Glamorgan - Did The ECB Show Them The Money

Colin Graves did an interview with the BBC on the 14th May.  As well as blethering on about the 100 he said something interesting about the subject of payments to Glamorgan for not bidding for test matches.

"Graves said: “No payments have been made to counties at all, full stop. I floated an idea talking to four or five county chairmen, that would need to be agreed by the board to go any further. No payments have been made. No payments have been promised. End of conversation.” [Quote taken from the Guardian]

This is a bit embarrassing for me.  In my previous post on Glamorgan I wrote: 

"Glamorgan have accounted for the full £2.5m non - staging payments as income (see page 8 of the accounts).This would only be appropriate if they were assured the payment would be made.  And although the years covered by the payments are 2020  - 2024 it seems Glamorgan have already received some of the cash.  It's only I guess but I would estimate £1m to £1.5m has been paid out by the ECB, and it is not clear the board of the ECB approved the payment."

How could I have reached the conclusion that the payments from the ECB had been guaranteed to Glamorgan and that some of the payment had been made in cash when Graves makes it clear this is not the case?  Clearly I had fallen into vulgar error and I have gone back to the Glamorgan accounts for 2017 to see where I went wrong.

But when I return to the Glamorgan accounts they still seem to me to state that the payments had been agreed with the ECB and to infer that a portion of them had been made in cash before the end of 2017.  The rest of the article explains the reason for my confusion [Alert if you are annoyed or scared by double entry book keeping and accounting concepts you may want to look away now.]

Firstly the issue of whether the £2.5m has been promised to Glamorgan. There can be no doubt that Glamorgan have accounted for all of the £2.5m as income in the Club's 2017 accounts; the Chief Executive's Report includes the following statement: "This profit includes an underlying profit of £1.646m and £2.5m relating to an agreement with the ECB regarding the staging of Test matches."

A clear a statement Glamorgan believed they had reached an agreement with the ECB whereas Colin Graves believes "no payments have been promised."  

We also need to consider International Financial Reporting Standard (IFRS) 15: Revenue From Contracts With Customers. [No moaning at the back]  Paragraph 9 of the standard states: Any entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met:
a)  The parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations" ...

So, assuming Graves is accurate when he says "no payments have been promised" are Glamorgan's accounts, signed by prestigious international accounting firm, PriceWaterhouse Coopers, incorrect?

Turning from the question of what has been promised to what has been paid. It is quite possible to account for an amount as income without having received payment.  All sorts of businesses do the work first, then invoice and then receive payment, meaning income can be booked in one period but the cash not received until the next.  However, the accounts will show the work done but not yet paid for as a debtor.  So if Glamorgan hadn't received any of the £2.5m from the ECB we would see a debtor in Glamorgan's accounts for £2.5m, hopefully it would be called something informative like amounts owing from ECB.

But when I look at note 10 of the Glamorgan accounts which analyses the Club's debtors there is no such amount.  There is a figure for "other" debtors of £1.038m which has increased from £0.036m at 31 December 2016.  If the increase of £1m is money outstanding from the ECB it implies the other £1.5m of the £2.5m has been paid.

It is always difficult to navigate around a set of accounts, even if you know what to look for (which I like to think I do.)  But there is a conundrum here.  Graves would clearly know what was agreed with Glamorgan and therefore his statements will be accurate.  But they don't, apparently, tally with the information included in the Glamorgan accounts, which are a legally required and audited document.  Hopefully Glamorgan (or their auditors PwC ) will come forward in the next few days to provide clarification.