Digicel Contract Easy to Explain

It appears that many have been perplexed, bothered and bewildered by the WICB/Digicel contract issue. But, to me, everything can be explained easily.

Critics of the WICB have made a big deal out of the different figures quoted for the Digicel contract. They've found it difficult to grasp the different figures of $17 Million, $20 million and $23 million because they hold on to the simplistic view that a contract can be valued only one way under all circumstances. In the real world, things are little more sophisticated, as anyone who has filled out an income tax return or purchased a house understands.

Open up a spreadsheet, calculator, or abacus, and follow along, folks. According to the latest WICB release, the Main Sponsorship Agreement (concerning the Test team) obligates Digicel to pay out a total figure of $18.75 million.

Enter "18.75" into the spreadsheet. Since a 10 percent brokerage fee is subtracted. Multiply 18.75 by 0.9. to get the amount actually going to the sponsor under the Main Sponsorship Agreement. That amount is 16.85 Million. Rounded up, that's $17 million, so that figure is explained.

We are told that the maximum incentive fees are $6.65 million. Now add that figure to 16.85 and you get 23.50. So the $23 million is explained.

Now go back to the 18.75 million figure. Under the Digicel contract, $1 million is earmarked for youth cricket. Add $1 million to 18.75 million and you get 19.75 million. Rounded up, that's 20 million. Quod Erat Demonstrandum.

The $17 million, $20 million and $23 million figures are all explained without resort to conspiracy theories about Cayman bank accounts or mystery brokers.

One last figure needs explanation -- the $30 million figure that Cable & Wireless was asked to match. Now the $30 million figure comes from the total of $29.55 is listed in the memorandum of an offer that Brathwaite, the WICB CEO, forwarded to C&W as being an offer made the WICB as being from a third party.

See this four-page letter from Brathwaite to C&W: [Page 1 ] [Page 2] [Page 3] [Page 4]

The figures in that letter speak of the contract maximum was 18.75 +1 + 6.665 = $26.50 million.

So there's a missing $3 million that has spawned conspiracy theories.

My theory is that Brathwaite was trying to "game" Cable & Wireless into offering more than the $26.5 million. He did so by exaggerating the Digicel offer into a $29.55 million offer. Now many will see this as yet more evidence of Brathwaite perfidy. My take is that I can't get terribly upset over Brathwaite trying to game C&W into raising its offer. The fan in me wishes it had worked!

After all that has been said, the difference between the contracts comes down to this: as regards the C&W contract appears to be worth slightly more than the Digicel contract per year, ($3.65 million > $3.55 million) but the Digicel contract is worth substantially more over overall ($19.75 million net 10 % = $17.76 million versus $10.95 million) and lasts for two more years. (We assume arguendo that the C&W contract consists solely of guaranteed payments, although it?s worth noting that we assume this. It is not documented as fact).

Cable & Wireless backers argue that the WICB could make substantially more with the C&W contract, since they are free to find sponsors for foreign tours. Now what we know is that we have in the past found sponsors for tours to England, India, Australia and South Africa. We also know that we would have to pay for tours to Pakistan, Bangladesh, Sri Lanka, New Zealand, and Zimbabwe.

Over the next 3-5 years, can we make more on the sponsored tours than we will lose on the non-sponsored tours? Will we continue to find sponsors for the tours to England, Australia, South Africa, and India as in the past? I do not know the answers to those questions and I suspect that nobody really knows the answers either. An even more pertinent question is, would anyone be prepared to bet millions of dollars on what they would guess the answers would be?

The lack of answers to these questions has created a kind of perfect storm of logical fallacies claiming that the WICB would make more money than they would lose on foreign tours, with most simply repeating, with great fervor, the claim as if stating it would make it so. However, once we dismiss the plethora of bad arguments, the claim remains unproven.

Digicel has said it would be spending millions to promote cricket through the region. (See this B.C. Pires piece in the Trinidad Express). In addition, it has made a start by creating a very nice Web site. Digicel has proposed creating a TV program about West Indies cricket, according to this Tony Becca article.

It began initiatives like ?text-messaging the Team?, Live news feeds from on tour, tour diaries by the players, et cetera, only to have WIPA shoot down those initiatives- an act of mind boggling stupidity that was actually supported by many fans. Go figure).

Cable & Wireless suggested that it would do some general types of promotional efforts, but they seem much less than the detailed proposals Digicel had.

A maximum of $6.65 million available to players under the Digicel plan (Had the full team played in Sri Lanka, they stood to make $100,000 in payments, since they would have likely won the Test series, according to a Sri Lankan commentator).

Under Digicel, money is guaranteed through 2008 and 2009. C&W fans hope that their company would have extended the contract past 2007, but hope is not a plan (Where have you heard that before?

There is a saying making the rounds that :you can?t sell what you don?t own" but that is not a legal principle: it?s a figment of the imagination of Amit Varma - a man with an axe to grind.

He has an interesting point of view, but no court anywhere on earth has bought his theory, and I doubt any court ever will. Read here for the actual law, which agrees that the WICB can provide exclusivity to the team sponsor by including certain restrictions in the player contract (although it also says the original version of the player contract was inadequate for the task).

We the fans don?t really have to decide absolutely as to whether Digicel contract is better than the C&W contract. For one thing, we lack all sorts of information (including a detailed knowledge of the future). What can be decided is whether the WICB decision to choose Digicel over C&W was a reasonable exercise of business judgment.

I think the answer must be yes. Those who want absolute moral clarity may not like the way I have formulated the terms of decision, but hey, you can't please fanatics. That is at least close to the way a court of law would have formulated it, and (I believe) would (or will?) make the decision.

* Shuan Rose is an attorney with the Rose Law Center in Washington DC. He posts on the CaribbeanCricket.com message board as 'Carib'.