The Hundred For Sale

Last week, a sports investment company sent a press release to every cricket journalist extolling the virtues of the ECB hiring them as consultants in order to facilitate investment in The Hundred. It was a pretty obvious advert being portrayed as an independent ‘report’ which I chose to completely ignore. Unfortunately, the cricket journalists themselves decided to pick up on it and the story has been gaining traction ever since. I think now that its fundamental flaws need addressing.

The mechanics of investment seem fairly simple. The investor buys a portion of a company, in exchange for which they may receive a some of that company’s revenue or profits. In addition, if that company gains in value then the investors can typically also sell their stake to someone else for more money than they paid. For the company selling the shares, they get a short term increase in money available to them without having to repay a bank loan. That extra money can allow the company to expand, or restructure themselves in order to become more profitable. If everything goes well, everyone wins.

There are two scenarios which I can see applying to private investment in The Hundred. The first is the wildly optimistic outcome where the new competition is a huge hit, filling stadia with fans and earning a massive TV deal from 2025 onwards. If that happens, the ECB will likely lose a lot of that profit to the private stakeholders which they could have otherwise kept and invested in English cricket.

The second, perhaps more likely scenario is that The Hundred stalls. Perhaps not a total failure, but the offered TV deal in 2025 is lower than expected and the ECB want to cut their losses and start again. The problem with that would be they would have given up some measure of control to the private investors in exchange for their money, and so they might not be able to do so unilaterally. What should be a simple process instead becomes a complex and expensive negotiation involving lawyers and all sorts.

So it would be fair to say that I think this kind of outside investment will financially harm English cricket in the medium to long term, one way or the other. It has been suggested that the ECB might not have any choice in the matter due to their own current lack of funds. This is, I think, hyperbole.

Regardless of what happens this season, the ECB will still receive £220m in 2021 from Sky. I believe that is more than the television, ticket and membership revenue of all English cricket combined in 2019. It’s not currently clear exactly how much the ECB will be getting this year, except that it won’t be the full amount due to the postponement of The Hundred, but even then it is likely to be more than last year if the England men’s team play most of their scheduled games. So long as counties are sensible with their finances, and readjust their plans to the new situation, there shouldn’t be any threat to their existence.

In conclusion, I believe welcoming investment into The Hundred (or really any other aspect of English cricket) is a mistake which should be avoided. Things aren’t as bad as many people seem to fear (at least in the professional game), and so now is certainly not the time for panicked decisions or short term fixes.

Feel free to comment below.

19 thoughts on “The Hundred For Sale

  1. dArthez May 8, 2020 / 9:39 am

    Actually, since the Hundred will undoubtedly flop, selling a stake in a financial black hole is probably the sensible thing to do. Knowing the ECB incompetence and greed, the investors probably will end up having to sell their share back for a pittance to the ECB anyway.

    So take the money, and do everything in your power to make the competition fail – in short, continue on the same path.

    But tip for the ECB: read up on the robber barons, if you do want to go down this route. Sometimes failure is more financially rewarding than success.

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  2. Marek May 10, 2020 / 1:45 pm

    I’m not as confident as you on the financial front.

    Yes, £220m sounds a lot. But £60m of this is already committed for cricket-related Coronavirus relief. Another £40m is the broadcast money for this year’s Hundred, which will have to be repaid (or will be withheld from next year’s payments) and won’t be recoupable. And £48m is the out-of-pocket expenses for next year’s Hundred (costs minus Sky money. By the way, in Harrison’s usual transparent way, the annual projected loss for the Hundred has silently gone from £7m to £12m since February, according to George Dobell’s articles). So that’s already £148m gone, and £72m left (plus £11m cash reserves).

    Harrison’s interviews seem to suggest that the losses which would be incurred if the international season failed to happen this year would be £280m–of which around two-thirds seems to be TV income (£220m minus £36m for the Hundred minus some for the Blast).

    So imagine if half the season were lost–which is a fairly likely scenario given that the Australian government has suggested fairly strongly that it won’t be letting anyone into or out of the country till mid-September and that England’s first inbound tour is from a group of between five and ten countries–nice easy bureaucratic task then!–whose death rate per inhabitant is the best part of 100 times less than the UK’s (as is every Full Member’s apart from Ireland’s) and whose team is all from an ethnic group who are particularly susceptible to dying from Coronavirus in the UK.

    That would be a loss of around £90m–or the rest of the 2021 Sky money plus the ECB’s cash reserves. And that’s before taking into account any 2021 expenses not related to the Hundred; any further increase in the Hundred costs beyond the 14% they’ve increased in the last three months; or what happens if there are further substantial losses (a recurrence of Coronavirus, say, a terrorist attack during a tour, or the Queen dying just before a Test is due to start).

    That would suggest to me that, if this year’s international programme takes any sort of substantial hit (and despite the ECB talking as if their draft programme is a done deal, it’s clear from reports in the last few days that it’s very, very far from that), then next year’s Hundred is effectively going to bankrupt the ECB. Which would probably mean bankruptcy for more than one county club.

    If that was the case, then, the challenge is getting through to the 2022 season and still being solvent. To me, the Hundred is the real fly in the ointment here, simply because it’s a wildly speculative venture–an important consideration as we enter a disastrous global recession– which is projected even at the moment to make £60m losses in five years. It’s a financial disaster, in other words.

    Since even getting to the middle-term is going to be a challenge, I’m not sure that the idea of floating it to a load of Indian billionaires and letting them take the risks is such a bad one. The main alternative–which would be my preferred one–would be to recognise the Hundred as the enormous vanity-project white elephant that it is and scrapping it (preferably along with Harrison!), and renegotiating the Sky deal to persuade them that showing an extra 35 Blast matches is every bit as good an investment as showing 35 matches of a bunch of teams that no-one has heard of.

    Liked by 1 person

    • dannycricket May 11, 2020 / 9:12 am

      My reasoning is fairly simple: The new TV deal represents an increase in revenue of about £110m per year. Even if no cricket is played this year, which Tom Harrison has said would cost English cricket £380m in lost revenue (presumably ignoring any reductions in expenses), then the next four years will still give the ECB £440m extra compared to the 2013-19 TV deal. The Hundred could be made profitable too, simply by dropping some of the extravagant spending, adding a few million more to the pot.

      So if the ECB scales back their expenses to 2019 levels, including wages and number of employees, then that extra money should more than cover a lost season. And they’re obviously trying everything possible to have England’s men play a full schedule this summer, which would likely add over £100m to their accounts on top of everything else.

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      • Marek May 11, 2020 / 12:05 pm

        It’s possibly worth considering too that, while the amounts are larger and they have contracted to pay them, Sky is very probably promising money that it doesn’t actually have–yet. Getting the money depended, when they signed the contract, on some level of economic growth, rather than the biggest recession in a couple of centuries.

        It will be very interesting to see where the ECB contract is left if people start cancelling Sky subscriptions in droves because they’re a luxury which they can no longer afford–contract or no contract.

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        • dannycricket May 11, 2020 / 2:52 pm

          Yeah, which is why I made the rather extreme suggestion last month that the ECB should prioritise showing The Hundred. I fear that if Sky do run into financial issues, they will seek to cancel or renegotiate any TV contracts that they can. By cancelling The Hundred, and quite possibly not playing the Blast or women’s internationals either, the ECB hand leverage to Sky in future dealings.

          On the other hand, Sky might be wary of BT or a streaming company swooping in and taking away a significant portion of their customers. If they do start losing subscribers due to the economic environment, the last thing they’d want to happen is to accelerate the process by shedding content.

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  3. Grenville May 12, 2020 / 12:01 am

    I know little about finance, but anything which means the ECB loses control gets my vote.

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  4. dArthez May 15, 2020 / 3:01 pm

    How do insults to imbecility retain power, CSA-style.

    https://www.cricbuzz.com/cricket-news/113037/csa-honchos-consider-brazen-tweak-of-board-laws-to-stay-in-power

    That is the way.

    Also interesting to note that alleged serial thief Moroe is being paid MORE than the highest paid centrally contracted player (admittedly, Moroe is paid a pauper’s salary of a paltry $228k a year for being incompetent at best, while the per person capita of South Africa is less than $7 k / year), while he is suspended (and since nothing seems to be actually investigated, he is being paid more for doing nothing than anyone representing South Africa will be paid. When money is already extremely tight, thanks to his (alleged) thieving ways. Um, yeah way to go.

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    • dArthez May 25, 2020 / 4:10 pm

      Apparently, Nenzani, now wants to run for ICC President. Because clearly, a human wrecking ball must aim to achieve maximum carnage, and Nenzani, despite having overstaid his two terms by a year, is not done yet.

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  5. dArthez May 17, 2020 / 1:56 pm

    Really not sure why you have not advertised your long-running Twitter-tournament here.

    It is the bit of Twitter that I look most forward to 🙂

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    • dannycricket May 17, 2020 / 2:18 pm

      Me neither. Sean’s running the competition, so I think we’re just leaving it to him to decide what to do.

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    • dArthez May 25, 2020 / 4:11 pm

      I am gutted that Warner won.

      I might change my mind if Warner takes up a career in the comms box, but somehow I doubt that.

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      • dannycricket May 25, 2020 / 8:43 pm

        True. Few players improve their standing by spending any time in the commentary booth or press box.

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    • dArthez May 21, 2020 / 6:37 pm

      Not surprising. Again, screw the nations that are actually dependent on the ICC prize money pools, who will see yet another dent in the resources available to them.

      In the time of corona, getting a global tournament on easily accessible channels would be a great opportunity to expand the base of cricket. So obviously, that is the last thing the ICC would be thinking about.

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    • Marek May 21, 2020 / 7:02 pm

      This is the next big battleground I think–and it’s a return to the steamrollering BCCI of the Srinivasan era.

      The noises coming out of official Indian cricket circles–most recently from Ravi Shastri–have for several months been suggesting that bilateral (for which read Indian bilateral) series need to be given priority over ICC tournaments. Despite, as you say, that bilateral series that don’t involve the big three are a drain on the financial resources of the smaller countries, whereas ICC tournaments support them, as well as increasing the exposure of cricket amongst all countries.

      I had been thinking that Graves would be the worst possible next chair of the ICC. But I’m not sure that Ganguly would be any better, and he could well be worse for the reasons above (there’s a sentence I never thought I’d write–worse than Graves!)

      In which context, spot the connection between these two stories (as a SA follower, you already will have, d’A!):

      https://www.espncricinfo.com/story/_/id/29203594/india-set-play-t20is-south-africa-end-august [amazing really that in a time of such fixture congestion, two Full Members could be contemplating a series which is neither being rescheduled nor in the FTP!]

      https://www.espncricinfo.com/story/_/id/29205289/is-sourav-ganguly-eyeing-icc-chairman-position

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      • dArthez May 21, 2020 / 8:36 pm

        Yup. Closed shop, vested interest, and then lots of bluster and speaking a few sentences about ‘the good of the game, growing the game’ and all that.

        Mind you, I don’t envy the South Africans, but some of the problems (like the idjits in charge) have been of their own making. Even during the last board meeting, they still did not get rid of the dead wood (and obviously they won’t have mentioned what happened with regards to the execution of the planned coup that I posted about a few days before). Three new independent directors have been appointed, but they all have backgrounds in finance (and as far as I can discern none in cricket – I could be wrong though). So whether that really helps, is doubtful.

        CSA desperately need to plug a hole in the budget to the tune of 50 million pounds, so it is really not strange that they are selling their votes to get some much needed cash in (after all Moroe needs to get his 19 000 $ / month for not doing anything / further damaging CSA). Other boards will be in the same situation.

        Sri Lanka for instance, but then they announce plans to build a 40 000 seater stadium in Colombo, since apparently stadiums pay for themselves, and the 35 000 seater over there can’t bring money in. So lots of cricketing boards are massively in denial about how wretched their finances are, and what that will mean for the global game in a few years time.

        At the rate the haves are redirecting the money to themselves, it may soon well be classified as an upset if say South Africa / Sri Lanka or Pakistan only loses by 80 runs / 5 wickets to Australia / England / India in an ODI. And then the idjits in charge cannot fathom why no one is really interested anymore.

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      • Marek May 22, 2020 / 12:10 pm

        It seems to me that the financial model for international boards should be Pakistan, who seem to be in at least passable financial health despite not having hosted a series against India since before the IPL started.

        And, although they might not be “state of the art” (hurrah!), their stadiums are perfectly capable of hosting international cricket and being certified by the ICC to do so.

        If other countries don’t adopt their model–whatever it is–then literally the only other path is kowtowing to whatever the BCCI want, simply because their financial clout is four times as big as every other country put together.

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        • dArthez May 23, 2020 / 1:28 pm

          I think that might also be BECAUSE they can’t play India. With no realistic hope of playing India (and thus making money of that), they can’t over-commit financially on the expectation of a huge payout from an India series. Prudence with money is even more important for Pakistan, since they have been starved from international cricket at home for even longer – they even have to pay for hosting “home” series in the UAE.

          As for the length of India series, that has little to do with sporting merit, and more to do with generating profits and to a lesser extent rewarding compliant boards. The same happens with England and Australia, although obviously to a much lesser extent.

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