Receiver says CricHQ will keep running; confident of sale

KeallHauled

Chris Keall

CricHQ chairman Kevin Roberts says they were disappointed at being unable to monetise the platform.

RELATED AUDIO: Kevin Roberts on why he joined CricHQ, and the size of the opportunity (Dec 22, 2016)

0
0:00 0:10

LATEST: Callaghan can’t claw back millions in grants to failed CricHQ

NZ Cricket was wondering earlier today if it would have to go back to pen and paper for scoring games following CricHQ's receivership yesterday.

Receiver Neale Jackson, of Korda Mentha, tells NBR the answer is no.

CricHQ’s cloud-based scoring and team management software is still up and running, he says.

NBR spoke to Mr Jackson from CricHQ’s office in Wellington, where he has set up shop while he sorts through its files.

The receiver says he’s confident the business can be sold, based on interest expressed so far.

Asked about job losses, he said a restructure was under way. The business has 22 staff in Wellington, plus more in offices in India and South Africa. Enough staff will be kept on to keep the CricHQ platform running, he says.

CricHQ was in the early stages of monetising its service, which was offered free to most users.

Mr Jackson would not comment on how much CricHQ owed but one unpaid contractor – who did not want to be named – said the situation was complicated by a high-interest convertible loan from Singapore’s Tembusu.

The first receiver’s report is due on December 24.

Beyond debtors, those with the biggest stakes in a possible sale are the three owners of Moneybaker Holdings, which held a 42% stake in CricHQ: chief executive and CricHQ founder Simon Baker and former Black Cap captains Stephen Fleming and Brendon McCullum. 

In a statement, CricHQ chairman Kevin Roberts said, “I have been involved with CricHQ for only 10 months and have been disappointed that we were unable to successfully monetise our much used and respected platform. The constantly evolving sports media and data marketplace has made it difficult to convert serious interest into investment.”

Five reasons CricHQ failed

1. A scattergun approach to capital raising

CricHQ, which has raised $20 million since it was founded in 2009 (albeit some of it with strings attached; keep reading), was in the process of trying to raise $10 million when it went into receivership.

The raise had been dragging for more than a year. In September last year, then CricHQ chairman Mike Loftus sent an email to NBR publisher Todd Scott and NBR contributor Michael Coote, asking them to participate in the raise.

Neither Mr Scott nor Mr Coote knew Mr Loftus, nor had any association with CricHQ or any of its investors. It seems likely they were among many recipients in a cold call campaign (or at least, cold email campaign).Many of the customer and financial targets in the investor presentation attached to the email seemed fanciful, including its claim of 2.5 billion cricket followers worldwide (a sum greater than the population of all the major cricket playing countries combined, let alone their cricket fans). The whole escapade seemed disorganised and unsophisticated at best, and desperate at worst.

Mr Loftus first tried to stop NBR publishing an article based on the investor presentation he emailed to Mr Scott and Mr Coote but, when an article was published anyway, he then sent another round of emails to potential investors trumpeting it as “positive unsolicited media coverage.”

2. A big 2015 raise but with strings attached
In fact, NBR’s article wasn’t completely positive by any stretch.

It noted that in June 2015, CricHQ landed $US10 million through a capital raise led by Singapore-based Tembusu Partners — albeit via convertible notes with a 12% interest rate for the first two years, and some of the money tied up in milestones that have yet to be met. For example, $US1 million will be released when CricHQ England's national governing board is a fully paying customer, another $US1 million when it signs Australia.

3. Failure to crack the UK and Australian markets
While CricHQ had a lot of success selling its product to cricket boards around the world, it never managed to crack the key, lucrative UK and Australian markets.

As well as lost opportunity and revenue, that meant it had failed to meet the milestones required by Tembusu to access the full $US10 million.

4. Kevin Roberts no longer in first XI form
Toward the end of last year, Kevin Roberts signed on as CricHQ chairman.

But the legendary ad man was perhaps no longer at the height of his powers, having recently taken an early retirement from Saatchi & Saatchi following a sexism scandal.

5. A sport for love, not money
After NBR’s article on CricHQ’s investor presentation was published, Peter Macauley, a director of Melbourne-based Interact Sport, got in touch to say, “You are right to be skeptical.  Our company operates in the same market – supplying digital solutions to sport, and have done so since 2001. I give CricHQ credit for their passion and for having a “crack” in this market but the commercials just don’t stack up.

 “We manage some five million participants across cricket and other sports and are one of the bigger providers in the space.  I can tell you from 15 years of experience that it’s a difficult market to operate in.  In fact, there was a New Zealand company that tried to do a similar thing to CricHQ several years ago (RealSports International) and went under after a couple of years.  Larger organisations will bury you in product customisation requests – grassroots sport is complicated – while smaller ones will want it for free and then require constant support as they are managed by an ever-changing roster of volunteers. 

“You have to keep costs very low as the SaaS [software as a service] revenue you get is limited to the minimal budgets that sports organisations have.  Getting a subscription revenue stream from players and parents is tricky and unproven, and this is what CricHQ has based its projections on.  If it’s proven, then the national sports bodies will take that revenue for themselves, because ultimately they control the platforms as they control their affiliates.  They can mandate which platform the sport uses and can even decide to build their own as one sport did here in Australia.

 “People work in this industry because they are passionate about sport, not to make huge sums of money – there is no pot of gold in this market”

LATEST: Callaghan can’t claw back millions in grants to failed CricHQ

All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription. 


17 · Got a question about this story? Leave it in Comments & Questions below.


This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

17 Comments & Questions

Commenter icon key: Subscriber Verified

Interesting business but over-invested balance sheet.

Reply
Share
  • 0
  • 0

20 Million!! You'd think after spending that sort of money they'd have a business model sorted out... Isn't Kevin Roberts involved with Unfiltered...?

Reply
Share
  • 2
  • 0

September 2016 NBR article shows the absolute insane valuations and projected revenue out to 2020:

https://www.nbr.co.nz/article/leaked-investor-doc-reveals-projections-st...

Not surprised one bit this entity failed to secure contracts, was handicapped by a 12% interest convertible loan and was all a bit too pie-in-the-sky from the get-go!

Reply
Share
  • 2
  • 0

The company had great potential but ran it's capital raising programme completely the wrong way
The previous board Chair and CEO tried to do it themselves to save a few dollars and the result is no money was raised and the company is in receivership - they had no track record or credibility to successfully raise the funding.

The 2015 Tembusu Partners $10M convertible note raise at 12% was also a dumb move.

Now someone will pick the company up for a steal and the existing shareholders will lose everything - hopefully Stephen Fleming and co will be the buyers at the discounted price alongside new investment partners

Reply
Share
  • 1
  • 0

I see Unfiltered (which K Roberts is also involved with) cancelled both of its Unfiltered Live events recently because they had received "overwhelming feedback that many wanted to attend the events but couldn't in Q4" (cough...cough...).

Reply
Share
  • 1
  • 0

Given you're talking about cricket, I think you mean 'First 11' not 'First 6' form, so it's XI not VI. Not to be a pedant, it just spoils your story and quite a nice line.

Reply
Share
  • 0
  • 0

Could be touch cricket. Fixed. Thanks.

Reply
Share
  • 0
  • 0

They got a $1.5m grant from Callaghan Innovation only 5 months ago!

http://www.callaghaninnovation.govt.nz/success-stories/crichq-still-keep...

Reply
Share
  • 1
  • 0

Callaghan says CricHQ applied for more funding at the time of that May article, but that grant did not proceed.

Earlier, Callaghan did disperse grants to CricHQ totaling $2.2 million -- but more than three years ago so beyond its claw-back period.

More: Callaghan can’t claw back millions in grants to failed CricHQ

Reply
Share
  • 0
  • 0

I saw (many) CricHQ IM's and forescasts. Always a hockey stick, always insanely missed. All I have to say is a massive LOL.

Reply
Share
  • 0
  • 0

NOT a good look for FNZC's mighty investment banking team who tried to sell this to new investors this year !!!

Reply
Share
  • 0
  • 0

Hey guys - remember that time CricHQ said it would have earnings of 208 MILLION in 2020???

Why does the NBR give so much coverage to jokers like this ?

Reply
Share
  • 0
  • 0

This is yet another monumental mess up funded by Vic Crone at Callaghan.

I hope she has put a claim in to get the grants repaid. However I assume she is a meeting

Reply
Share
  • 3
  • 0

Callaghan says CricHQ applied for more funding at the time of that May article, but that grant did not proceed.

Earlier, Callaghan did disperse grants to CricHQ totaling $2.2 million -- but more than three years ago so beyond its claw-back period.

More: Callaghan can’t claw back millions in grants to failed CricHQ

Reply
Share
  • 0
  • 0

Oh that's lovely Callaghan. Thank you for taking $1.5m of our taxes and investing it where your staff thinks it should be invested. Jeez, we should send Callaghan more of our taxes to invest.

Reply
Share
  • 1
  • 0

Callaghan says CricHQ applied for more funding at the time of that May article, but that grant did not proceed.

Earlier, Callaghan did disperse grants to CricHQ totaling $2.2 million -- but more than three years ago so beyond its claw-back period.

More: Callaghan can’t claw back millions in grants to failed CricHQ

Reply
Share
  • 0
  • 0

As a jnr cricket convener, manager and scorer, I can say that the product is user friendly and a massive time saver. Hopefully someone picks it up and makes it $work.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.6817 0.0024 0.35%
AUD 0.9022 0.0013 0.14%
EUR 0.5810 0.0010 0.17%
GBP 0.5164 0.0010 0.19%
HKD 5.3265 0.0201 0.38%
JPY 76.3640 0.2740 0.36%

Commods

Commodity Price Change Time
Gold Index 1296.5 15.490 2017-11-17T00:
Oil Brent 62.7 1.370 2017-11-17T00:
Oil Nymex 56.6 1.440 2017-11-17T00:
Silver Index 17.4 0.300 2017-11-17T00:

Indices

Symbol Open High Last %
NASDAQ 6794.7 6797.8 6793.3 -0.15%
DJI 23433.8 23433.8 23458.4 -0.43%