Lancashire Members Group
Unfortunately we’ve already been duped on the last para:
We are told that the Hundred has saved county cricket. Or rather the £500m raised from selling a month of the summer to billionaires could be a lifeline for counties.
Counties face an uncertain future. They cannot host big games in peak summer with over 100 players missing. Moved to May, June and July the Blast audiences have dwindled. Crowds of 15,000 that used to watch Lancashire play Leicestershire now go to watch the Manchester team after huge marketing spend and cheap tickets aimed at attracting different people.
Counties hosting the Hundred have been asked to play as few games as possible at their home ground during the Hundred. Surrey use 2000 capacity Guildford, Nottinghamshire play three games at Welbeck Colliery and Chesterfield, in Derbyshire, Warwickshire play three games at Rugby school.
One suspects that some host county boards prefer their franchise stake to developing their county brand. Surrey stands out, making a big effort to encourage people to watch county cricket.
Non-host counties have very few days of home cricket to showcase in peak summer. Somerset had sell-out games in the One Day Cup last summer, but only four home games were scheduled.
Even more significantly, TV rights money is being allocated to the Hundred teams without any transparency. Money going to the owners of the Hundred will not be available to the counties. Counties can expect lower ECB distributions in future. But until we see the next TV rights deal, we won't know just how hard the counties are going to be hit.
For this reason the allocation of c £25m of the sale proceeds for each non-host county is being carefully managed by the ECB. Counties have to apply to use the money. Allowable purposes include reducing existing structured debt - but not paying off debts run up by recent operational losses (Sussex).
Investment in revenue generating facilities such as a hotel or hospitality facilities are allowable. Investment in cricket facilities such as indoor nets, upgrades to the ground and possibly even a second ground are potentially possible - but funding operational losses to hire management to formulate plans are not (Middlesex).
Reports suggest the ECB is holding the money in cash and will pay over some interest earned on it to the counties each year, but again details are sparse.
For counties like Middlesex with few revenue generating opportunities open to them (as MCC rather than Middlesex own Lords) and a management/governance crisis on its hands, what can it do with the sale proceeds? £25m is not enough to fund a new ground. Its board wants to explore demutualisation to bring in extra investment. But where are the profits from county cricket going to come from to support a new home away from Lords and the probable loss of membership that will follow? Is it just to chase the dream of another Hundred team?
If counties can only spend the interest on their £25m then focus goes on where the money is actually invested on their behalf.
Stuck in cash paying around £1m a year then this income will reduce year by year in real terms. Around £0.5m a year could be paid to keep pace with inflation each year if invested in government inflation-linked bonds. Another approach is a county cricket wealth fund investing more broadly in the global economy. An income of £1m or more per county could be achievable in real terms if well run at a national level on low costs. However, if the global economy suffers a shock from war, pandemics or AI revolution then this income may need to be scaled back or even paused. Who has the expertise to manage these sums and what would be the governance rules?
Counties like Somerset, Gloucestershire, Durham, Kent and Essex have all shown some ambition to part-own a Hundred team. But they need to expand their grounds/develop a new ground before they could be considered, even if the current Hundred owners agree to an expansion.
Somerset CEO Jamie Cox speaking to Mike Atherton said:
It doesn't feel like a lot has changed. It's a great, fortunate position that we are in, but there is jeopardy in getting it right. Twenty million quid, it sounds a lot doesn't it, but it's not necessarily transformational. I could spend that very easily in infrastructure that needs updating around here.
We don't want our focus on the here and now to be distracted but we will try to put ourselves at the top of the pile if and when that opportunity comes along. the great thing about the Hundred expansion criteria is that we tick most boxes, but we don't have enough seating capacity, so there has to be some capital work to increase that.
It's hard. We have access to all this money but the business model hasn't changed. So there is pressure to get these decisions right. There is a feeling that there is a lot more money coming into the game than is actually real. The financial challenges feel just the same.
If anything Cox is understating the challenge. Counties can expect lower ECB payments in future that the interest on their allocation may well not cover. There is a risk in spending money on private investments that may not pay dividends. Chasing the franchise dreams involves even bigger risks. Still Somerset can only host very few days of county cricket in the peak summer holidays.
In order to access funds then counties need to become private developers and expand their business models if the market opportunity exists. Balancing that challenge whilst remembering that they are still a members' cricket club at heart underlies why Lancashire's board have faced membership complaints for over 10 years.
It is fraught with risk and upfront costs too. Household finances are extremely strained and there is strong competition for leisure spend. Sussex found its business development plans for extra income hard to deliver in the current climate, despite being in a relatively wealthy area. The costs it sustained trying to grow the business model to support cricket investment has seen the ECB step in with funding alongside reprimands and penalties.
Outgoing Hampshire Chair and investor, Rod Bransgrove is clear that counties will have to demutualise to get the investment and expertise needed to transform their grounds and business models. Any club not doing that faces financial disadvantages and irrelevance. Colin Graves still wants Yorkshire to become a private business even though all its debts are paid. What is the private money going to do for county cricket and what does it want in return?
Northants is already privately owned. Arguably they have saved the club and stabilised its business but what can the Hundred money do to help the club when the draw of Jimmy Anderson fails to bring even 500 people to the ground on Easter Saturday? Counties like Derbyshire who have cut their cloth according to their means for decades will no doubt carry on in the same vein. They are looking to upgrade their floodlights with an ECB grant and use some of the Hundred money to upgrade their hospitality marquee. Leicestershire has ambitions and a big site at Grace Road with development potential. The new CEO has paused the plans previously developed.
These counties have some of the lowest membership and fan base despite improving on the field in recent seasons and investing in coaching excellence.
The ECB has some big decisions to make after the next TV rights deal is done. The host counties advantage from hosting international cricket has been boosted by the Hundred sale. Will the ECB give the non-hosts a greater slice of the pie in future? What will the ECB demand in return? The ECB is ultimately answerable to the counties.
These big questions will probably see not only the amount of county cricket being discussed again very soon but whether there is a majority support for 18 counties playing three forms of professional cricket and in what structure.
Members should think very carefully before agreeing to reduce their own ability to hold their Board to account and giving their Board even greater powers to decide who can go onto the Board.