Sta£e of the Nation - County Cricket Finances

The Lion, The Witch and The Wardrobe and Brave New World all in the same post is v impressive , s&f !

I agree that the finance of county cricket clubs is now totally detached from reality; but then frankly so is  finance in general  as we discovered in the 2008 crash.

Money doesn't actually exist, except in a symbolic context. Pounds, dollars, Euros and even gold ingots do not have any value in and of themselves. At the risk of sounding like an old Marxist, they  are merely a representation of labour and/or natural resources.

Supply and demand determines the purchasing power of what we call 'money'  and 'value' fluctuates wildly and subjectively;  400 years ago tulip bulbs were worth more than gold. Today you can buy a pack of ten of them  in the 99p shop.

In the unstable and volatile market-place built around this arbitrary concept , what matters is knowing  when to sell.

If there were openly-traded shares in county cricket clubs, you would have to conclude that it's time to get out now because we are currently 'supplying' 18 clubs when the 'demand' justifies no more than half that number. Yet English cricket bizarrely  continues to behave as though  it were the other way around.

I have no idea what the solution is; but I know that the financial results currently reported by counties are totally meaningless in helping us to arrive at an 
answer, because none of them use the same metrics.

 A basket case like Kent claims a totally illusory 'profit' of £1.25 million; Sussex reports an equally illusory paper deficit of £630,000 by invokng  a paper guestimate called  'depreciation' and treating its ECB loans differently.

The black arts of accountancy , or 'smoke and mirrors' as s&f calls it, allow a wilfully distorted picture in which different  counties decide for political reasons whether they want to portray an 'up' message or a 'down' message.

One side of the  Weald has decided to 'talk itself up'; the other has decided to 'talk itself down' and  if Kent and Sussex were floated on the stock exchange and you foolishly chose to believe the distorted headlines emanating from both of them, you'd buy shares in Kent.

Yet anybody who knows anything about what's going on at the two counties would do the opposite, because Kent are mired in debt  and have a deeply uncertain future  , while Sussex  have no debt,  higher gate receipts and greater non-cricketing revenue.

Here endeth the lesson in GCSE economics smoke-and-mirrors!

As for Glamorgan , they remind me of Robert Maxwell, who once said if you owe the bank ten million you're in trouble, so better to owe 100 million, which means the bank is the one in trouble.  In other words, all county clubs should follow the example of Glamorgan and Kent, borrow more than they will ever be able to pay back, and when the repayment deadline passes , plead poverty and dare your creditors to do something about it. Odds are , you will get away with it....

I have spent an idle Sunday morning researching a little more about Glamorgan’s humiliating financial plight. It appears few local residents
or supporters were keen on the ground transformation in the first place, as the idea was steam-rollered through by the ECB. The Board
desired a Category A cricket ground in Wales, no doubt inspired by that disastrous ‘Deloitte-Touche’ 2005 report stating that the cricketing
halcyon days were back again after England had beaten Australia at home.

Here is some angst-ridden hyper-ventilation from a Glamorgan supporter called ‘dicmortimer’.

Thus here, in the centre of Cardiff, is the only sports stadium in the world purpose-built to host another country’s sporting events.  It was
paid for with £6 million in unsecured loans from Rodney Berman’s malleable LibDem Council plus a straight gift of £3 million from Rhodri
Morgan’s dopey Labour government. It contravened the lease of Sophia Gardens, given to Cardiff by the Bute Estate in 1858 as a public
park protected from development. It drove a coach and horses through the park’s listed status, setting a precedent for the nibbling away
of Bute Park on the other side of the river.  It failed Design Council criteria for a well-designed building fitted to its environment, plonking
a cheap-looking eyesore in beautiful arboreal surroundings.  It ignored the infrastructure issues of having 16,000 people descend on the
mere 100 extra parking spaces provided.  It has been lambasted by independent consultants for its unviable business plan and wildly over-
exaggerated claims of economic benefits.  It was steamrollered through the Council in defiance of fierce local opposition. And to rub in
the tawdry motives at work, the ground was renamed the Swalec Stadium after the energy company bought naming rights for 10 years,
the only test venue to be pimped in this way ( “In Swalec we have a sponsor who represent the best Wales can offer,”  proclaimed Glamorgan
chairman Paul Russell of a company owned by Scottish & Southern Energy and run from Reading).  This – gag reflex – Swalec Stadium is a 
scandalous waste of precious Welsh resources, a betrayal of Cardiff and its people and a profound insult to Wales.

dicmortimer.com/2012/06/21/its-not-cricket/

Back in 2012 when Glamorgan last had to ‘restructure their finances’ (a delicate way of putting ‘to avoid bankruptcy’), the club proudly trumpeted,
“Glamorgan Cricket has signed a restructuring agreement with its lenders and new investors which the club said would put it ‘on a sound financial
footing for a number of years’". Those number of years lasted little more than two.

A mysterious consortium of investors stumped up another £1.3m to throw at the money pit of no return. Who were they? The consortium are not
mentioned in the recent financial restructuring.

Former club Chairman, Paul Russell, had invested £1.2m by 2009 - was he the mysterious consortium and thus has had to write down 70% of his
£2.5m loan?

www.insidermedia.com/insider/wales/65346-private-investors-back-glamorgan/

As for ‘Allied Irish Bank’ (AIB) their loans, presumably, are £7m which means they have lost close to £5m. One of the top four Irish banks it was formed
in 1966 and has a growing list of alleged financial scandals. The bank, itself, was bailed out by the Irish Government in 2009 which led to it being nationalised
in 2010. So, not only have the Cardiff taxpayers been stitched up but so have the Irish public!

en.wikipedia.org/wiki/Allied_Irish_Banks

It is of no surprise that the Glamorgan CCC financial scandal has the ECB smell all over it. David Morgan was Chairman from 2002-2008 before becoming
co-President of the ICC for two years. Today, he is Glamorgan's President and a former club Chairman. And previous ECB CEO, Hugh Morris, is now the present
club's CEO. It is unclear whether there are other strong ECB ties with the county.

Having watched closely over recent years the extraordinary financial shenanigans at Kent - under a treasurer who was a partner in the dreaded Deloitte, the company whose fatuous  'we're in a golden era so let's spend spend spend' report to the ECB after the 2005 Ashes victory is  the root cause of county cricket's debt mountain - nothing surprises me any more.

And after yet another round of going through these various and misleading statements from counties with different customer numbers and cost bases, doesn't one fact reach out and grab you by the throat? County cricket is broke. It is a moribund business that is sustained almost entirely by debt, whether owed to councils, banks or Lord CostCutter. Debtors sooner or later will want their debts paid off or restructured with the interest increased, and county cricket clubs are in no position to do either of these things.They work tirelessly at satisfying two mutually opposed ideals: service to the community through the development of cricket in schools and clubs, and making money from that community by offering a package of cricket that most of the community has never heard of, has no interest in, and is staged at the most inconvenient of days and times, and usually with poor provision for amenities, compared with other spectacle events.

Meanwhile there is money in cricket. It comes from the ECB's marketing of media rights, and from some of the Test match grounds that are geared for large crowds and for expansive and expensive hospitality packages at spectacle events.Big events, positively marketed and aimed at the right audience, held in stadia that are properly equipped to deal with large crowds, backed by a package of media rights that maximise the marketing message and hammer it home through affinity deals with commercial sponsors, these are the events that show that cricket itself is not moribund.

I love the county game and have enormous respect for what most of the counties - particularly Sussex - are trying to achieve through their community involvement. Unfortunately they simply aren't equipped to pay for this, let alone to repackage and sell the traditional game to a wider audience, because they lack all the necessary ingredients to fully exploit the potential of short-form, exciting cricket. Their stadia are too small, their marketing is parochial, no doubt for budgetary reasons, and they are too fearful of the loss of their traditional power-base to admit that other kinds of organisation would be better placed to break this new market for them. All they can see is dilution of their existing tiny revenues; they are oblivious to the prospect of how that revenue base could be expanded very considerably, and that they could then benefit from the new customer base and fulfil both their social and financial goals more effectively.

A good and interesting example here www.derbyshireccc.com/dccc/news-and-features/news-headlines/2052-derby-enterprise-growth-fund-backs-cricket-club-job-growth of a county club finding imaginative and resourceful ways of getting funding. Derbyshire have been granted over £400K by the Derby Growth Enterprise Fund specifically to grow the club's off-field activities: as a venue for Conferences and Events. Chairman Chris Grant says "The revenue we generate will be directly reinvested into the development of the next generation of Derbyshire cricketers, who will make the county proud and inspire others to get involved in cricket.”

This is realistic. However impressive Dilshan and Guptill may be for them this year, Derby cannot hope to steal sufficient crowd numbers from Nottingham to make on-field revenues their staple, nor ever have. Many years ago one of the annual jobs of the County Secretary was to visit the patron, the Duke of Devonshire with the balance sheet from the previous year. His grace would give a weary sigh, reach for his chequebook and say "How much is it this year?"

At Yorkshire's AGM last Saturday Mr Graves reported that the £20m+ debt is not really so bad because the ground is worth £15m. I find this an extraordinary remark. The ground can not just sold like a house and where would the club play if it was sold? This is ludicrous accounting. It was also stated that the Yorkshire membership is now less than 4,000. Another astonishing admission. When Graves took over 13 years ago the figure was at least 10,000. They can't all have died off!

I predict that history will not view Graves's Yorkshire tenure so favourably as he chooses to present it now.

Around £12m is in loans from Graves himself and from the Graves family trust. You would imagine that such a large  loan would be secured against assets - which basically means the Leeds ground, although I don't know for certain if that is the case. What I do know is that Graves is  charging Yorks a very decent rate of interest, which means that  he is not currently losing any money on his loan/investment.

However, I think it would be hard  for him or anyone else to call in the loan by seizing the assets, because unless Yorks has another Test match  stadium to which it can decamp at short notice, it is vital for all investors/creditors that Headingley continues in its present capacity as the club's only real source of income.

Kent, on the other hand, have played their hand  in a rather special Deloitte wide boy kind of way : they cannot repay their over-leveraged loans  but they have smartly ensured that it doesn't matter as they  have somewhere else to go, following  the  redevelopment of Beckenham (a more expensive upgrade than the Canterbury redevelopment, as it was a 'kick back' funded by the third-party property developer Leander, which owns the ground, in return for Kent's vital support in helping them to overturn LBB's green belt planning restrictions to secure approval for the construction of  a housing estate on part of the site).

Beckenham will host three matches this season and there is currently some speculation among Kent members that it would be a smart move to hand over the St Lawrence ground to the city council in lieu of  repaying the club's  over-leveraged loans (the  terms of which have just been tightened cripplingly as a a punishment for the club's default on a £1.1 million repayment that fell due this month).

Basing the club in Beckenham at the more populous end of the county, so the thinking goes,  offers the best chances of Kent's long-term survival, whereas remaining in Canterbury  means a slow, lingering and painful death.

ps: if Yorks membership has dipped below 4,000 and others have followed a similarly downward trend, it probably means that overall  membership across the 18 counties is now below 40,000 for the first time in county cricket's history. The ECB can no longer afford to bankroll  a county set-up about which nobody gives a stuff,  apart from a few tired old has-beens  like us on this and similar forums. . The oft-repeasted complaint by county members  that 'franchises won't work  because they're anonymous and counties have an historic resonance going back to Grace and Ranji' is ballcocks (not least because it was actually Grace who  set up the first franchise when the Crystal Palace Co. paid him to start the London County Cricket Club 117 years ago...)

Sadly, I don't think anybody under 40  cares or even understands what a 'county' or a 'shire' is any more, and hanging on to such an obsolete model as the ONLY way English f/c cricket can be organised is ludicrous. Time to re-embrace  the 1898 spirit of Grace and London CCC!!!