English County Cricket Finance: 2018 Bentley Forbes Rankings

I have gone through the most recent financial statements for the English first class counties,  made an estimate of the financial strength of each and given them a Bentley Forbes Consulting (TM) financial sustainability ranking.  The overall table looks like this.

County	Profit	Assets	Ranking	Position
Essex	4	4	4	1
Surrey	1	7	4	1
Nottinghamshire	5	5	5	3
Somerset	2	8	5	3
Derbyshire	8	3	5	5
Leicestshire	6	6	6	6
Sussex	15	1	8	7
Middlesex	14	2	8	7
Kent	9	9	9	9
Worcestshire	3	15	9	10
Gloucestshire	7	12	9.5	11
Northamptonshire	11	13	12	12
Glamorgan	16	10	13	13
Durham	12	14	13	13
Yorkshire	10	17	13	15
Warwickshire	17	11	14	16
Lancashire	13	16	14	17

The approach is to rank the counties for profitability and balance sheet strength and combine the two measures in a sustainability ranking. The balance sheet strength is itself a combination of three separate measures (for you cricketing accountants there's a bit more on how I did this below.) 

A few big picture points: The fact Surrey and Essex are top of the table shows there is no single formula for being successful. Surrey is, by the standards of county cricket, a financial behemoth, quite unlike any other county, able to fund big spending with high profits. Essex is the complete opposite. They haven't built new stands since the Corn Laws were repealed or pushed for test match status or any of that but they have a rock solid balance sheet, spend pretty much what they earn and have just won the county championship.

Although its  fun to look at positions, every county down to and including Gloucester in 11 does reasonably well on one measure or the other (but only Essex is top 4 for both.).  There's then a slump to Northamptonshire in 12 with the bottom six counties in the relegation zone.  All of the bottom five counties have redeveloped their grounds to host / continue to host international matches.

This has not been a successful strategy, Durham has now been bailed out by the ECB (it hadn't been when the financial statements these rankings are based on were produced), Yorkshire has been bailed out by Leeds council and Glamorgan by both Cardiff council and Allied Irish Bank.  

As the eagle eyed reader will have noticed I have 17 counties in my table although there are 18 first class counties.  I have left out Hampshire which isn't  a proper county but a subsidiary of a company owned by Rod Bransgrove.  Trying to make sense of the entire Bransgrove group would take a lot of time and I'm not sure comparing it with county cricket clubs would tell us much.  

A few bits on methodology:

My profit rating came from the financial statements but adjusted for any deferred tax (as deferred tax is just an accounting concept with no cash flow.)  To try and adjust for inevitable fluctuations I took profit for two years and averaged out.  Both Yorkshire and Glamorgan have made profits from loans payable being written down and I have excluded these amounts as they are hardly a sign of financial strength.  I have also excluded Kent's profit from selling freehold land as it was, presumably, a one off. 

For financial strength I have used balance sheet figures adjusted for certain items.  On the asset side I have excluded tangible assets (e.g. stands) as these assets cannot easily be converted into cash unless the club goes into liquidation.  From accounting liabilities I have excluded deferred income, i.e if I pay for a 2017 membership in 2016.  There is a liability there but it is not a cash liability and not the same as owing money to the bank.  Similarly I have excluded cash grants included as liabilities.  Again there is a commitment here, typically to make ground improvements but not the same as borrowing money.  I have judged balance sheet strength using three measures: an absolute measure, a measure deflated by tangible assets (i.e. bigger counties should be able to deal better with debt) and a measure of debt due in the next 5 years, on the basis that short term debt is harder to deal with.

If people would like to view the workings in full, please drop a request in the comments space.

I will update early 2019.