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Leicestershire County Cricket Club Accounts for 2019

2018 was a bad year for Leicestershire cricket.  The usual poor on field performance was matched by financial worries, with the club falling 6 places to 11th in the prestigious Bentley Forbes Consulting rankings.

The financial statements for the year to 30 September 2019 showed more losses.  A loan from the county council has bought some time, but even before Covid 19 Leicestershire faced significant financial problems. The county are unfortunate in being assailed both by specific financial issues as well as the more general issues faced by the cricketing counties.    

It's always been hard work trying to grow cricket in Leicestershire's stony soil.  When I was researching my book on 1930's cricket I found there were counties who were only getting by thanks to their share of the revenues from English test matches and MCC overseas tours.  Leicestershire were generally included in the ranks of the struggling counties and, in that respect, not much has changed.  The county's total revenue in the year to September 2019 was just over £4m with approximately 60% of that coming from the ECB .   As ECB payments were lower in 2019 than they had been in 2018 there was an inevitable financial squeeze.  

The squeeze was exacerbated by two other problems, faced by Leicestershire and many other first class counties.  Firstly there is the curse of the loan repayment.  Like many other counties Leicestershire have borrowed money, "only" a couple of million in Leicestershire's case and the club was (just about) OK meeting the interest costs on that debt.  But the problem with debt is that it has to be repaid.  And Leicestershire were operating under the cloud of having to make a £900,000 repayment in 2021.  Making that repayment was always a stretch and by 2019 it was beginning to look like an impossible aspiration.

The second generic issue eating away at Leicestershire's financial security is the failure of English county cricket to interest people with a South Asian heritage.  There's a generally quoted figure that 1/3 of  recreational cricketers in the UK have South Asian backgrounds.  Given the big Asian community in Leicester you would expect the figure in Leicestershire to be higher, a half? - 2/3rds?.  But Leicestershire rarely  develop South Asian cricketers, I can think of Aftab Habib, Hassan Azad and Shiv Thakor. This isn't just a Leicestershire problem, in general English counties, struggle to develop Asian players even when they make up a majority of the local cricket community.  This lack of contact between cricketing communities has a financial cost as well.  Of all of the first class counties Leicestershire has the lowest membership, depriving the club of an alternative to ECB funding.  In the board room Leicestershire has been a progressive county.  Wasim Khan was chief executive before his resignation in 2019, Mehmooda Duke is the current chair of the club's board and Lord Patel of Bradford, once of the ECB, has popped up on the Leicestershire nominations committee (He'll be popping up again later in this blog post).  But boardroom representation hasn't led to increased South Asian involvement as players or spectators, at least not yet.

Isolated from the wider cricket community and with a shortfall in ECB revenue Leicestershire tried to cut costs to balance the books, reducing 2018's £4.7m of expenses to £4.2m in 2019.  But still ended up losing £0.4m in the year compared to £0.3m in 2018.

Although a financial crash seemed to be imminent as often happens in cricket something was sorted out.  Leicester county council stepped in with new 10 year funding of £1.75m (on top of an existing loan of £0.7m).  Along with £0.2m of other financing (including £0.1m from Leicestershire cricket chair Mehmooda Duke) the council loan has allowed the bank financing to be repaid.  The council's involvement isn't wholly altruistic, in addition to a 5% interest rate, it has an ecb guarantee of repayments on the loan up to 2024 with reference to the guarantee being extended beyond that.  The ECB's support for Leicestershire contrasts with the treatment handed out to poor old Durham when they were in financial difficulties.  

Another interesting side bar to the Leicestershire refinancing, is the position of  Lord Patel of Bradford.  Lord (as I like to call him) is not a director of Leicestershire county cricket club, but he does sit on the nominations committee and was in that role at September 2019.  He was also, prior to his resignation in August 2020, a director of the ECB.  So when Leicester council, Leicestershire and the ECB entered into their tri -party agreement in December 2019 Lord Patel had a role at both Leicestershire cricket club and the ECB.  Personally I don't see this as a big deal.  There will always be conflicts of interest in cricket, the issue is whether they are properly disclosed and managed and I assume that, in this instance, they were.  

But in recent years the ECB has made a shibboleth of corporate governance, preventing ECB directors from holding equivalent roles at the first class counties.  Their blithe indifference to Patel's dual role not just at a first class county but at a county the ECB was bailing out, shows corporate governance had nothing to do with the ban on "dual" directors.  Tom Harrison and Colin Graves wanted rid of directors like Richard Thompson (Surrey) and Andrew Nash (Somerset) who were, in their ineffectual way, trying to hold the chairman and chief executive to account.  The ECB is a good example of how seemingly progressive concepts (who would be against corporate governance?) can be used to entrench existing elites.

But where does all this leave Leicestershire County Cricket?  As with the other counties there are some grounds to be hopeful for the future.  Rather like Lancashire their financing was fortunately pre coronavirus and they now have 10 years to repay the debt rather than it all falling due in a single payment.  Additionally, provided cricket gets up and running in 2021 there should be additional ECB payments over and above the amount received in 2019.  But there will also be calls on those additional revenues.  The interest rate on the council debt (and the amounts advanced by chair, Mehmooda Duke) is considerably higher than charged on the pre - existing bank financing.The £2.4m of council debt will require payments  in the region of £0.3m a year. Additionally Leicestershire's accounts are excellent (they'd be a good template for the ECB to adopt.)  and they show serious efforts were made to cut costs in 2019.  What's questionable is whether all of these cuts are sustainable.  In particular players' salaries were reduced to £1m.  But the new salary cap and floor introduced in 2020 set a lower limit on payments to players of £1.5m by 2024.  So if that agreement sticks post covid Leicestershire are going to have to find another £0.5m to pay to their players, plus employers national insurance.

Certainly the board thinks things can't carry on this way and the strategic report included the following, "In January 2020 we began a discussion with our members where reference was made to the transformation of LCCC to an alternative business model.  We are of the view that a business structure change is now crucial to eradicating the recurring financial difficulties we have found ourselves in over many years."  Quite what that actually means is unclear.

All this uncertainty has had an impact on Leicestershire's leadership, along with a new chair there has been a succession of chief executives.  Wasim Khan left in January 2019 being succeeded by Karen Rothery, who didn't last a year in the role.  The new chief executive is Sean Jarvis.

I for one hope he sticks around and does a good job. Leicestershire entered the county championship in 1895 and from the get go there was a school of thought that was a mistake.  Maybe it was and certainly there are reasons to be frustrated with the county (and all the other counties.) For all the talk of engaging with the South Asian community player development seems more active in South Africa than in Leicester.  I'm sure the county can point to age group teams with a preponderance of players with a South Asian heritage but is any serious effort being made to bridge the gap to first team cricket?  

But for all their faults the counties are communities, odd communities that reform each spring, but communities none the less of players, ground staff and members.  And if those members tend to be old is that such a bad thing?  And not just communities of those of us around now, also communities with those who watched the cricket and are now dead and gone and those yet to be born who will hopefully, one day, sit in the sun and watch county cricket at Grace Road*. 

* AKA The Fischer County Ground.

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