A post on the ECB and how it spends the money receives on behalf of cricket in the UK.
In this post I had a moan about the lack of information in the ECB's published accounts and had a guesstimate at how the ECB might be spending its money.
Well the ECB have now produced an analysis of their expenditure on cricket's behalf, you can find it here.
It's a really welcome development. What follows is an analysis of how the ECB's figures compare to my estimates, a brief diversion into the accounting for The Hundred and some comments on how disclosure can be further improved.
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Differences
My estimates were pretty good, in most categories I'm within a few million of the ECB's figures. I'm way out on The Hundred and payments to the counties etc but the issue here is one of the periods being compared. My figures are based on the accounts for 2019 and therefore don't factor in the additional amounts paid to the counties post the new TV rights deal, similarly expenditure on The Hundred wouldn't have figured. The ECB's figures are on a rather odd basis, being the ECB’s average planned expenditure for 2020-24 assuming coronavirus never happened, so hypothetical rather than actual figures.
The ECB's figures tell a good story. With revenue and payments to the counties and The Hundred increasing but administration costs staying relatively flat the ECB's percentage of administration costs to total costs falls, roughly in line with Oxfam. A total spend of £38m on The Hundred is more contentious, the ECB is spending more on a month of hundred ball cricket than it does in a whole year's of the grassroot's game. Not unreasonably the ECB point out that The Hundred generates revenues as well as costs and goes on to claim the competition will make a profit of £10m from year one.
So Will The Hundred Make a Profit?
I've no idea. And in any event the true impact of The Hundred isn't dependent on whether it makes or losses a few million quid but what it does for the future of cricket. But what is clear is that the ECB's £10m profit figure doesn't stand up. One reason why the counties agreed to The Hundred was that the ECB promised to pay each county an annual £1.3m. If we take account of those payments, the £10m profit quoted by the ECB becomes a loss of £13m
It's important to bear in mind that unlike a lot of payments into and out of the ECB this isn't cricket simply taking money out of one pocket and putting it into another. The Hundred may or may not generate a new audience for cricket but it sure as hell is a competitor with county based cricket for the current cricket watching audience. With the Blast overshadowed by the Hundred's marketing spend and with no Blast games in August, county 2020 attendances will decline. And that represents money going out of the game. Quite how much money remains to be seen, but the amount paid to the counties as compensation is a decent first guess.
Improvements
Speculative statements about The Hundred aside there are two other things I don't like about the ECB's expenditure figures.
1. Budgets
As explained above the ECB's spending figures don't represent cash out the door but rather what it expects to spend. As anybody who has budgeted their own expenditure knows the real world tends to be more expensive than its spreadsheet equivalent. And I expect the ECB's attitude to digital marketing executives is similar to mine to £4 cappuccinos - we will stop spending on them, just as soon as we've sat down and had a coffee.
2. Marking Its Own Homework
What's available on the ECB's website is the ECB's explanation of how it would, hypothetically, spend its revenues in a parallel coronavirus free universe. But how do we know we can rely on the ECB's figures? - After all we've already caught them out on The Hundred. And along with flat out misrepresentation there's always spend in a organisation that doesn't fall neatly into any one category - are those grey area costs being allocated in a fair way? Its worth noting the Oxfam expenditure figures linked to above are from the annual report and accounts. But the ECB's figures are just on its website.
But there's nothing to stop the ECB from providing a detailed breakdown of income and expenditure in its accounts (although no requirement to do this either), indeed FRS 102 makes specific provision for reporting companies to adopt IFRS 8 when they want to provide additional information to users. The ECB's accounts would be much improved if they provided an analysis of the results for the year between activities and if this disclosure was audited. Admittedly there are some indications that audited or not some weird stuff goes on in the ECB's accounts but at least if figures are audited and signed off by directors there is some independent check on the information provided.
Conclusion
I'd give the ECB's disclosure of expected income and expenditure a tentative 1.5 cheers (out of three). It's good that some detail is being provided on where cricket is spending its money but only a first step along the road to appropriate, independently reviewed, disclosure.
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