ECB Financial Statements 2020 - 2021

 This is a post on the ECB's financial statements for the period ended 31 January 2021.  

Posts on previous accounts are here: 

2017 

2018

2019

2020

Summary

In 2021 the ECB's income was £207m against total costs of £223m leaving it with a deficit of £16m. At 31 January 2021 accumulated reserves were just £2m.  As the accounting period  coincided with the worst of the coronavirus crisis that's not a bad result.  Of course the talk (some of it from within the ECB) of cricket losing £100m + was always exaggerated, given reduced revenues would come with reduced costs and that cricket's financial position is underpinned by TV revenues.  But there was no guarantee there would be games to televise and the ECB did well to keep the show on the road.  The remainder of this post, tries to get underneath the headline figures, compares actual to expected outcomes and asks the questions: who benefits from English cricket's weird structure?

As with all previous posts on the ECB accounts this comes with a caveat.  The ECB provides the minimum amount of disclosure required in its accounts and, arguably, sometimes even dips beneath that standard.  Certainly there's nothing like the amount, type and quality of information that should be produced by a public body (see this post for more) So there's a certain amount of guesswork, but, I've tried to make it clear where and how I've guessed.

Actual against budget

In this post I had a look at the ECB's published budgeted income and expenditure for 2020  - 2024.  Over this period it was on average expecting to earn £273m a year against 2021 actual income of £207m.  Of the £66m shortfall £14m was due to the ECB losing its share of gate money from international matches, failure to stage The Hundred, allegedly, cost a further £49m (the ECB attributes costs of £39m to The Hundred and claims a profit of £10m, so revenues  =£49m).  That leaves a relatively small £3m from "other" causes.  

The ECB budget showed costs (including building up reserves) equal to the £273m of revenue.  Actual costs were £223m  - £50m under budget.  The ECB's accounts don't provide a proper analysis of where money is spent but they do give us a few clues.  The budget provides for £118m to be paid to cricketing organizations, principally counties and minor county boards.  Note 20 to the accounts shows the ECB paid £80m to cricketing organizations in 2020 - 2021 making up £38m of the £50m saved.  So quite a lot of the ECB's savings were paying less to other parts of the cricketing pyramid (I suspect the pain here was in amounts paid to test match grounds).  Other savings are harder to spot but some of the £39m earmarked for The Hundred presumably didn't have to be spent although it is noticeable that salary payments to Hundred employees were made even though no games were played.  

Certainly the press was full of stories of ECB cut backs in 2020 - 2021, 20% of the workforce laid off , 15% cuts in player's salaries and a 25% pay cut for ECB supremo Tom Harrison.  The accounts show some evidence of this although the actual figures are a bit lower than those in the press, there were 331 ECB employees at 1 February 2021 compared with 389 at  31 January 2020 a decline of 15% (not 20%).  Tom Harrison's pay fell from £580k to £512k a reduction of 12% (not 25%).  And there's also some evidence that the ECB remains a high cost organisation.  Tom Harrison's pay may have been lower in 2021 than 2020 but his £500k ++ wages are still an outlier compared with the amounts paid to chief executives at other UK Voluntary organisations.  Despite Harrison's pay cut overall board room pay increased by 11% and crossed the £1m mark for the first time, no sign that the redundancies reached the boardroom and its assorted non  - executives.  The mysterious long term incentive plan also survived the cuts and will pay out £2m in 2022 to unnamed persons for unknown reasons.  Employees at the end of the year were down on the start of year figure but the average number of employees increased (from 379 - 416) and staff costs rose by 18% to over £40m. Bear in mind the ECB budgets on spending just £38m on grass roots cricket.

We need to see these figures in context.  Much of the additional costs of employees was the ECB, for the first time, employing non  - international cricketers in The Hundred and whatever you feel about the ECB's accounting for the Hundred there will be probably be some additional revenues to offset some of the spend.  Additionally covid 19 will have brought with it certain additional costs and the redundancies came part way through the year and would have involved redundancy payments.  So we'll have to wait to 2022 to see whether the 2021 cost cutting genuinely reduced costs or was more of a gesture. 

Cricket on the precipice? 

Although cricket might have got through 2020 intact the ECB's reserves having declined from £70m to just £2m does indicate the game has taken a battering.  With the ECB's reserves close to zero and the counties generally in debt they generally struggle to pay back it would seem cricket has no resources if there are further hard times to come.  

But I think the low level of ECB reserves is a bit misleading.  Although stated reserves are just £2m the ECB had over £150m of cash and money in short term bank deposits at 31 January 2021 up from £102m at end 2020.  There's a couple of things going on here.  Firstly the ECB reduced it's debtors (i.e the amount of money owed to it) over the course of 2021.  That's sensible cash flow management but  a one off benefit.  Secondly the ECB has very large amounts of accrued income.  By the end of the 2021 accounting period accruals and deferred income were £147m. Additionally the accounts refer to additional cash payments received in 2022, further increasing the ECB's cash reserves. 

There's no breakdown of the accruals and deferred income balances in the accounts but what's presumably going on here is that the ECB is receiving cash (from TV deals or whatever) for games that haven't yet been played.  From an accounting perspective including advance payments  as creditors is correct, the ECB does have a liability, it has to stage a match in the future.  But the accrued income will hopefully include future profits as well as future costs.  There is a bit more freedom for management to interpret accounting standards than is generally appreciated.  I'd imagine that the ECB is well aware than when it negotiates with players, the cricketing counties or HM Revenue and Customs, if it has a large amount of retained reserves the other party will ask for "their share" of the excess.

Who Benefits?

A brief history of the administration of English cricket:

From the start of the 20th century first class cricket was largely run by counties.  Certain central functions (picking a national side, taking care of the rules) were the responsibility of the MCC but that amateur, patrician organisation was anxious not to get dragged into running first class cricket.  At the start of this century the introduction of big money TV deals saw the emergence of a salaried, expanded, activist ECB.  The ECB first centrally contracted international cricketers and then devised The Hundred, a competition where the ECB centrally contracted all of the players and dispensed (pretty much) entirely with the counties.  

But although they are diminished the counties remain.  They still contract professional cricketers and run their numerous side projects.  At times the ECB has indicated its vision of men's cricket would see a similar structure to the women's game in the UK, with the counties replaced by larger regions and all of the players centrally contracted.  But Tom Harrison is a smart cookie and has, I think, decided he's not going to be the ECB chief executive who has that fight.  The counties have a bit more strength than is commonly imagined, votes at the ECB AGM, control of the test grounds and the backing of a significant minority of cricket supporters.

So rather than a fight there's been a compromise and like all good compromises the necessary indignities have been washed down with a good gulp of cash.  The ECB will set the agenda but the counties will continue to exist and, at least until the end of the current current media deal, everybody gets paid.

So who benefits?

I'd pick out a couple of groups.

White ball bits and pieces cricketers, For most of my time watching cricket this group, judged not good enough to play first class cricket and with international cricket a distant dream, was on the margins of of the game.  But now their time has come, it's like "Revenge of the Nerds" but starring Samit Patel.  The former outsiders are now at the centre of the game.  First they have their county contracts, but they are also contracted by the ECB to play in The Hundred.  As Hundred players rebate 12.5% of their county salaries the white ball pro isn't quite being paid twice, but he is being paid 1.875 times.  And that's not the end of it, if the IPL is a distant dream these players can hope to get a slot in the Big Bash, PSL,BPL & CPL.

And if injury strikes?  Well the player can fall back on his county contract and available facilities, as well as a chance to catch up the lads playing the four day stuff.   I'm not blaming the players, if I was in my early 30s, had a well disguised (even) slower ball and could whack it around a bit with the bat if called upon I'd be cashing in before you could say Quatari Gladiators.  

And the second group

Cricket Administrators, Cricket's dual structure of an activist ECB alongside the counties means two parallel bureaucracies.  The ECB's accounts disclose it paid just short of £2.5m to "Key Management Personnel" (KMP) in the year to 31 January 2021. But on top of that the counties were paying an additional £8.5m to KMP in 2019 so that's £10.5m being spent on the top rank of administrators alone.  

I'm perhaps being a bit unfair to administrators.  With the ECB expecting income (before costs) of £270m a year the total turnover of English cricket must be over £300m (perhaps £350m?).  I don't think its desirable or even possible to deal with a business of that size with the almost exclusively amateur administration of the twentieth century.  

But some facts can't be avoided.  There is duplication in English cricket, there are enough administrators in county cricket to run the non  - international game and also enough administrators at the ECB to run the non  - international game.  It also looks like the amount paid to KMP may be accelerating (although the ECB figure did fall in covid hit 2021) and the prospect that payments to administrators and non  - executives might erode the volunteerism which is still the bedrock for much of cricket in England.

Conclusion

English cricket is a messy compromise.  Both centralised with the ECB in control, but also devolved with the counties.  The result is too many administrators and some players being paid twice (OK nearly twice) for half a job.  In general I'm in favour of compromises  - better something that works in the here and now than sacrificing the present and everybody in it for utopia.  But this messy compromise is based on the money coming into cricket from the current TV deal.  If TV money continues to grow then perhaps the compromise can be sustained.  If it doesn't though the future will have to be negotiated and the game will have spent a one off windfall on bit and pieces white ball players and cricket administrators.