Warwickshire have released their accounts for the period to 30 September 2022, which are available here.
This post is my analysis of those accounts, a similar post for 2021 is here. I always look at Warwickshire's accounts in some detail, largely because I'm a member but also they are one of the first counties to release accounts which provide an insight into the health of English county cricket. (This insight won't be available for future periods as Warwickshire intend to move their accounting date to 31 December from the current 30 September.)
2022 Summary
These are an excellent set of results. The county made a record profit before tax of £2.9m. (There was a tax charge for the period but I've excluded it from the chart below as it was an accounting adjustment only, but if Warwickshire make this level of profits in the future they will have tax to pay.)
In the past I've always looked at Warwickshire's accounting profit alongside an adjusted measure which adds back the accounting charge for wear and tear on fixed asset, i.e. the stands etc. ("depreciation") and replaces it with the actual cash cost of buying fixed assets. The logic of the second measure is that it is an indication of the cash coming in or going out. For 2022 this adjusted measure is a profit of £1.4m - a good result but not a record as the 2019 figure was higher. If we look at the two profit measures over time we get this.
There are a couple of points of caution. Firstly the cash profit (yellow line on the graph) is below the orange line representing accounting profit. Some of this is due to costs incurred in the new plaza immediately outside the ground, which shouldn't be repeated in 2023. But it might also be a sign that as the stadium ages it is costing more each year to keep it up to scratch and this might become a bigger issue in future periods. Secondly 2022 was an unusual year, with a Test match against India going into the 5th day and Edgbaston staging the women's cricket competition at the Commonwealth Games. Even though this year has a home Ashes series I wouldn't expect the 2023 profit to be at these levels.
The Short Term Future
Hopefully the excellent results for 2022 plus a profitable 2023 will allow the county to make significant progress paying down debt. The accounts show that nearly all of the £3.5m borrowed from Macquarie
Bank in 2020 has been repaid (£1.4m of this was paid off in November 2022, after the accounting date.) and if all goes well £2.2m of the money borrowed from Birmingham City council to redevelop the pavilion will also be repaid in 2023.
However, there are plans for new building work on the Priory and Raglan stands. Whether or not this redevelopment will include a hotel is unclear. The case study in the accounts reads as if the hotel is definitely going ahead but Craig Findall's Chief Operating Officer Report refers to a potential hotel, I'll guess we will have to wait for further announcements.
It does seem unfortunate that as soon as the county begins to shift some of its historic debt it enters into another works program, presumably requiring more borrowing. The £22m borrowed from Birmingham City council to build the new pavilion should have been paid off in instalments from 2010, so the first payment will be 13 years in arrears. I wonder who will be prepared to lend money to the club this time around.
However, I also appreciate that the board is in a difficult position. If money isn't spent on the ground it will be increasingly difficult to obtain international fixtures and conference bookings and that would also lead to long term financial problems - it's a conundrum.
The intention was to use money from the government's levelling up fund to make changes to the area outside the ground alongside the stand redevelopment. Unfortunately the application for government funding was rejected (as was every other levelling up application from Birmingham) but Warwickshire are still hopeful they can find some other way of funding this work. It's clear the failure of the application for levelling up funding won't prevent the work planned for the Priory and Raglan stands.
The Future Long Term
The only thing I can say with any certainty is there's a lot of uncertainty. There are a couple of trends worth watching - perhaps. Firstly the ECB has signed a new media rights deal with Sky going all the way out to the 2029 season. The ECB are coy about how much the new deal is worth and given the fanfare for the current rights deal I suspect that means the deal is for around about the £200m a year Sky is paying under the existing rights arrangement. If that's the case then, given inflation, the real value of ECB funding will fall over the course of the new deal and things will get tighter for the counties.
But there is the possibility the financial model of English cricket will change between now and 2029. There has been slightly vague talk of a £400m private equity bid for the Hundred. ECB chairman Richard Thompson, indicated any bid for the competition needed to be in the billions rather than millions. Currently the assumption seems to be that any bid for The Hundred would follow the existing financial model with the ECB getting the money and deciding how it is spent. I think that's a big assumption as the ECB doesn't have any players contracted for more than a year and doesn't own any cricket grounds. A direct deal between outside investors and the Test match grounds would be another possibility. Either way Warwickshire as a Test match ground would be well placed to benefit from selling the rights to English short form cricket.
Comments
Post a Comment