County Finances: Part I (I guess)

The County Cricket (CC) off-season is a time of many changes. Clubs make alterations to their playing and backroom staff, players receive and lose contracts and grounds get redeveloped. Added to these changes are the often eagerly awaited announcements from clubs of their yearly finances. The domestic circuit in England has long been under financial duress and in the recent past has not only faced threats from dwindling crowds but also the global economic crisis and increasingly wet summers which lead to vast amounts of cricketing hours being washed out and in some cases like New Road, ground flooding. The very fact that most of the counties are getting by is down to some shrewd business minds finding new revenue streams to generate a cash flow into their clubs. Stands to reason that some of the best examples of clubs practicing innovative methods of making money would come at some of the smaller clubs who don’t play at Test match grounds (non-TMGs). So much so that even those with Test match grounds are following suit. One of the main routes to achieving a profit in a tough economic climate is to make the club as a business entity an entity all-year round as opposed to just during the CC season. This is done by developing and increasing the corporate and events facilities at the ground, added to staging music concerts, which can make huge differences to a club’s end of year accounts.

In January the ECB announced a program to inject £18m into the County game. Each club would receive a loan of £1m. As of yet not all the Counties have opted to take on the loan. At the moment, the list just stands at Glamorgan, Gloucestershire, Hampshire, Kent, Leicestershire, Lancashire, Middlesex, Northamptonshire, Somerset, Surrey, Sussex, Warwickshire, Worcestershire and Yorkshire. The other counties might well follow suit but there might well be a reason as to why they haven’t joined the rest just yet. In the article on the ECB website, it says that:

 The loans have been approved in return for meeting key strategic targets relating to stadia and facilities, customer relations, community programmes and business operations.

This suggests that the ECB will only grant the loans if the Counties agree to spend it on certain things. Lancashire, for example were the first County to outline how they planned to spend their cut of the investment. The Cricketer reported that they planned to install a new video screen, improve net facilities, a new electronic scoreboard, redevelopment of the pavilion and “enhanced facilities around the ground for the benefit of our visitors.” It could be that the ECB’s much publicized £18m injection is not a loan to pay off debts for struggling Counties but has to be spent on areas specified by the ECB. The loans are repayable in January 2017 with interest, which could be another reason the other Counties have put if off for now. Since it appears the clubs will not be using it to pay off existing debts, it could mean that come 2017 – after a few years of even wetter summers- these same clubs might find themselves unable to pay off these loans and end up defaulting on them, causing further trouble.  could be that should the Counties spend the money to the ECB’s satisfaction, the loan will be simply written off – although I cannot find any evidence to support this hypothesis. The deadline for applications for the loan is towards the end of 2013 so its not like time is running out for those who haven’t opted in for it.

I should perhaps point out at this point that I am not an accountant, nor do I possess any business experience to speak of. Which made delving into the world of CC finances an interesting but jargon filled trip. There is a very distinct possibility that I have either misinterpreted something, or got the figures wrong or both. So please keep this caveat in mind if you for some reason intend on reading further. Also bear in mind that not all the Counties have released their accounts, and of the ones that have, new details may emerge later on. Also I would like to mention that this thread on the Sussex Message Boards about County finances has been invaluable in making sense of some of the club figures especially for someone like me who is not versed in the language of business and accounting.

Derbyshire

Derbyshire defied all expectations to win the Division Two Championship


Derbyshire were County Cricket’s surprise package last season. They are a County that have not necessarily been considered as ‘underachievers’ more so than ‘non-achievers,’ seemingly intent on making up the numbers in Division Two and collect ECB funding. But with the emergence of bright young talents such as Chesney Hughes and Dan Redfern (I  must have been the only person outside Derbyshire to vote for Dan Redfern as player of the season last year) coupled with the experience of Tony Palladino and under the astute guidance of Karl Krikken they have finally found themselves in the not-quite-so-promised land of Division One. Off the pitch, Derbyshire have been relatively stable. They have a very tidy ground in Derby and a picturesque second ground in Chesterfield. Recently Derbyshire announced that they had made a £23,310 profit in the last year. This is a small profit, but is the sixth time in seven years that they have generated positive finances and the second year in succession.

Like many Counties, they were hit by one of the wettest British summers in living memory that saw a lot of cricketing hours washed away. Added to the fact that across the land CC had to compete with the Olympics and Euro 2012 in terms of interest over the summer. Derbyshire have announced a six-point plan to increase the interest of cricket in Derybshire, capitalizing on the success of last year. The six points are; Cricketing Success. Customer Experience, Attracting more supporters, Community Involvement, Financial Stability and of course, Corporate Governance. Presumable part of this plan includes the recent addition of Shiv Chanderpaul as part of the playing staff. His contract will not be cheap, but may be worthwhile.

The point of corporate governance is an interesting one. At the next AGM (Annual General Meeting) of the club’s governing body and membership, a vote will have to be passed between the members to effectively slim down the governing body from 15 members to 9 with these individuals bringing certain specialties to the table. Derbyshire are selling this notion as a sort of ‘building society model’ for the running of the club. They have also applied for the ECB’s £1m loan (which as I eluded to above, might not necessarily be a loan, more so a grant). The ECB are said to be unwilling to provide this loan unless the leadership team at the County is in this format as opposed to the way it has been all this time. So unless the members vote for the cut-down version of the committee, Derbyshire will be unlikely to get the ‘loan’. The chances are that this will be voted in and the £1m is granted. Derbyshire will then borrow a further £1.5m from the Derbyshire County Council to refurbish many aspects of the current ground at Derby including a new media centre and maybe even a new 2nd XI ground. More information on this can be found in this piece in the Derby Telegraph. It explains that because of low interest rates, the risk of Derbyshire borrowing £1.5m from the Council are relatively low and the advantages of Derbyshire moving with the times are high.

Essex

Like many Counties, Essex are proceeding with ambitious redevelopments to the County Ground and the surrounding area. They haven’t released details of their accounts for the last year yet but it is worth looking at the plans for the Chelmsford County Ground (which from next season will be called the Essex County Ground or ‘ECG’). Along with their developmental company MCD, Essex unveiled plans for an expansion of the ground, 4 towers of 300 apartments, about 14,000 sq ft of retail and leisure space and redevelopment of the shopping facilities in central Chelmsford. All this is expected to cost in the region of £85m according to the MCD website. Planning permission was granted in 2010, and work could start as early as spring this year.

In the first phase of development, 62 apartments will be build on what is currently the car-park servicing the County Ground. Of these 62 apartments, roughly 90% of them have already been sold which is pretty impressive given the current state of the property market. In these towers, the most expensive apartments are likely to be priced at about £270,000 each. Essex have also named a new Chief Executive; the outgoing David East having been headhunted for a job as Chief Executive of the Abu Dhabi Cricket Club and the Emirates Cricket Board. It is testament to the work he and Essex have done as a business that he was offered such a lucrative job. As his replacement, Essex have announced that former Ipswich Town CEO Derek Bowden as East’s replacement. Bowden himself was also headhunted by the headhunting firm Odgers Berndtson and is supposedly on a salary of somewhere in the region of £120,000 (per annum). His first and most pressing task will be to oversee these developments and make the cricket club the centre piece of Chelmsford as a city. More information can be found in the Developmental Brochure.

What the redeveloped area surrounding the ECG could look like. © Essex Cricket Club

There are more club finances to get through, but I reckon I’ll leave it for the next installment in this riveting series.

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