Accounts for 2014 and AGM

hhs,

Well said. You beat me to it. 

“We have to balance the objectives of investment in professional cricket today, with our responsibility to our successors, to have
appropriate funds in place to renew the stadium in the future.”

While a very refreshing approach in a Western world where mortgages, general debt and leverage are the financial Gods, is this
‘putting money away’ realistic today?

The subject deserves a thread of its own given the future implications for the club. At face value this path should be applauded
and is worthy of our Chairman’s eminent and prudent professional banking past. Perhaps, Jim May views this as his legacy? But
given how low interest rates are and given the trust that must be placed on our successors to use this fund for the right purpose,
however noble, is it the right way?

I was reminded recently of the appalling 1980 Sussex CCC ‘firesale’ where the hierarchy required some quick cash and panicked.
It was decided to hold an auction and sell off the club heirlooms and treasures - many of which had been given to the club by past
players in good faith. The auction sale was, from some accounts, a shambolic embarrassment where many bargains were sold on
the day. So, how can we trust our club successors to revere this fund and for it to be used in the correct way? A similar situation to
the 1980 sale could occur unless stringent measures are put in place to protect the said foundation.

Secondly, one must ask whether the money being put away could be used for better purpose in the present. For example, as the
property and rental market continues to rise could it not be employed to purchase flats around the ground which will not only gain
a monthly rent for the club but as an investment potentially increase in value?

Could this said money not be used to strengthen the team squad further and return the club to the halcyon winning ways of the previous
decade thus bringing in trophies and additional money from higher attendances? Everyone likes to watch a winning side.

The obvious question: Is there not a more creative and diverse usage of the fund which not only helps the club long-term but short-term
too?

The club in recent years won a £12m lottery ticket (Spen Cama legacy) followed by a £1m ‘soft loan’ (the ECB). This money has/is being
used to redevelop and market the ground which should lead, hopefully and eventually, to earning £1m a year extra for the club or just
over 7.5% return on the money (before overheads) from off-field commercial activities. For, after staff marketing wages and general
overheads, it is unclear what the actual true percentage is although it should be above the best 3% or so interest rate presently available
in a building society or bank. Meanwhile, supporters have resplendent new surroundings to watch cricket.

That achievement must be applauded.

Therefore, with this influx of money during the last 10 years, Hove has a modern redeveloped ground which should last for another 30
years before any major renovation works will need to be carried out. Why therefore, at this stage, put money away? Twenty years up
the road - then begin the process. While, thanks to the generosity of Spen Cama, the club are debt-free. How many TMGs would bite your
hand off for that comforting situation?

Perhaps, the proposed fund instead could be employed to continue improving the ground’s facilities and attracting further off-field annual
income?

Parking is and always will be a major issue for the club. Could that not be improved within the ground? Renovating the awful eyesore of
the old ‘Newbery Building’ is another. Constructing six offices in the north-west section for rental is an excellent idea. Could not further
similar constructions be carried out, perhaps, in the ground? And a reminder: in 2019 the club have plans to sell the ‘Cricketers Pub’. So
long as the British economy remains stable that sale could bring in an additional £1.5m for the club coffers.

Therefore, creating a fund for the upkeep of the ground 30 years from now is a worthy and noble proposal, but couldn’t this money be used
for more constructive and diverse purpose in the present?

The treasurer's report doesn't actually say the club are setting aside these huge sums for depreciation - it says somewhat more nebulously that "the Board are evaluating options in this regard."

I agree with s&f that it seems bonkers to squirrel away large sums of money in the precarious financial climate of 2015 with interest rates at an historic low and ring fence these sums in a manner that says they cannot be spent until 2040 or whenever.

Sussex recorded an operating surplus of £122,000 in 2014 compared to a loss of £103,000 the previous year and that is a brilliant performance, driven by a 38% increase in commercial income and non-matchday income of half-a-million.

Yet when depreciation is taken into account, the operating surplus suddenly becomes a deficit of £418,000 - so an annual depreciation cost of £540k more than wipes out the £500k non-matchday income.

Like s&f, I cannot see the rationale for putting the entirety of 2014's non-matchday income plus another £40k from cricket revenues into a fund that cannot be touched for say another 25 years. But from the careful wording in the treasurer's report, my reading is that thankfully that decision has not yet been taken. Surely much better to spend and invest it wisely here and now in some of the ways s&f suggests?

The big concern, of course, is that average attendances were down again last season and total membership has fallen by 10%. I recall that Jon Filby was bitterly disappointed that the membership recruitment drive failed to increase the numbers in 2013 and the figures continue to fall inexorably.I fear it is ineviable that it will continue to do so year-on-year. It's not just Sussex; members of county cricket clubs all over the country are ageing and dying and not being replaced by new younger recruits. That is the sad reality of county cricket in 2015 and another compelling reason why Graves and Harrison are right in seeking a radical shake-up of the exisiting county structure.

Yes but no. Depreciation specifically includes all the items I listed, and if you don't provide for them you have to deplete your income each year. The concept of allowing for depreciation in accounts is to provide for that cost. If you maintain a property and keep it up to latest specifications then you are deferring the need for massive renovation very considerably. Of course if you are talking about building a new stand in 30 years time because you need extra seating for new customers, that's a different matter.

Bm,

members of county cricket clubs all over the country are ageing and dying and not being replaced by new younger recruits. That
is the sad reality of county cricket in 2015 and another compelling reason why Graves and Harrison are right in seeking a radical
shake-up of the exisiting county structure.

I completely agree with your sentiment but fortunately Colin Graves realises this growing and imminent danger. His tenure and what
he achieves as the next ECB Chairman, perhaps, could be the most important 5 years of English cricket. I don't believe cricket supporters
realise just how important a forward-thinking attitude is now. Literally, this could mean the sport's very survival.

One has great sympathy for those who wish to remain in the past. Major change is often not a pleasant experience and the CS Lewis world
of Narnia is comfort food personified, but unless major changes occur, and occur now, cricket as it stands, may not be viable in 20 years time.
Attracting youngsters to the sport has to be the overriding factor in this impending revolution and the main thrust must be marketing the sport
for them.

My major concern is that a battle will occur within the ECB itself where the forward v backward thinkers clash and nothing substantial is achieved.
By then it could be too late to avoid the inevitable decline of cricket to the ranks of volleyball and greyhound racing.

The buildings referred to here are assets of the club. Each of those assets has a cost which is reflected in the profitabilility of the club, but not directly consumed by it, unlike, for example bats and balls. Without the assets of the stand, pavillion, boundary rooms the club could not offer its main trading function and therefore the cost of providing that asset has to be assessed. By convention it is expended over a lenghty period, 30 or 40 years, and represents the expected salvage value of the buildings at the end of that period.It isn't related to an anticipated market value.

Those costs are deducted from the overall trading balance along with other items - taxes, interest, amortisation - in order to provide a net income figure. If this is not done, the profits can be overstated and distributed as dividends, in the case of a commercial trading company, or expended on other activities, but at the end of the working life of the asset there will have been no provision and and it will be necessary to borrow to replace it. Clubs who do not provide for depreciation are effectively overstating their profitability.

The physical cash set aside each year can be accumulated as working capital or specifically invested in a fund to provide cover for the replacement.

Either you accept accounting standards or you don't. I'm not an accountant but I've spent long enough in both public and private sectors to understand that good governance requires the proper observance of conventions, particularly those that have been adopted in order to stop people from booming share values by inflating profits and ignoring charges. That goes far beyond cricket - lack of governance and dodgy accounting have been key factors in creating the massive inequality in society over the last 20 years. I'm glad that Sussex are demonstrating their governance by treating their accounts properly.