Sta£e of the Nation - County Cricket Finances

Two massive assumptions there. One that success on the field will generate extra members and sponsors. What are membership levels now compared to 2003? The other thing to factor in is that 2003 was the first year of Twenty20. What is the commercial revenue now compared with then after adjusting for inflation? 2) That we will get another bequest like Spen Carma. I sincerely doubt we will get another such large donation in my lifetime. However, in forty years we won't be able to spend what we don't have. If we borrow the money that is hugely risky as banks can pull the plug at any time and have done so to companies with devastating consequences. Without the ECB money most counties would have gone bust by now.

We have increased the playing budget for 2015 because we have made an operating profit in 2014. What happens if we make a loss in 2015? With no tourist match this is a strong possibility.

Depreciation may be a non cash item but it cannot be ignored simply because it doesn't suit the desire for cricket to be seen as operating profitably. Depreciation is, as Coverpoint suggests, the cost of replacing the asset over a period of time. If you do not set aside or create a fund to replace an asset that has reached the end of its useful life, how is the replacement to be funded? - except through borrowing? EBITDA is a misleading measure.

Nobody has answered my basic point about 'saving for a rainy day' to fund future depreciation when - as has been the case since 2008 - inflation far outstrips the rate of interest.

Any money set aside since the last ground refurbishment for future renewal of fixed assets will already have declined in its real value and purchasing power and, according to market predictions, will continue to do so for years to come. By the time the ground needs refurbishing again, therefore, such sums that are being set aside for depreciation purposes today are likely to prove totally inadequate.

As putting cash into a deprecation fund in 2014 to refurbish the ground in 2050 means the money can only shrink in real value under present market conditions, surely better to invest it in growing the business in ways that will produce future year-on-year income streams?

Sussex, due to a combination of canniness and luck, spent the Spen Cama money at just the right time; the club enjoyed substantial investment income from the capital sum for a number of years while interest rates were high - and disposed of the cash just at the point when interest rates plummeted to almost nothing.

I suppose the point is that the concept of depreciation to fund future renewal of fixed assets is a sound one in 'normal' market conditions. But in a period when historically unique conditions of almost zero interest apply, the traditional laws of  finance are found sadly wanting - as many pensioners have discovered over the last few years as their savings, put aside so prudently to fund their old age, have plunged in value.

BM, no-one is suggesting that funding the future replacement/refurbishment of fixed assets is straightforward. There was a time (in the 70s IIRC) when inflation was so high that accountants began to charge depreciation, not on the basis of writing off the capex at historical cost, but on the basis of estimated future inflated replacement cost. Fortunately, we have low inflation at the moment. 

No-one knows the cost or the timing of future long term replacements and/or refurbishments. Surely, the least we can do is to provide for depreciation on the basis of the historic cost? Anything beyond that is a matter of guesswork. But, to ignore the issue (for whatever reason), is to store up a problem, as SCCC found to their cost - or should I say, Spen Cama's cost.

Fascinating insight into how other people organise their lives. I had no idea that anybody starts saving for their next car on the day after they buy the current one!

In the current financial climate that makes no sense to me. If you had started saving in 2010 to buy a car in 2015, inflation would have increased by around 13 per cent, while your savings  would have grown by 5 per cent. So wouldn't one be better advised to finance the purchase with one of the many excellent low-cost leasing or contract plans now on offer?

And, sorry duleep, but there's a fundamental gulf between the solid security of the real estate of a cricket ground  and the planned obsolecence of a car; namely that the value of one appreciates and the value of the other depreciates. Diametrical opposites, in fact.

So surely, renewal of the fixed assets on property that you own could not be more different from buying a new car, because the value of the  real estate  is appreciating  all the time.  Therefore, it's more like the  maintenance/upgrading on your house - which, unlike running repairs on  the declining asset of a car,  is a value-adding investment,  whether it's  £15k on a new kitchen every ten years, installing under-floor heating or adding an extra two bedrooms over the double garage. (And are we meant to start saving for the next kitchen upgrade the day after the installation team has hung the final cabinet door on the last one?)

Over the last few years, almost every county has upgraded its facilities. With the exception of Sussex, which had the Cama bequest, I think every single county has funded that redevelopment by borrowing. Can you name me one county that has financed their redevelopment from a depreciation fund into which they have been paying for the last 40 years?

So why should the next round of redevelopment circa 2050 be any different, and funded by  clubs  saving money now for a rainy day, rather than spending the spare cash on building a successful cricket team?

Can't help feeling that the luxury of the Cama bequest has led Sussex CCC  to adopt an entirely different outlook on this to all the other 17 counties.

I enjoy a good debate when you can see both sides and depending on the mood of the day decide, accordingly, which to support.
Although, perhaps, the book should be entitled, “Accounting for Realists’.

The cost of making a ground clean for ICC and removing all sponsors signs etc is vast.

Hence I imagine few bids, if any, by other NTMG counties for even relatively minor matches in 2019 World Cup