The Club has just filed its annual Financial Statements for the year ended 30 September 2016. A full copy can be found here.
The information below gives some additional context to some of the numbers.
Notes on Profit Reconciliation:
1. ECB make periodic Special Payments to First Class Counties based around their own levels of reserves and forecast requirements; it is also influenced by the revenues generated by the England team, which in turn is dependent on which countries they play in that season. In 2015 all FCCs received a £1.0M special payment but this was not repeated in 2016.
2. While the Club has traditionally always made a profit from One Day cricket, the success of Test Match cricket has depended on a combination of the timing of the match and the opponent. So whereas an Ashes Test Match in August generated a good profit for the Club in 2013, we made a loss on the Test Match in May against Sri Lanka in 2016. Both of these fixtures were part of a package of matches allocated to the Club in 2010 on a fixed fee basis.
There has since been a change in the way that the ECB and Counties now operate so that whereas in the past a County would pay a hosting fee, the ECB now takes a share of revenue which significantly reduces the risk of hosting international cricket. The negative £220k shown in the table above is the difference between the £170,000 profit made on the New Zealand ODI in 2015 and the £50,000 loss on the Sri Lanka Test Match in 2016.
3. Elior is our catering and hospitality partner who made a significant one off contribution of £500,000 towards the cost of installing and maintaining the floodlights at Emirates Riverside. Elior are one of the largest and most experienced catering companies in the UK and operate all hospitality and event catering with us through our Joint Venture, Riverside Events.
The Elior contribution was matched to an ECB contribution of £700,000 covering the entire cost of the lights. The installation of permanent floodlights has enhanced our ability to host T20 games and was a prerequisite for us being awarded three matches at the 2019 World Cup.
4. As part of the complex negotiations and financial restructuring required of the Club we had to engage additional legal and other specialist advice over and above what we would expect to spend on a routine basis.
5. We paid more in interest payments in 2016 as a result of an increase in the interest rates charged on certain loans as well as some additional funding being provided. A key element of the restructure has been to reduce the capital and interest payments the Club has to pay, which has been achieved through a combination of loan conversion, write off settlements and interest rate reduction. As a result we will see a substantial reduction in interest and capital payments in 2017, estimated to be around £1.1M less compared to 2016.
Player Remuneration
From a high in 2012, when the Club had seven England international players, player salary costs have been managed steadily down. Comparing 2016 to 2015 the Basic salary cost has reduced from £1,111k to £1,088k. In terms of total player remuneration, i.e. including any other payments such as pensions and performance bonuses, our spending increased marginally and placed us 12th out of the 18 counties. In 2015 the professional player squad numbered 18 individuals, in 2016 it was 19 and for 2017 is 18. We do not expect the number of professionals employed to vary dramatically year on year.
All First Class counties have a maximum amount that they are able to spend on players’ salaries. As Members will be aware, as part of the financial restructuring agreed with the ECB, the Club are operating under a reduced salary cap compared to other First Class counties for the current season, although the cap is in fact in excess of our playing budget for 2016 and allows sufficient flexibility to maintain a competitive squad of First XI and Academy players. The cap is expected to remain in place for the next two seasons. We currently have 18 players in the First Team Squad with a further 18 across the Development and Academy. The Club continues to invest substantially more in its Academy than other counties which we believe is important in generating first team players of the future and strengthens our North East development philosophy.