Category Archives: Finance

The Counties and their Finances II

Lancashire,  Nottinghamshire, Warwickshire and Yorkshire

The March issue of The Cricketer  has a strongly worded editorial comment in favour of a city-based 2020 ‘future’, and while to be sure the editor was clearly thinking  in terms of the then expected t20 format, the editorial line was no need for fear, only winners here; before going on to mention that the domestic game is almost £200mn in debt and that the new competition from the ECB is a ‘diligently researched, meticulously constructed attempt to eradicate it’.

Both sides of the argument in relation to the proposed 2020 competition face what is a divide of sorts, if not a fault line, between the counties with international grounds in the cities and the other counties; the  legacy of redeveloping and upgrading venues one side, the risks of marginalising, if not extinguishing, part(s) of the county game on the other.

Yet, when it comes to their financial size, and the debts that are being carried, the differences between the TMG counties, with Surrey at one end of the spectrum, are often greater than the differences between them and the others. In terms of revenues, the four counties over the horizon covered by the chart, for instance,  vary from Lancashire (£258mn) to Yorkshire  (£118mn) with Warwickshire (£183mn) and Nottinghamshire (£153mn).

When TV coverage of Test cricket went commercial after 1998, Channel 4 latterly offered a contract that was so favourable to the game that it was unable to repeat it and the ECB, prioritising (centralised) revenues, traded away FTA coverage; with  risks for the  finances of individual counties passed on from the diminished visibility of the game and in the case of the TMGs, dealing with the effects of having to bid and pay staging fees to hold international cricket.

It is no surprise that the revenues from the middle of the last decade became more variable,  with the  particular years in which Test cricket was staged or not obviously important for the individual grounds. Edgbaston and Trent Bridge both staging four Ashes Tests after 2001, Headingley and Old Trafford two, creating predictable local peaks; as the for the troughs in the case of Old Trafford 2012 was a year of major rebuild, the ground that re-opened a year later, ‘a venue for the 21st century’.

There are, of course, other specifics, which impact the revenue figures, one of which being membership numbers; at Old Trafford, for example, there were  more than 13,000 members at the turn of the century, a number that had declined  to the order 5,000 by 2016, while at Trent Bridge numbers of 5,000 in 2000 have since risen by around 50%. Differences of this sort are not obviously attributable to matters of TV coverage; variations in costs and fixture scheduling, the management of member facilities would seem likely, among other things, maybe.

In a way the revenue figures are also an observation on the argument put forward by some club officials at times that the business in the cricket business is simply there to support the cricket. Centrally set limits have meant that the differences between the counties’ expenditures on their playing staff have been relatively small: the financial records over the last decade show spends by Lancashire of £26mn, by Yorkshire £24mn; the  amounts of support from business involved in putting out a team of  cricketers seemingly varying by a factor of up to two among the counties here, between 2007-16  about £1 in 6 of the revenues at Old Trafford went on paying their county players, at Headingley, about £3 in 10.

As to the debts being carried, the second chart shows the growth in the loan finance by the four counties; numbers that have risen in the last decade with ground developments at Edgbaston, where loans rose from £20K to £20mn between 2008-11 and at Old Trafford, where they rose from £3mn to £18mn during those years and where the numbers have been projected to keep rising, as they have been at Headingley, reportedly up to £40mn with the development of the football stand. As things stand something like a half of the debt in English cricket is carried by three counties, with loan finance at Trent Bridge  having peaked at the end of the last decade since when it has halved approximately.

How much of a problem is this really? Much of  the growth in debt finance in the last decade has an orthodox (and not unreasonable) justification that the cost of the ground rebuilds be paid for on a generational horizon.  Developments aimed at eradicating debts on a shorter horizon come up against the standard (and as far as it goes not unreasonable) objection that they are likely to be either ineffective, for some if old debts are paid off new ones be acquired, or un-necessary, for others manageable debts simply remain that way.

Debts from trading losses are another story and there is a something like common sense takeaway from the first chart that more stability would be a good thing, greater certainty about major match allocations for longer horizons a help and avoiding unnecessary risk-taking, it does seem reasonable to think, likewise; such as a new competition for new spectators where they simply may not exist in noticeable numbers  in one, or several, of the proposed locations for holding it.

Broadly speaking an era of commercialisation, with the centralisation of revenues and arguably more managerial influence throughout the game, has resulted in more debt. There is no obvious outward sign that this is set to change, rather that the 100 ball cricket now proposed from 2020 is the continuation of the same, at least in terms of managerial influence;  which raises the question whether the rising debt levels are reversible without, among other changes, there being larger budgetary spends on the game’s players?

 

 

 

The Counties and their Finances I

Derbyshire, Leicestershire, Northamptonshire and Essex

Graeme Wright’s  book is a lively account of the issues attracting the attention of the game’s business minds at the beginning of the decade, some of which have certainly moved on, some of which equally certainly remain, hardy annuals as it were.  The difficulties caused by the bidding war for major matches and the resultant indebtedness of some of the TMG’s, now recognised,  a fixture list seemingly giving little rhythm to the cricket season, still,  and criticism of an over-powerful bureaucratic governing body then, for better or not a new ECB constitution in 2018.

The language of dependence  tends to permeate the references to the smaller counties, downstream from decisions, resistant to the proposed  city-type T20 competition at the end of the last decade and, in the view of some,  leaving the modernisation of the game a  decade and more behind rugby union. What future for county cricket now, with a city-based T20 game on the horizon from 2020,  its Championship watched by the proverbial three men and a dog and calls from prominent figures to reduce the amount of 4-day cricket that is played?

Financial  numbers tell us something about the county game and the revenues of the four counties above in the time of Sky TV are in the chart; the numbers for  Kent, Somerset and Worcester not very different to Derby, Leics and Northants  in 2016, those for Gloucester closer to Essex, Sussex a bit higher.  Once the effects of general inflation have been allowed for, the revenues of the four have, broadly speaking, flatlined, the effects of taking TV coverage behind a pay wall not helping with the general awareness of the game or, it seems reasonable to think,  membership numbers or ticket sales.

In the peculiar, peculiar in the sense of being unusual, economics of team sport, revenue sharing is something that gives smaller clubs a chance to compete, an aid to the overall competitive balance of the competitions that are played. The extent of this varies between sports, although for smaller clubs, their share of pooled funding is, of course, a larger % of their revenues.

Scaling the financial numbers in cricket up by factor of around  30, Leicester City FC, a relatively small PL club, were around 75% financed from TV monies in the year they were champions; in rugby union where the numbers are closer to those in cricket, Northampton Saints, for example, a not so small rugby club, receive about 30% of their funds from Premiership Rugby and the RFU.

When free market economics meets English cricket it could therefore be expected to be on the side of the smaller counties. Cricket has a long history of pooling monies from Test cricket that dates back to the time of the TCCB, and before: in the  Sky era  ECB monies have been of the order of 40-50% of the total revenues for Essex, Northants do not disclose £mn figures, but  have referred to ‘well in excess of 50%’ in their accounts. The % for Derby and Leics are in the chart. 

 

The revenues that the ECB generate are, in large part, derived from Test cricket and concentrating the revenues coming into the game via TV contracts has concentrated the financing for the red ball game. For individual counties more revenue may be generated by T20 ticket sales and the associated hospitality than comes from member subs from those more interested in 4 day cricket, but taking ECB monies with other revenues together the picture of what it is that finances the county game is more mixed.

Whether overall the long form of the game has been used to support the development of T20 cricket by the counties in the last decade or so is moot: but whatever answer be given,  a county Championship that is in large part financed to support the development of the England Test team needs sensible fixture scheduling among other things.

In the 2018 season ahead  county cricket overall will still make some sense economically, Derbyshire and 17 others doing what they are financed to do. Whether from 2020, when the cities are seeking a new audience for the T20 game, more 4-day cricket should be played by the counties at a time and in conditions they often don’t play in now, is another question again, and one that deserves to get an airing.