Bailing Out

It was a difficult time for the northern county cricket club.  Financial hubris, encouraged by the ECB, had seen it pile a high risk project onto a debt laden structure and, when the project failed, there was insufficient cash to pay its burgeoning debts.  It had to turn to the ECB for financing.

Well you know the rest of the story, the ECB demands a high price for the bail out, the county is taken into special measures, penalised with relegation to the second division, swingeing points deductions for the next two seasons, a reduced salary cap etc.  A very public humiliation.

Except none of that happened, because this isn't the story of Durham's financial difficulties, but Yorkshire County Cricket Club's (YCCC).  (Do you see what I did there).

What had brought Yorkshire to the brink of financial ruin was the staging, in 2010, of a Headingley test match between Australia and Pakistan.  You can see the logic, Pakistan supporting Yorkshire men and women would (hopefully) turn up to such an event and it fitted in well with then ECB Chairman, Giles Clarke's, wooing of the Pakistan Cricket Board of Control.  Nice idea; but no  - one turned up, leaving Yorkshire, already struggling to pay the interest on debts incurred to improve the ground,  in a spot of bother.

As the Director of Finance's report in the 2010 accounts put it "The poor performance of the Test Match meant that the Club had to find an alternative source of cash and this came through an upfront cash receipt from the ECB."

But whilst Durham's bailout was a public affair Yorkshire's was handled much more discretely.  The £3.4m paid to Yorkshire was structured as a payment for the income from "a number of advertising sites around the ground over the 2011 to 2019 seasons."

There was clearly some concerns at the ECB over repayment of the cash advance because it was guaranteed by the then Yorkshire chairman, Colin Graves (This disclosure is in the ECB accounts).

The fate of the chairmen of Yorkshire and Durham after the bail outs of their respective counties is instructive.  Durham's Clive Leach was unceremoniously ousted to make way for ECB approved replacement, Ian Botham.  Graves, who had been Yorkshire CEO from 2002 and chairman from 2006 initially remained in his post, and in 2013 became deputy chairman of the ECB.  He resigned from his role of Yorkshire chairman in 2015 to become ECB chairman.  Putting him in the interesting position of being chairman of an ECB which owned advertising rights at Headingley whilst, personally, guaranteeing the return to the ECB of the money advanced to Yorkshire for those rights.

When you consider the different treatment of the bail outs of Durham, Yorkshire and Glamorgan I think Durham were harshly treated.  This is particularly the case when you consider Durham's success in developing England players, such as Ben Stokes who has done some bailing out of the ECB this summer. The question is, why were Durham so harshly treated?

Stuart Rayner's book, five-trophies and a funeral tells the story of Durham's rise and fall as a first class cricket county.  Rayner hints that it was jealousy at other first class counties which led to the draconian penalties associated with their bail out.  And there might be something in this but I rather doubt it is the whole story, the modern ECB is a bureaucracy not the collective will of the counties and I suspect Durham had done something to upset those bureaucrats.  I don't know what that was but have a couple of theories.

Theory 1: Durham had it coming (sort of)

Five Trophies and a Funeral is a very well sourced book, written by a journalist who worked the Durham circuit for years.  And although it tells the story from a Durham perspective you do get little hints, here and there that Durham was, from the get go, to its financial difficulties in 2016, a north east prestige project prepared to take a financial risk, or two.

Steve Coverdale, the chairman of Northamptonshire, who sat on the ECB working party which eventually recommended Durham's admission to the county championship is quoted in the book:  "The Callers entertained us wonderfully at a couple of lovely stays at Linden Hall (which they owned).  If we'd been put up in a pokey hotel we may not have been so inclined to support them.  We were probably not as totally objective from the very start as we perhaps could have been.

'All sorts of promises were made in terms of sponsors and so on.  We were led to believe quite fervently that the support had already been granted"

In Five Trophies and a Funeral Rayner also makes it clear that the expansion of Durham's Riverside ground for test cricket was not, as was widely reported at the time of the bail out, a pre - condition for Durham obtaining first class status, but rather a decision taken by Durham.  Those ambitions fitted in nicely with the ECB's policy of encouraging counties to bid for test matches, but the county weren't pushed into disastrous expansion, they happily ran into the fire.  The impression I get is that the financial ethos of Durham County Cricket Club had been "If you build it they will come" but they didn't come to Chester Le Street, not in the numbers required.

This Daily Telegraph report confirms that the ECB had already given Durham some leeway by swapping the staging payments for Australia and Sri Lanka tests.  And in Five Trophies and a Funeral Stuart Rayner says that Durham were struggling "to keep their head above water" in 2007 and 2013.   

Of course financial hubris wasn't confined to Durham.  Yorkshire's transformation under the Grave's regime, from a tenant at Headingley, to owner of a redeveloped test match ground owed  more to YCCC's self image than financial calculation.  But, although ECB money was important in the short term survival of Yorkshire Grave's role in funding the county should not be ignored.  The most recent set of financial statements shows that Graves has, via various trusts and settlements, advanced just shy of £18.5m to YCCC.  And even though the loans pay interest it can't be denied the man has undoubtedly put his money where his mouth is.  

With Durham there seems to have been more a belief at board level that someone else would step in and rescue the county.  And you can see why the ECB felt that sort of thinking had to be discouraged whilst stopping short of letting Durham go into administration.  

None of this is me trying to argue Durham entirely deserved the penalties they got, it's just a theory of why the ECB's sanctions were so disproportionate and inconsistent with the treatment afforded to other counties.   And I have another theory.

Theory 2

One fascinating though under - reported chapter of the Durham story is the investment  / purchase of the club by Indian businessman Gautam Radia.  Durham was never a proper county cricket club, controlled by its members but was originally a company limited by guarantee.  That all seemed to change by 2009 when Radia was identified in the company's financial statements as having having a controlling interest in Durham County Cricket Holdings Limited.  As far as I can see Radia paid approximately £2.3m for his stake in Durham.  In Five Trophies and a Funeral Stuart Rayner identifies another outside investor, Singaporean businessman Jhaveri Darsan, who he says put £6 million into the county, although I haven't been able to track this down in the financial statements.  

Whether the outside investment was £2.3m or £8.3m Durham seems to have run through that money as well before hitting the buffers in 2016.  And as well as reinforcing the ECB's concerns that bad things happened to people who gave Durham money, foreign investment may have triggered more existential fears in St Johns Wood.  As this 2010 BBC article sets out, part of the reason for Radia's investment was to be in at the start of a putative UK cricket gold rush, with an IPL like tournament including Indian stars and powerful independent franchises based at English test match grounds.  It was, perhaps, not a realistic prospect but I suspect it put the fear of God into the ECB.

One of the changes at Durham as part of the 2016 bail out was that the limited company was converted to a community interest company ("CIC").  One condition for CIC status to be available is that no more than 35% of profits arising can be paid to shareholders as dividends.  This condition formalises the fact that Radia (and possibly Darsan) have lost the money they invested in Durham.  

And in doing this, along with the other sanctions loaded onto the county, the ECB have put down a marker.  For them the counties getting together to form a short form league is an unappealing prospect.  It would see them dethroned from their current position as Sun King of English cricket to a position analogous to the Football Association, theoretically in control, but in practice subservient to to powerful club sides.  I think the ECB nursed its dissatisfaction with Durham and fear of what of they represented and, when the time was ripe, showed what would happen to counties which threatened the ECB world view.