The England and Wales Cricket Board has urgently sought clarity on the state of Middlesex’s finances as the county continues to cope with the fallout from a long-standing blunder on pension payments costing £500,000.
Middlesex’s most recently released accounts to the end of 2021 showed a loss of £952,000, reducing the club’s net worth to £179,000, down from around £2million two years earlier.
The association’s balance sheet for the past year is to be published shortly. They will post another loss, but not as bad as last year after a series of cost-cutting measures. However, the club’s reserves are all but depleted, which makes it so important to turn a profit.
“The worst is behind us”
CEO Andrew Cornish is confident this can be done and points positively to the fact that Middlesex is one of the few debt-free counties.
“It’s going to be tough but I’m predicting we’ll get a small win in 2022,” he told Telegraph Sport. “It won’t be massive, but it will be progress.
“The worst is behind us. It’s really tough, but if you’re honest and see what you see, you have a chance to deal with it.”
If Middlesex’s finances don’t improve, the ECB could be forced to intervene. The scene has changed since 2016, when Durham was relegated from Division One, handed a 48-point deduction for the following season and lost its Test status in exchange for a £3.8million ECB bailout to ease debt in manage £7.5million.
Any action would likely be less draconian given the ECB’s new leadership of chairman Richard Thompson and CEO Richard Gould, both formerly of Surrey, desperate to promote the county game.
First and foremost, this means that they provide a loan or an advance payment. Should things not improve after that, they could take action against the club, although the exact form is still unclear. They might impose a business plan or spending limits; if these were not adhered to or if the situation did not improve again, the club could drop points at the level of the men’s professionals. In Middlesex, or any other troubled county, there seems little prospect of that as yet.
Much of Middlesex’s trouble stems from the glitch in pension payments discovered in 2021. The error resulted in current and former employees’ pensions being consistently underpaid over a 12-year period. Correcting that error and boosting the pension funds of everyone affected has cost the club £500,000, more than double the original estimate.
That failure, combined with the Covid pandemic, is having “a massive impact on cash flow,” according to the club’s chief financial officer, Illa Bhardwaj, who spoke of a “challenging” time in an interview with the club’s channels last year. The club’s 2021 financial statements reveal further errors in accounting for lifetime memberships and sponsorship income in the previous year.
Middlesex occupies a unique financial position among the 18 counties as they do not own land. They are tenants of MCC at Lord’s and use a number of outdoor facilities. They have formed a “strategic partnership” with Merchant Taylor’s School, where they will play more there and train at their new indoor school over the winter. The development of a ‘home from home’ at Barnet Copthall, near Saracens Stadium, has long been discussed but has now fizzled out due to cost concerns. Two of the club’s properties have had to be sold in recent years.
This means that their sources of income come almost exclusively from cricket. They can’t host concerts at Lord’s like many counties do at their headquarters, or create spaces for the kind of corporate events that have made Surrey such a commercial powerhouse just five miles from London.
“Cricket is difficult to earn domestically,” says Cornish. “It’s doubly difficult for us. We don’t own our house. For many clubs, putting on a concert is the difference between profit and loss. We don’t get any of it.”
Middlesex has more than 7,500 members and will see higher revenue this year with a 15 per cent increase in subscriptions. That number is almost 10,000 fewer than Surrey currently has, although the comparison is unfair: as Surrey owns the Kia Oval, they have Test Match Cricket’s carrot to sell to members.
O’Farrell to resign
The ECB’s interest in Middlesex’s finances is partly due to the large proportion of their income they provide. The club’s latest accounts show that the borough has received £4.733m from the Governing Body, out of a total of £6.589m received: more than 70 per cent. Some of this money forms part of the boroughs’ basic partnership agreement, while boroughs still receive £1.3million each year to enable the Hundreds to run.
Middlesex chairman Mike O’Farrell is set to step down at the club’s annual general meeting next month. Middlesex conducted a recruitment process to replace O’Farrell, during which seven candidates were rigorously interviewed, none of whom were deemed suitable for the role. Loyal Angus Fraser will take over as acting chairman after the AGM if there is no alternative.
Middlesex’s challenging time off the field came at the same time as a rebound in fortunes. They were promoted to Division One of the County Championship last season and are back in the top flight for the first time since 2017 (when they were relegated the year after winning the title).
The county is one of the few not to do a pre-season tour, although Cornish insist it is a cricket, not financial, decision. Middlesex signed South African spinner Keshav Maharaj, who raised eyebrows at the ECB, but a serious injury has ruled him out. Talks with another overseas signing for Vitality Blast have had to sit on hold until at least next month when the financial picture is clearer.