the preserve of the Expatriates and their kind. It soon spread to the Estates and Cane fields when Sugar was King.
Cricket is no longer an amateur sport.
The days when Professionals were distinguished from Gentlemen are long gone. When the Touring Team was the MCC – not England.
In what form did W.G. Grace receive his reward? – Shamateurism.
Frank Worrell struck a decisive blow to remove the traditional barriers, when he refused to tour India in 1948 – 49, as his request for a modest fee was denied. The natural talents and the attractive flair of Caribbean players served to dismantle the social barriers and opened the gates for fine batsmen and fiery fast bowlers who have created a universal appeal for the Caribbean brand.
Cricket in the Caribbean is more than a Sport or Past-time. It is an essential aspect of our heritage and cultural identity.
Creative Industries
With the decline in prices for our primary commodities and minerals,
we have to diversify our economies and capitalize on those areas where we enjoy a competitive advantage.
Our Governance Report identified Cricket as belonging to the group of Creative Industries which, according to UNCTAD statistics, enjoyed an annual growth rate of 14% and a market value of US$600 billion in 2010.
“The Sports industry is growing faster than GDP both in booming economies such as the BRICS Nations (Brazil, Russia, India, China, South Africa) and as well in more mature markets in Europe and North America”. A.T. Kearney
The creative industries have become the leading component of economic growth, trade, innovation and social cohesion in most advanced economies with exports from developing countries representing as much as 43 per cent of their total goods exports.
Commercial Development
Recognizing the dominance of the sport and entertainment industries in the business-world, the West Indies Cricket Board (WICB) has embodied within its strategic plan, an initiative to develop and treat cricket as a business, capitalizing on the benefits which its players bring to the game. Commercialization is the name of the game.
The WICB, as a first step towards formalizing this process, proposes to establish a company within the WICB structure with a clear mandate to exploit the business and commercial opportunities.
The establishment of a tax efficient entity will manage and administer all transactions of a commercial nature, with returns and dividends being deployed for the development of cricket within the region.
An expanded and entrepreneurial minded marketing committee has already been established, comprising co-opted leaders in industry across the region.
Purpose and Rationale
Even before our Governance Report was finished, the legal vehicle had been identified – West Indies Cricket Properties. WICP is to be created as a separate legal entity, with the WICB being the majority shareholder. The additional shareholding is to include strategic investors, – a mix of local and West Indian investors – combining strategic investors specializing in sports, entertainment, media, tourism and finance and other investors. It would be the exclusive sales and marketing arm and enjoy exclusive market rights to the WICB’s commercial property.
WICP by aggressively and creatively marketing West Indies Cricket’s commercial rights and creating proprietary events, would generate revenues with a view to ensuring the long-term financial viability of West Indies Cricket.
The ultimate goal is to provide the financial comfort that will assist West Indies Cricket in regaining their global dominance.
The Caribbean Brand
The Caribbean is recognized as producing many of the world’s leading athletes – in a wide variety of sports.
It is the largest exporter of professional athletes in the world. Most of the major Anglo and American sports are played in the region.
An incorporated Group could offer full service sports marketing throughout the region, and prove to be a valuable resource to the numerous rights holders, professional teams and leagues, events and sports organizations. Instead of proceeding separately, all entities in the Caribbean could combine in the organization of proprietary events and collectively become one dominant force in sports marketing throughout the Caribbean.
This would enable a significant increase to the Board’s revenue streams to fund its existing operations and to provide additional funds for the continued development of the game in the region.
West Indies Cricket Properties (WICP) was conceived as the catalyst for this transformation.
As the only professional sports entity in the Caribbean, it could result in WICP emerging as an regional and international sports and entertainment powerhouse.
WICP
It would be responsible for marketing the full range of properties owned by the WICB – the senior male and female teams, the under 19, under 15 one day and T-20 teams.
· Broadcasting Rights
· Licensed merchandise at cricket venues, retail stores, gift shops and airport locations – as the fan base spreads, the demand for a variety of products would grow for delivery to customers across the globe.
· A Travel division – in the travel and tourism sector
WICB spends over US1.5M annually – integrated travel sponsorship. The US has over 5 million people from cricket-playing countries
· Arranging Overseas cricket tours from the UK and the Diaspora.
· Publishing Arm – Magazine, Advertising Supplements
· Food and Beverage
· Marketing West Indies Cricket Legends and protecting their Intellectual Property Rights.
North America
The growth of interest in cricket beyond our geographical boundaries to the North and South opens up endless possibilities. The WICB as the ICC full member nation within the region has the responsibility for the development and growth of cricket in the Western Hemisphere. The largest consumer market lies in North America and we must seek ways to exploit this market.
The WICB has in the past taken the WI team to Florida and played international matches which attracted large spectator audiences.
This can, of course, be a significant source of revenue with the exposure, catapulting cricket in the US into another dimension.
Sporting Clubs on Stock Exchanges
Research on Listing
The research has shown that many sporting associations have successfully listed and remain listed on major stock exchanges. Companies such as Portuguese SAD, Sport Liston e Beneficia, Societa Sportive Lazio and Manchester United are but a few companies that are publicly traded. They have been able to demonstrate the ability to earn revenue through primary sources of revenue such as membership fees, venue receipts, royalties, television rights and ticket sales.
The governance structure for a successful organization is no different for sport related companies than for any other organization.
New Investment
Access to Stock Exchanges would attract new investors willing to provide equity capital to these companies. It will allow the assurance of tradability of the shares across a regulated market.
The criteria are the same: The business must be driven by the fundamentals that will allow it to be profitable and which provide a reasonable rate of return to investors.
Many cricket associations have pursued listing on an exchange, none was listed to date. Cricket Australia and Hampshire Cricket Club have embraced the idea at different times as but did not follow through.
Let us break new ground to permit the WICB to raise the equity capital to realize its strategic goals.
Cricket plays an important role in unifying the Caribbean people. The WICP could further strengthen the link already made at the level of the players, government and spectators, providing ownership at the level of the investing public throughout the islands.
The Financial Statements released by WICB show that the company currently presents its financials in keeping with International Financial Reporting Standards.
The Regional Exchange requirements for listing are similar in nature. As a result of this and the technology used, ease of raising funds across the region if required, of listing and cross listing of the securities on all the exchanges in the region, would be greatly facilitated.
The issue of currency is not a factor. Other cross-listed companies trade in the currency of the country of the Exchange on which they are listed.
Of the greatest importance, listing of the company could possibly push the players to increased performance by the West Indian cricketers who would be seen as part of the product and their performance or lack thereof would affect the share price.
This would help Management to hold them accountable.
On the flip side, the players having an investment also in the company would be conscious of the need to ensure a consistent valuation through high performance.
The Business of Cricket
At its October meeting in Kingston the WICB announced its intention to convene in March 2014 a two-day event on “The Business of Cricket” The Meeting has now been rescheduled for June 2014.
To secure the best return on our investment, the key stakeholders must be brought to Port of Spain:
Governments, Corporate Regional Business, Tourism, Airlines, Media, Financial Institutions, Entertainment, Professionals and Players for this Conference.
I would suggest that the Stock Exchange in the Caribbean use the 6 month interval to prepare a plan for listing cricket on the Regional Stock Exchange.
The matter of valuation, preparation of prospectus and taking the organization to market can be handled by any of the seasoned brokers within Jamaica and the wider region.
It would also serve as a welcome boost to the CSME which is yet to secure a thriving life of its own.
Conclusion
In cricket, we have the single largest investment by the Caribbean people.
We must ensure that like other businesses, the standards of governance and transparency in cricket are within the domain of the Caribbean people.
I would expect the operation of the organization to improve, given the level of performance necessary at both the board and operational levels.
Believe you me, we deserve to return cricket to its winning ways.
Better still, if at the same time it can also be of economic benefit to Regional Investors and the West Indian people at large.
