The England and Wales Cricket Board has been warned its Hundred windfall should be used properly to stop the money injection becoming a “glorified payday loan”.
An auction of stakes within the competition’s eight city-based sides raised a remarkable sum over the past fortnight, with global investors clamouring for shares that got here with a complete price tag of around £520million.
That’s the figure the ECB expects to have at its disposal because it looks to fulfil its aim of refinancing the game for a generation, with around £50m put aside for the recreational game and the remaining to be divided between the 18 first-class counties and Lord’s owners, Marylebone Cricket Club.
An estimated one-off hit of between £22-27m could prove a lifeline for county sides, but sports finance expert Kieran Maguire, who lectures at Liverpool University, insists it will not be a magic cure.
He believes the best way the cash is handled is as vital as the ultimate tally whether it is to act as greater than a sticking plaster.
Clever Spending Needed
“It’s about how properly they spend this lottery win, because that’s what it’s. There may be a long-term issue in the case of the sustainability of skilled cricket,” he told the PA news agency.
“Parts of the sport have turn out to be increasingly marginalised through the years, with the result that many clubs run at a loss and fall into debt. Among the losses that are being incurred are quite substantial.
“If you find yourself freely giving an enormous percentage of future TV revenues, you possibly can have a look at that and see it as a glorified payday loan. It’s easily spent away on a number of vanity projects.
“Unless you set a brand new budget for sustainability we’re going to be in a really similar position in a number of years’ time. The one thing we all know concerning the history of cricket and finance is that we never learn anything from the history of cricket and finance.”
The ECB is aware of concerns about how the cash may very well be spent and has made it clear there are ‘guard rails’ that include each county’s payday.
Core Objectives
An edict has already gone out that funds needs to be used for 3 core objectives: constructing reserves, generating revenue and debt reduction.
“We would like the cash to be invested quite than ‘spent’,” said chief executive Richard Gould on Thursday.
“We would like to be sure it has a very long-term impact.”
Doctor Dan Plumley, a sports finance expert at Sheffield Hallam University, is optimistic concerning the future given the unexpected scale of the gold rush.
“We will file this one under ‘exceeded expectations’. The numbers are staggering,” he told PA.
“To be fair to the ECB, this competition has had its critics, but they were bullish about their targets and these numbers are considerably above the estimates.
“The ECB probably feels justified to be reaping a number of the rewards and it’s a money boost for the broader game which is far needed. It has the potential to deliver some real legacy.”
Return On Investment
As for securing a handy return on investment, Plumley stressed the importance of hooking within the Indian TV audience.
“It’s the identical economic model, you would like eyes on screens and bums on seats. That’s driven by on-field talent – it’s tried and tested through history,” he said.
“When the following TV deal comes up, expect an enormous push around international rights. The Indian market is the one to crack and, when you can get a few of their star talent into the Hundred, you possibly can absolutely have a look at serious growth potential.”
Even when that doesn’t occur, it will not be a deal-breaker. Maguire sees a few of these purchases as much through the prism of luxury spending as clinical money-making vehicles, citing the £145m paid by a Silicon Valley consortium for 49 per cent of London Spirit.
“I consider it went for 31 times expected revenue. Once you go to that type of number, you’re not buying it as anything aside from a trophy asset,” he said.
“Lord’s is the equivalent of the Mona Lisa and, even when it’s only yours for 4 home matches a yr, that remains to be an asset that suits them right down to the bottom. I don’t think they’re investors in the normal form, by way of wanting a financial return on an asset.
“It sounds a whole lot of money to us but, when you have a look at the valuations of a few of these firms, it’s a drop within the ocean. It’s like they’re buying a cricket club as an alternative of one other superyacht. It’s conspicuous consumption.”
READ MORE: ECB: Near £1bn from the Hundred auction will protect cricket for generations to return
