Cardiff Council has agreed to provide Glamorgan County Cricket Club with a further £1m towards the cost of transforming the city’s SWALEC Stadium into what is now a fully-fledged Test match venue. I say additional – the council has already contributed £4.5m in late 2006.
At face value, it could be seen as worrying indictment of the club’s finances and places this winter’s turmoil into greater context. But reading into the report put before councillors, it sheds a little more reassuring light on the situation – both from the club and the council’s point of view.
The cost of transforming the SWALEC Stadium was believed to be around £9m. But revisions to the England and Wales Cricket Board’s demands for grounds to attain international status – a hover cover, an extra floodlight and the provision of a tri-vision sightscreen to name but a few – forced it up to more than £11m.
The council report said: “The club went ahead and met the cost overrun with extra short term funding from Mr Russell, a bank overdraft and accelerated use of staged naming rights income. Carrying the additional burden of the cost overrun has led to cash flow issues for the club.”
By securing the additional £1m from Cardiff Council, the club plans to remedy these cash flow issues and ensure that it is capable of bidding for another Ashes Test in the coming years – complementing the other international games due to be held in Cardiff between now and 2014.
The cut-throat nature of the Test match bidding process means that Glamorgan have had their hand forced. Financial incentives that come with hosting such an occasion as an Ashes Test match are too alluring to pass up, but there’s a surplus of clubs to notice this – some will lose out.
Those incentives are very handy when it comes to paying off the debt accrued in the process of redeveloping the SWALEC. And this is where this winter’s mess is to make its entrance – poor Twenty20 form means matchday revenues fail to do their bit and prompted a wave of personnel changes that have been a PR failure.
Glamorgan’s proposal: “The council’s further advance would be used by the club to reduce its bank overdraft to £0.3 million and to address its ongoing cash flow challenges.” So, £1m on top of the £4.5m equalling total liability of £5.5m, minus £500,000 waived in return for a community partnership grant scheme.
That’s the ‘take’ half. The ‘give’ half from the club is that the full amount (£5m) would be repaid to the council more than four years early – October 2023, not the initial loan period ending January 2028. I’m not an apologist for the public sector bailing out the private, but at least there is compromise.
It’s in Cardiff Council’s interest to look after Glamorgan’s interest in some ways. According to the report, an Ashes Test match is incredibly valuable to the city’s economy; bettered only by a Heineken Cup Final that usually results in an army of Irishmen invading the city…
The £1m will come from the Public Works Loan Board, rather than the council’s own coffers, and if it helps Glamorgan secure another Ashes Test match (or two), the short-term outlay will be recovered. Another sweetener was perhaps a pledge by the club to provide a ‘community benefits package’. Alan Hamer told Wales Online: “The loan will be paid back in full at commercial interest rates and the club will provide additional benefits, which total in excess of £900,000.”
The issue that is the most concerning, however, is the references to Glamorgan’s cashflow. In a year that has included little on-the-field success but the visit of an England game, how will the annual results fare? Does the need for an additional £1m from the council mean that a loss is inevitable?
County cricket finances are coming under scrutiny at present, especially with the likes of Yorkshire and Lancashire staring at seven-figure losses. Other clubs have seen six-figure losses, and a minority are in the black. And Glamorgan? Time will definitely tell…