MCC Accounts 2022

This is a post on the Marylebone Cricket Club's (MCC) annual accounts for the year to 31 December 2022.  

The MCC dates back to 1787 and is a curious institution. It is a private members club which owns Lord's cricket ground, is the custodian of the rules of cricket, and self - appointed guardian of the spirit of the game.  The merits of MCC's continued role and influence are sharply contested.  For some the MCC preserves old fashioned virtue in a modern, money mad, game; others look at an MCC membership which is posh, white, male, elderly, conservative and, probably, Conservative and conclude we need to to move on from both the MCC and Lord's central place in cricket's calendar.  

In general I'm on the anti side of the MCC argument which is set out in this post on "Being Outside Cricket" but I should say: when I wrote a book on cricket the staff in the MCC library were both courteous and helpful.  This post largely lets the pros and cons of the MCC go past the off stump and uses the 2022 accounts to try and work out how the MCC fits into cricket's financial jigsaw.   

The report and accounts of a company have two key statements: a balance sheet which shows the net assets (or liabilities) at a particular instant in time and a profit or loss statement, that shows how much money the company has made (or lost) over a period, typically, of 12 months.  

Balance Sheet

The MCC has a rock solid balance sheet. My measure of a cricket club's balance sheet strength is to take away the liabilities from the assets, excluding fixed assets relating to cricket, i.e. stands etc; the logic for deducting cricket assets from total assets is that these assets can't be easily converted into cash.  Even excluding "cricket assets" the MCC has, after deducting liabilities,* net assets of approximately £16m. For a cricket club that's a massive figure, when I apply a similar measure to the first class counties most are in a net liability position.  The county that comes out best on this measure is Sussex with £5m of net assets and Lancashire is in a net liability position of £23m.  

But the net asset figure doesn't capture the overweening power of the MCC's balance sheet as the the club's principal liability is £46m of debenture loans.  These are debt, they have to be paid back, but the softest form of debt imaginable.  The term of debenture loans is typically 75 years, they pay no interest but do give the holder the right to buy tickets at Lord's for a period of time, as far as I can see a much shorter period than the 75 years the debenture holder will have to wait to get her money back.  

Profit and Loss Account

The MCC has cricketing assets of £90m and you might think that, coupled with the ability to borrow interest free for 75 years would lead to outside profits, but this isn't really the case.  In the period to 31 December 2022 the MCC had a pre - tax surplus of £2.9m, a relatively low rate of return of 3% on cricket assets.  But the MCC's accounts include an admirable amount of detail and allow us to break this number down.  

Firstly the ECB is a highly profitable customer for the MCC.  A mini P&L account might look like this.

So, a net profit from staging ECB matches of £15m.  That's probably a bit of an overstatement as I've dropped all of the subscriptions into the ECB pot but seems a pretty reasonable "first pass".

If ECB fixtures are life blood to the MCC, the reverse doesn't hold.  The MCC paid £6.3m to the ECB for staging matches in 2022, hardly loose change, but not that significant compared to total ECB revenues of £334m.  The MCC's £6m of payments do look more impressive when compared with total staging fees received by the ECB of £13m, i.e. almost half of the ECB's staging fees come from the MCC, but  MCC gets about a third of the international cricket played in a summer and the best games and slots in the calendar.    

The question is: given it does so well out of international matches why doesn't the MCC make bigger surpluses? One answer might be if the MCC incurred a lot of costs on the wider game of cricket . 

The MCC certainly engages in a range of (award winning) activities that support the wider game of cricket; detailed on pages 22&23 of the annual report and its long standing support for Afghani cricket shows a streak of internationalism which is sadly lacking in the ECB and ICC.  But what isn't clear is how much money it spends on all this.  I've looked through the accounts and come up with the estimate below.  

  

There is a Marylebone Cricket Club Charitable Foundation but that receives donations of approximately £1m a year and from the 2022 accounts it would seem the MCC is responsible for £80k or so of this.  I may be doing the MCC down but it seems as if it's total expenditure on the wider game of cricket and charitable activities would be in the region of £1.2m and that's assuming all of the expenditure on marketing and community is on supporting the wider game.  That's not that much for a club that plans to spend £58m redeveloping the Tavern and Allen stand sides of the ground.

If the MCC is only spending £1.5m on "good works" then what explains how £59m of income is reduced to a pre - tax profit of £3m, when Surrey, in 2021, made a £5m profit on income of £36m.  Perhaps the answer is that there is a lot of expenditure on the MCC's members.  One possible clue here is the catering and hospitality category: the MCC generates income of £16m on hospitality (£8 a pint for Joe Public at the Ireland Test Match), but it spends £15.5m in generating that income.  Perhaps I'm being overly cynical, but I'd guess there is a lot of free food and drink sloshing around in NW8. 

There's a reasonable response: If member's of a private club want to spend their surplus on themselves then that's their business.  But I'm not all convinced by that, because the MCC is built on its agreement with the ECB to stage international matches.  I'm sure people join the MCC for all sorts of reasons, but I'm also sure Test match tickets are the big draw.  Given the ECB is an effective partner in the money making machine that is Lord's / MCC the ECB has a duty to ensure English / World Cricket is getting a good deal from that arrangement.  Payments to the ECB of £6m and a further £1m or so of good works is approximately one third of Lord's profit from Test matches pre ECB payments, with the MCC retaining the other two thirds.  It's  reasonable to allow Test match grounds to make some profit from their staging deals with the ECB to encourage the investment necessary for high standard stadia.  But 2/3 to the MCC members and third to the rest of cricket seems wrong. I also think the MCC has reputational costs for the wider game of cricket.  

I'll be setting out how the MCC /ECB/Cricket relationship could be improved and some of the potential barriers to this in my next post.   

*  I have left accrued income out of the figure for liabilities, this is typically cash received up front for life memberships and will be released to the profit and loss statement over the term of the membership.