In part two of our feature on the counties’ financial health, we look at their year-round business plans and the ECB’s efforts to ensure that ‘the 18’ survive in a challenging financial landscape
Chris Stonor03-Oct-2013In part one, read how the local councils stepped up to help the counties and develop their communitiesA hotel construction at Worcestershire’s New Road ground is typical of many development projects•Worcestershire CCCThe ECB has completed the approval process for a £1m grant from central funds for each of the 18 first-class counties. The intention is a bold and essential one. The grant aims not to just to prop up ailing counties but to assist their vital off-field metamorphosis from a decaying six-month business model to a more dynamic, all-year-round enterprise.Gordon Hollins, the ECB’s head of professional cricket, sounds satisfied with the progress made. “We are very comfortable with the quality of the 18 business plans and the support they have given our five strategic priorities,” he says at Lord’s as the season draws to a close.Those five priorities, intended to establish county cricket as a game fit for the 21st century, are stated as follows:To create a customer-centric businessOperational and organisational excellenceFirst-class facilities for spectators, sponsors and the mediaWorking with and alongside the local communityA clear and consistent fixture scheduleMany counties are bearing debts considerably larger than the grant offered, but Hollins contends: “We believe £1m can make a significant difference and offers a real opportunity for counties to become a robust future force.”The paths taken to meet these aspirations are as different as seam and spin. Some counties have chosen property development. Warwickshire partnered with the developer MCD. Initially, 79 town houses are being built around the perimeter of the Wyatt Stand at Edgbaston with underground parking and first-level gardens.”MCD have until 2020 to complete the project,” Warwickshire’s chief executive Colin Povey, says. “We hope to create some retail like a restaurant and coffee shops – also a possible hotel along with further car parking. The money gained will help pay off our debt.”Another is Gloucestershire. Their £10m refurbishment of Nevil Road relies heavily on the money accrued from building a six-storey, 147-apartment block on the Ashley Down Road side of their ground. Kent, needing a way out of their financial troubles, are seeking council consent to construct an estate of retirement homes.But Essex are the high-flyers with their three-phase development of four large residential tower blocks, containing 350 luxury apartments. Overlooking the ground and central park, this also entails a public piazza, restaurants, coffee shops and a pedestrian bridge across the adjoining River Can, linking the whole development directly to the Chelmsford city centre.The sound of finance
Elton John stirred the counties’ interest in hosting concerts as a new revenue stream when he played at various county clubs between 2006 and 2012. Sussex gained £100,000 from two separate events and others like Kent, Somerset and Gloucestershire all financially benefitted.
But after several disasters including Kent’s £200,000 loss in 2009 promoting the Sugababes and James Morrison, counties realised the precarious nature of the market.
Some chose a more secure path, where promoters take all the risk but also the profits. Instead, clubs accrue income from ground rent and the peripheral food and drink. But Northamptonshire CEO David Smith gambled this year. The club signed a five-year deal with a local promoter where losses/profits are shared. Smith accepted this risk. “The lower it is, the less money. Therefore, it’s about balancing that risk by choosing the right performer.”
The first act was Madness in September. After some nail-biting, the concert attracted 13,000 people and attained a healthy six-figure profit. “We are thrilled with the result,” Smith says.
Durham amassed 15,000 for a Jesse J festival weekend but other counties did not fair so well. Sussex attracted only 5000 for a Sir Cliff Richard evening.
Lancashire are the trailblazers. Their first act was Simply Red in 1995. Other performers since include Oasis, Coldplay and Lady Gaga. In 2009, the club made £1m profit alone from five consecutive Take That concerts which enthralled 250,000 people. Capacity will increase next year to 65,000.
Meanwhile, Yorkshire hope they can gain up to £500,000 a year from musical events. The club were given council consent recently to hold three a year. And Hampshire are back on the music trail after a break, booking Barry Manilow at The Ageas Bowl for May 2014.
After nine years of planning, the first phase to build the smallest of the tower blocks, which incorporate 62 apartments, have begun. Over 90% have been pre-sold. The money gained can then be used to begin the key phase two, which includes the next two towers, a new pavilion, multi-storey car park, new cricket and media centres, an extended ground capacity – a modest increase to 8000 – improved conferencing facilities and the piazza.The success of selling these apartments is at the heart of a £85m ground regeneration, a staggering sum for county cricket. The construction will take four years to complete.Other counties are building retail outlets or hotels on their ground, which provide revenues either through rental or one-off amounts. Kent has a tenant – Sainsbury’s – at Canterbury. Opening 18 months ago, it has been a great success.In 2009, Tesco pledged £21m towards Lancashire’s redevelopment after a supermarket was included in the planning. Now built, Tesco has proved to be an important ally. During this summer’s Ashes Test, the club used the supermarket car park as an overflow. The company is also actively involved with Lancashire’s social and commercial events.Worcestershire gained £1m from Premier Inn for the use of a section of land. The company is investing £7.5m in a 120-room hotel and restaurant.Planning permission has been given for a 150-bedroom resort at Durham. The county hope to raise £8.5m, so it can be owned and run by the club under Hilton management. Lancashire have plans to double the capacity of the Lodge. And, of course, there is the Ageas Bowl and Hampshire’s luxury 175-bedroom extravaganza.According to Hollins: “During the last two years, there’s been a significant improvement in the off-field quality of personnel entering county cricket. It is imperative this business acumen continues to progress. A successful transformation of ‘the 18′ cannot occur otherwise.”Clubs are expanding their core commercial business from social events and conferencing to weddings and hospitality. Lancashire spent £12m constructing The Point for this purpose. It earns an annual £500,000 from Christmas festivities alone.Over the Pennines, at Yorkshire, the Carnegie Pavilion, a shared venture between Yorkshire and Leeds Met University, cost £21m. There have already been some benefits. In 2012, the club’s commercial income rose £394,000 to £1.8m.Events like alternative health shows, collectors’ fairs and second-hand car sales also occur at some counties.Povey stressed the value to Warwickshire of their growing commercial nous. “Edgbaston will be generating an annual £2.5m from non-match activities soon, which is more than our present ECB monies,” he says.Further areas of potential revenue are ground naming rights. Until recently Surrey held the record – a five-year contract with Kia Motors worth £3.5m – believed to be the largest county cricket commercial deal in history. But in late February, Lancashire smashed this after announcing a ten-year contract with Emirates Airlines for a stunning £10m. In one move, “Emirates Old Trafford” wiped out a large part of their debt.Economic austerity and debt are the primary problems facing Test match grounds in particular. These include Yorkshire and Warwickshire (-£20m each), Glamorgan (-£15.6m) and Durham (-£9.1m), all of whom languish under the spectre of decades of loan repayments.That is why the ECB appointed this year two Business Change Managers, Tom Johnson and Karina Murtagh, whose specific job is to provide support and help. Every aspect of the business plan is regularly discussed to see how clubs can maintain and improve their revenues.”There is terrific energy and enthusiasm emanating from the counties with many passionate and committed people involved,” Hollins says. “I am optimistic ‘the 18’ will succeed.”
