Yorkshire recently released their annual accounts for the year ended 31 December 2022. This is a review of those accounts which updates this post on the 2021 financial statements.
Summary
Yorkshire disclose both a "normal" profit and loss for 2022 and an exceptional loss relating to the continued fall out from the Azeem Rafiq affair. The table below splits the 2021 and 2022 loss between normal and exceptional profit / loss.
| Year | ||
|---|---|---|
| 2021 | 2022 | |
| Ordinary activities | 1,327,190 | (580,703) |
| Exceptional Loss | (1,892,071) | (1,643,629) |
| Total Loss | (564,881) | (2,224,332) |
The loss for the period is just over £2.2m (rather less than the £3m loss predicted by the Yorkshire Post).
Exceptional costs related to the Azeem Rafiq case were slightly down in 2022 compared to 2021. It looks as if payments to settle an unfair dismissal case brought by Andrew Gale and five other employees were in line with the amounts provided in the 2021 accounts, but legal fees in connection with that case and the ECB's Cricket Disciplinary Committee ("CDC") continued to run at a very high level. On a more positive note the accounts do conclude "Whilst further exceptional expenditure is expected in 2023, it is anticipated it will be at a much lower level now the Club has accepted the CDC charges."
In some ways what is more concerning than the continued exceptional items is that Yorkshire made a fairly chunky 2022 loss on its ordinary activities reversing the profit made in 2021. Revenue was pretty flat between 2021 and 2022 but expenses increased by £1.5m. Some of the additional expenditure was outside the board's control, Yorkshire's interest payments increased by £130k in 2022 and will probably go up again in 2023. Other areas of increased expenditure are an attempt to respond positively to the Rafiq scandal. For instance Yorkshire now runs its age group cricket at zero cost for the parents of participants, and as a result development expenses have increased by £370k (or if you want to look at it another way, previously the parents of young Yorkshire cricketers were chipping in £370k.) Similarly Yorkshire has increased the number of Northern Diamonds players with professional contracts, I may have this wrong but I don't think there is any other county that employs women cricketers.
What Does The Future Hold
Although the ECB's enquiries into racism at Yorkshire are drawing to a close the county is in a perilous position. The costs of dealing with the ECB enquiry and associated employment tribunal claims is £3.5m to date with presumably more (but perhaps not much more) to come in 2023. That would always have been a burden for Yorkshire. But what puts the county's future in jeopardy is the need to pay off, by October 2024, almost £15m of loans from various family trusts set up by former Yorkshire chairman, Colin Graves. As Yorkshire have no cash on the balance sheet there is no possibility they can generate that sort of money independently. Just to make things worse Yorkshire doesn't have a Test match in 2024. Accordingly they expect to have an additional cash outflow over 2023 and 2024 of £3.5m and to take their existing overdraft to its £1.9m limit.
Accordingly, Yorkshire are looking to raise £20m of additional finance (Not clear how this number was arrived at, looking at Yorkshire's accounts it seems they made a profit on all international cricket in 2022 of £2.2m so there's presumably other overspend of £2.8m or so).
In my last post on Yorkshire I predicted "some plan to defer repayment of the loans until after all of the liabilities from the Rafiq scandal have been quantified and settled is probably the surest (and definitely the most hassle free) way for the trusts to get their money back. That has happened in as much as amounts payable to the Graves' Trusts in 2022 have been rescheduled to fall due in 2024 but it isn't the comprehensive rescheduling I was predicting.
What is, perhaps, complicating matters is, it is possible Colin Graves will return as Yorkshire's chairman. The article I've linked to includes this, "The majority of board members are prepared to back a return for Graves on the basis that he would delay the repayment."
But if the board does decide to make Graves chairman it's not certain to rescue Yorkshire County Cricket Club from its financial difficulties.
What I've not seen in recent press coverage is any reference to the well documented issues between Colin Graves and current ECB chairman Richard Thompson. Thompson was an ECB director whilst Graves was ECB chairman (do keep up at the back) but resigned because he was unhappy with the way Graves was acting. His resignation statement included this, "I’m saddened to have to stand down while still being a board member. I have been uncomfortable with recent decisions taken without full consultation and as such did not feel able to remain on the board”
This raises a couple of interesting and inter - related questions. Does Thompson believe Graves is an appropriate chairman for Yorkshire CC given Graves' performance at the ECB? And, if the answer is no he doesn't then what would he do about it? If Thompson is willing and able to take Headingley off the International match rota then Yorkshire would need to go into Administration as there would be no way they could repay the loans from the Graves' Family Trusts without regular international cricket.
The Yorkshire board seem to be caught between a rock and a hard place. They can either appoint Graves as chairman and run the risk the ECB cuts off international cricket or make somebody other than Graves chairman and run the risk the Graves' Trusts ask for all their money back in 2024.
Is There Another Solution ?
Yes there is. It's still possible Yorkshire can find a third party bank to lend them the £20m. Although they've been looking for such a lender for at least a year and probably longer, it may be the possibility of a fine from the ECB over the Rafiq affair put prospective lenders off. But with the CDC hearings being concluded there should soon be clarity on any fine. And it's perhaps unlikely the ECB will fine Yorkshire, over 2022 the ECB provided the sort of low profile financial assistance to Yorkshire that other counties, including Yorkshire (but not Durham) have benefitted from in the past. For the second year running ECB payments due to Yorkshire were paid early and the ECB also "compensated" Yorkshire for their home Blast quarter final clashing with the Headingley Test.
Conclusion
English cricket has a talent for smoothing over problems and I suspect this is what will help to resolve Yorkshire's financial difficulties. Ultimately it's in the best interests of the ECB, The Graves' Trusts, Yorkshire and English cricket to sort something out and everything will be that much easier if a third party refinancing can be achieved.
But for the second year in a row Yorkshire's accounts include a "material uncertainty" over whether the club can remain in business for the next 12 months - and that's a pretty big deal. The longer this drags on the greater the chance the county does end in an Administration that nobody really wants.
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