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Chief executive outlines the challenges facing cricket club
LAST September in the wake of Durham's latest county championship triumph, the club's chief executive David Harker admitted "cricket doesn't really pay".
He said: "We're stable and there's no immediate threat, but it's never going to be a comfortable position. That's no different to most other clubs."
Mr Harker said that without international cricket provincial clubs like Durham faced losing between £2.5m and £4m a year.
Speaking to The Northern Echo following the release of the club's latest accounts, he said: "The business has historically made a series of significant losses, which is not sustainable, but at the same time we are saving just over 1m in salary costs this year.
"The longer term strategy is to become less dependent on international cricket, but with the support of the county council we are in a very good position to continue to have internationals in the North-East for the foreseeable future."
Mr Harker said he appreciated concerns over the council's level of financial support at a time when they are having to make cuts to their budget, but added: "If you turn the clock back to last summer it showed what the county cricket club can do for the region.
"We had high hopes in terms of the staging of the Ashes Test, but those were exceeded and there was a positive impact of about £20m on the economy.
"It is a very wise investment we believe and is the sort of investment you are seeing across the country in cricket and in other international events.
"People need to remember that while the club is pretty high profile, we are still a small business. We are not massively resourced and not in the same league as football. We also do an awful lot of good in the local community."
THE CHAIRMAN'S REVIEW.
INTRODUCING the latest accounts Clive Leach, the chairman of Durham County Cricket Club, said 2013 had been a "truly memorable" year for the club.
But it continued to operate in a difficult environment, he said, having faced a drop in membership and sponsorship income.
While domestic match income levels increased, they were still below levels previously achieved. Staff costs, which had previously risen year-on-year, stabilised. The wage bill for club's 69 staff - including 29 playing staff - amounted to £3.1m in 2013. Reducing staff costs would continue to be a focus for the business, Mr Leach said. Meanwhile, administrative and overhead costs remained stable, but the pursuit of additional and new sources of income remained a challenge.
The accounts also reveal that the 79-year-old chairman, who last year loaned the company £245,000, receives a £25,000 "consultancy fee" each year for what are described as his independent services.
The club told the Echo that Mr Leach brought "business background and acumen" to his role and also represented Durham in meetings with the ECB. He had also never received any cash from the club and received his fee in the form of shares in the holding company.
LOANS payable by Durham County Cricket Club Holdings Limited as at September 30 2013 and due after more than one year include £2.1m to Durham County Council, £1.1m from the North-East LEP and £900,000 from the ECB. Additionally a loan of 400,000 was provided by the board of directors in the last 12 months.
The £2.8m loan facility from the county council is repayable over 20 years at interest of 6.5 per cent above the Bank of England base rate. Up to £1.2m was available to be drawn on immediately with the authority also allowing the club to take a 12 month 'holiday' in respect of capital and interest repayments. The council had previously loaned the cricket club £1.5m in 2010/11, another loan in 2009 and also gave it a 500,000 grant in 2011 as a contribution to ongoing ground improvements.
The North-East LEP also agreed a £2.8m loan with the club, which included an immediate loan of £1.2m helping to pay for 5,000 extra seats in the form of a new stand which was installed prior to the Ashes Test. This is repayable at a rate of 7.49 per cent over seven years.
The LEP's chairman Paul Woolston has denied the club is getting special treatment ahead of other businesses and previously said upgrading the Emirates Durham International Cricket Ground would attract "global, national and local visitors to the area".
THE PLANNED HOTEL.
DURHAM County Cricket Club hopes to build a hotel at its Emirates ground, along with enhanced conference and banqueting facilities.
This "key priority" is aimed at boosting the club's income streams and making it less dependent both on matchday income, particularly from internationals, and public funding.
But despite discussions with the international Hilton hotel chain, construction of the hotel - which has planning permission - has stalled.
Chief executive David Harker said the club was now revisiting the plans, but gave no timetable for when the hotel might be complete.
He said: "The initial plans stalled partly because of the recession of the availability of credit. They've now been revised to incorporate conference and banqueting facilities.
"At the moment work is going on to hopefully demonstrate the business case for that and we are optimistic is going to work."
THE COUNCIL TAX PAYER.
RETIRED engineer Mike Cunningham, who lives in Durham City, said he failed to understand why the county council was "shovelling large sums of money" into a private company.
Mr Cunningham, who has asked a series of questions of the council over its backing for the cricket club, said: "Until recently the company has been losing money hand over fist and if it can't be supported by its own directors, why on earth should the taxpayer be giving it money virtually on a gift basis?
"Any other limited company looking for money - the first place they would go to would be the bank, not the county council."
He said the only security offered against the loan was that of the assets of the company if it went bust.
Mr Cunningham added: "The Labour majority on the council think that because they have made a decision nobody should question them about it.
"This is our money and I have a perfect right along with every other member of the public to question the council on any subject under the sun as long as it is council related."
THE CORPORATE HOSPITALITY BOX.
Durham County Council has a corporate hospitality box at the cricket club's Riverside ground, which has been regularly used by among others council leader Simon Henig, chief executive George Garlick and chairman Pauline Charlton to host events.
There is no charge for the box, which was originally owned by Chester-le-Street District Council and passed to the county council in 2009.
However members and officers have spent more than £30,000 to date entertaining guests in the facility - a figure which has attracted the ire of some county councillors.
Independent County Councillor Stephen Robinson said: "These people and those they are entertaining can well afford to pay their own way.
"The council must think money grows on trees. They are champagne socialists the lot of them and it's absolutely disgraceful.
"It's a kick in the teeth for the tax payer. In these times of austerity and with people suffering on the breadline the council should practice what it preaches and scrap this corporate hospitality."
Last November the council said a review of the box was underway and would include costs incurred and guests invited when hospitality was involved.
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