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ECB 2023 Financial Statements

The ECB has recently published its accounts for the year to 31 January 2023 and this post is an analysis of the ECB's financial position.  I've done a series of posts on the ECB's accounts, the most recent being this on the accounts to January 2021.

Not everything I've predicted in this blog has come to pass, but I think the analysis of the 2021 position stands up pretty well.  Rather than go back over the same ground this post focuses on the expenses the ECB incurs.  Lets start with a table.



This table shows the administrative expenses of the ECB for the period 2013 to 2023.  In those 11 years total expenditure increased from £97m to £249m;  an aggregate increase of 157%.  If the ECB's expenses had increased at the same rate as (CPI) inflation, 2023 expenditure would have been £124m, roughly half on the actual outcome.  In real terms the ECB is spending more money in 2023 than it did in 2013 -  a lot more money.

The good news is that the ECB does have a lot more money to spend.  Total revenue grew by 200% from £111m in 2013 to £334m in 2023.  After cost of sales of £66m (a 300% increase since 2013) and the £249m of administrative expense as above, the ECB had a £19m operating profit in 2023.  But the fact remains that ECB expenditure has risen and as can be seen from the chart, it has risen particularly quickly from 2019.  

The 2023 accounts showed the extent to which senior ECB executives have rewarded themselves, with the ECB's long term incentive scheme, paying out £2m to an unknown group of senior executives with no explanation of what they have done to deserve the payments.  Total directors pay first crossed the £1m mark in 2021 but in 2023 it reached £2.5m, a 133% increase on the 2022 figure.  Payments to Key Management Personnel increased by 150% in 2023 to £6.3m 

The question is, what has improved in English cricket since 2013 (or 2019, or 2021) that justifies such a rapid increase the ECB's spending? One thing might be the increasing professionalisation of women's cricket supported by ECB central contracts but even those salaries might be in cost of sales rather than administration expenses.  Its hard to escape the conclusion that a lot of money that should have been spent  on improving access to English cricket has gone on overstaffing, excessive compensation for senior executives and the weird, loss making, Hundred Competition.

The absence of a chief executive and a chairman probably made 2023 the high point for  spending in NW8.  You would expect the Richards, Thompson and Gould to get a grip on costs and the departure of Andrew Strauss with Rob Key taking on his responsibilities is perhaps an indication some of the overlapping of roles and excessive layers of management are being rationalised.  Also some of the talk about the future of the Hundred might be a result of recognising the ECB can't continue to finance the competition in its current form.

If this does mark a new era of spending responsibly then it is much needed.  Although the ECB hasn't said anything about the value of the new Sky TV deal  to run from 2024 - 2028 there is a general acknowledgement it is on the same terms as the 2019 - 2023 arrangement.  Some of the ECB costs will inevitably go up in the period to 2028.  For instance the accounts recognise rising player salaries in new 20:20 leagues as putting pressure on the ECB's costs. There will be more general inflation as well.  With income fixed and core costs rising there are going to have to be cuts in non  - essential areas.  

One indication that the ECB is expecting to be financially squeezed in the future is that it did something very unusual in 2023, something it may never have done before, it paid tax.  

In the past, I think, surplus funds from the ECB's operating companies have been paid as charitable donations to the ECB's "in house" charity, The England and Wales Cricket Board Charitable Trust.  (The Trust.)  As the Trust is a subsidiary of the ECB these payments aren't included in the expenses quoted above but they are deductible for corporation tax which is calculated on an individual company, rather than a group, basis.  I should stress that if this what the ECB had done in the past there is nothing inappropriate in this.  It seems sensible that genuine surpluses are transferred to the Trust which funds grass roots cricket and the Taxes Acts include specific provisions to ensure donations to registered charities are tax deductible.  However, in 2023 the ECB had a surplus for the year of £21m (The £19m operating surplus referred to above plus £2m of investment income) but presumably didn't pay this to the charitable trust and instead incurred a tax charge of £7.6m.  I presume the ECB accepted this tax as a necessary evil as it believes it will have deficits in the future and it needs to have a surplus in the operating company to defray these amounts.  Once surplus is donated to the The Trust it has to be used for the Trust's charitable purposes, which won't include paying professional cricketers.

I'm conscious that many of the posts in this blog lack drama.  I outline a set of financial constraints facing English cricket and then conclude that with a bit of luck and good management everything should be fine.  I'm afraid I'm about to do this again.  Yes the ECB has financial pressures, income will be flat going out to 2028 and it is going to have to spend more on players' salaries.  But the ECB has been so incontinent in its spending in recent years that the two Richards should be able to cut back on quite a lot of areas without in any way detracting from the ECB's ultimate goals.  It might even be a rare case where outcomes can be improved by spending less.  If I was asked for two current initiatives improving English cricket I'd pick out the ACE program, put into place by Ebony Rainford-Brent at Surrey and the South Asian Cricket Academy set up out of Birmingham University.  Neither program was initiated by the ECB and as far as I'm aware the ECB doesn't fund either organisation.  A leaner ECB might be less fixated with controlling things and more prepared to work in partnership with the wider game and then help scale up those diverse programs which address the many issues faced by cricket.     


 


 

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