Lot's of talk recently about the Hundred. A county investigation revealed the competition showed a £9m loss over its first three years. And that figure is before including the annual £24m of Hundred payments from the ECB to the first class counties and MCC. So a cost to the ECB over the first 3 years of The Hundred of £81m. But what has always interested me is the financial benefits / cost of The Hundred to English cricket as a whole. To get to this from the ECB cost we need to make two adjustments.
- Much of the expenditure on The Hundred goes to the counties, either by way of the £1.3m annual payment to each county or the staging and revenue share payments to the 7 counties with grounds that host The Hundred. The first class counties have their faults, but looking at English cricket as a whole this isn't money going out of the game.
- By making the Hundred the premier short form domestic competition the ECB devalued the existing 20 and 50 over competitions. In terms of gate revenues it looks like this is a very significant factor, aggregate gates for The Blast are well down and Notts and Yorkshire are saying 2022 Blast income fell well short of historic levels and budgets. For gate revenues we can be pretty confident that the Hundred is first and foremost a cannibal, it eats existing revenues rather than adding to the aggregate income of English cricket. Turning to TV and sponsorship I don't have the knowledge to split the Hundred's revenues between genuinely new income and cannibalising existing income. Instead I've come up with a range of costs / benefit to English cricket.
Fanos Hira recently completed a report into the finances of The Hundred. Initially the ECB had forecast that The Hundred would make a profit of £27m and the ECB got the 18 first class counties to vote for the new competition by promising them and the MCC an annual payment of £1.3m, representing almost £25m of the expected profit.
The ECB now claims that the Hundred makes a profit of £10m a year (that is £17m less than predicted) but that figure is not audited and the ECB hasn't explained how the £10m was calculated. As the initial budget for the Hundred was wildly optimistic the counties were sceptical about the revised £10m figure. Fanos Hira is the chairman of Worcestershire County Cricket Club and his accountancy background left him well placed to report to the counties on the true financial impact of the Hundred. Additionally Worcestershire don't stage Hundred fixtures and Hira's investigation into the Hundred might be indicative of a strained relationship between the 7 counties and the MCC who stage Hundred fixtures and receive £80,000 in staging fees for each home game plus a 30% share of gross ticket revenues and those 11 counties who don't.
Although the Hira report is completed it hasn't been published. But in true county cricket fashion both Elizabeth Ammon at the Times and George Dobell at the Cricketer have had access to its findings. Those articles come up with a headline loss from the Hundred in 2020 - 2022 of £9m before including the £1.3m paid to the counties / MCC and a £63m loss after including these amounts. (Although surely £9m + 24.7*3 = £83m???)
What I've tried to do is to take these figures and come up with a financial profit and loss to cricket as a whole from The Hundred. There's a lot of estimation involved and I come out with a range of possible results from a profit of £5 million a year to an annual loss of £45m. I'd tentatively suggest the most likely outcome is annual losses of between £10m and £20m.
Detailed Figures
It seems that most commonly quoted figure from the Hira report is the cumulative loss from The Hundred 2020 - 2022 of £9m and I've reproduced a paragraph from George Dobell's report below.
"The report also makes the point that the delay in introducing the competition (caused by the Covid-19 pandemic) contributed to costs. Indeed, it makes the point that "the overall impact simplistically would be an overall cumulative profit of £12.3m for the tournament (rather than a cumulative loss of £9.0m)." In both cases, the figures exclude the £1.3m payments to the counties (and MCC)."
So the £9m loss includes the costs of postponing the 2020 Hundred due to coronavirus. Perhaps two years of The Hundred would, without the 2020 cancellation, have made a profit of £12m or £6m a year. There are two points to emphasise.
If the Hundred makes the ECB £6M a year that is £21m less than the ECB originally forecast and £5M less than the ECB subsequently claimed. The Cricketer has another quote from the Hira Report "no central cost recharge to the Hundred for items which the ECB carries out or incurs on behalf of the tournament."
But the cost benefit to cricket as a whole will be different to the ECB's profit / loss from The Hundred. Firstly the 7 staging counties get additional amounts from the ECB as staging fees plus revenue share and presumably these are included as ECB costs. I think there are very valid issues around whether it is right that some counties get staging fees, revenue share and the £1.3m "compensation" payment but this isn't money going out of cricket as a whole and therefore it shouldn't be included in the cost to English cricket calculation. Secondly England was the birth place of the short form cricket revolution and had developed a pretty successful 20:20 competition which, in its current iteration, is the Blast. As the Hundred has the same players and the same venues as The Blast and gobbles up the most popular dates for matches it is likely it has a negative impact on the Blast's finances and to measure the true costs of The Hundred we need to factor this in.
Calculating amounts paid to hosting counties is relatively straightforward, a per game hosting fee of £80,000 gives a total benefit to the 8 venues of £2.2m and assuming ticket revenues of about £6m the 30% revenue share contributes another £2m to the lucky participating counties. Additionally the players drafted for The Hundred have to refund 12.5% of their county salaries which is an additional financial advantage to the counties. I've (very roughly) estimated the amount here as £1m.
That brings us on to the question of the £1.3m Hundred "compensation" paid to the 18 first class counties and MCC and whether this should be included in The Hundred's profit and loss account? Again I think this is pretty easy to answer. If the figure being calculated is the ECB's profit and loss then the compensation payments should be included as they are a cost to the ECB. The ECB has tried to argue that the compensation payments are dividends rather than costs but this is piffle. However, if we are looking at the cost to English cricket as an whole then, with a caveat, the £1.3m payments shouldn't be included. Although I think there's a good argument that we are spending a bit too much on the counties under the current settlement and not enough on cricket lower down the pyramid you would have to be Kevin Pietersen or Andrew Strauss to claim that the counties don't provide anything to English cricket.
There is a caveat as the ECB pays compensation payments, hosting fees and revenue share to the MCC as the owner of The Lord's ground. That's obviously unfair as Middlesex also get a compensation payment so there's a double payment to the county and the ground owner that doesn't apply to any other ground or county. More importantly the MCC is a private member's club and how it spends its money is entirely opaque. And the MCC is an ongoing public relations disaster for cricket. Accordingly there is approximately £2m paid to the MCC in respect of The Hundred that needs to be deducted in arriving at the true cost of the competition.
That leaves the issue of to what extent does The Hundred simply cannibalise revenue that would otherwise have been paid in respect of the Blast. How much of the gate revenue, TV rights and sponsorship for The Hundred is simply money diverted from 20:20 rather than genuinely incremental. For gate money it's possible to have a good stab at the answer. For instance Nottinghamshire's 2022 financial statements disclose a £250k shortfall on expected income from The Blast due to the congested fixture list caused by the Hundred taking up the prime dates in August. Taking that figure and scaling up for 18 first class counties gives a total reduction in revenues of £4.5m. That's obviously a rough and ready estimate but this article in the "Being Outside Cricket blog uses a completely different methodology and comes out with a lost revenue figure of £5m. If we assume a prudent figure for lost revenue £4m we won't be far wrong.
Trying to split TV and sponsorship income between income diverted from the Blast and genuinely incremental income is much harder and you would need to know a lot more than I do about sport's rights to come up with an accurate estimate. There are a few useful points to be made. This cricinfo piece has annual broadcast income for the Hundred of £40m with an additional £10m of annual sponsorship. So the range of outcomes for cannibalised income between £50m and £0.
It seems to me that there must be some cannibalised income, otherwise the ECB would be able to increase the supply of domestic cricket without reducing the price which seems highly unlikely. But by the same token the ECB has spent a lot of time effort and money on setting up The Hundred as a stand alone competition. It would seem likely that there would be some new broadcast and sponsorship money as a result.
Saying more than that seems very tricky. Just taking TV revenues there's no doubt that Sky and the BBC have been enthused (at least for 2021) by having a new cricket competition rather than than a retread of the existing 20:20 county format. But it seems to be generally acknowledged that the broadcasting deal the ECB signed for 2024 - 2028 was on the same nominal terms as applied to the 2020 - 2024 Sky deal. At the time of the 2020 - 2024 deal there was some talk of a redesigned 20:20 competition but the Hundred hadn't been invented. If The Hundred has brought in more broadcasting revenues then why can't we see that in the 2024 - 2028 TV rights deal? Similarly if the ECB really thought they has a valuable asset in the Hundred then wouldn't they sell the broadcasting rights to that tournament separately from the TV rights to England home games?
Ultimately this is all speculation, it might be reasonable, perhaps to assume something between a third to a half of the £50m of broadcasting and sponsorship revenue of The Hundred is cannibalised rather than incremental. That implies a reduction in value of £15m to £25m. If we take the £15m figure then a profit and loss account for The Hundred might look like this.
| £m | |||
|---|---|---|---|
| ECB Profit From The Hundred | 6 | ||
| Add: | |||
| Fees to eight hosting grounds | 4 | ||
| Player's salaries refunded to counties | 1 | ||
| Less: | |||
| Money paid to MCC | -2 | ||
| Reduction in Blast gate money | -4 | ||
| Estimate of lost Blast TV and sponsorship | -15 | ||
| Loss to Cricket | -10 | ||
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