Howzat? The Financial Health of English Cricket: Not Out, Yet

Round 1

Reviewer 1 Report

Thank you for the opportunity to review your paper.  I found your analysis of the financial health of English cricket to be pertinent and it provides a much overdue update on the work of Shibli and Wilkinson-Riddle. Of general interest it makes a very good contribution in demonstrating that the adoption of Twenty20 cricket has not led to financial independence fo the counties.  Your coverage of the financial accounts of the counties is systematic and supports your conclusions well - I particularly liked the comparison between Surrey and Durham and their respective fortunes.

Overall, this paper will make a welcome contribution to the literature, however I have some minor suggestions for further clarification that could be of use to the authors;

Your aim is clear but I think in its current form you undersell the importance of the paper - there needs to be a clear statement as to why this form of analysis is important - does it underpin our knowledge of all the other sport management things a club can do, if so an addition in the introduction and conclusion would suffice.

You have a very small section in your introduction on institutional logics.  This is actually a large theoretical framework in itself, and the very brief sport and business logics doesn't fit as a thorough example of the concept - for ease I think you can rely on the readers' knowledge to know that profit and winning are significant enough tensions/constraints in sport management.  I would cut this small section.

Are the debt ratios of the counties influenced by their recent redevelopment costs and therefore are these only temporary issues? I am unsure if this is a signifiant point, just that I noticed a number of counties who are over 75%.

As said, these are minor recommendations but if 1 and 2 are addressed they might slightly strengthen what is already a very good paper. 

Author Response

Firstly, thanks for your comments, they are not only very positive but have also made making the amendments straight forward as they provide direction.

We have revised our manuscript in line with the two key items by;

Adding a sentence in the introduction to strengthen the aim of the paper, and further extending this in a sentence at the opening of the economics of pro team sport section.

Removed the reference to institutional logics - we agree that this is too brief and doesn't fit here effectively.

For some of the counties the redevelopment costs have influenced their debt position. However, in general terms the results stack up. The Surrey and Durham case studies show the influence (or not) of debt. Had we chosen an alternative county we could unpack this suggestion further (but for the direction of the paper we wanted to explore a positive and more challenging case study.

Thanks again for your review.

Reviewer 2 Report

Some tidying up on the accounting side, as English cricket clubs are subject to FRS 102 rather than international accounting rules, although there is overlap between the two. 

I think the 75% debt threshold (line 422) as a measure of financial risk is arbitrary and outdated. Analysts tend to focus on EBITDA/Net Debt as a metric which indicates whether the business is generating sufficient cash to pay debts as they fall due. 

The central premise that country cricket is different because it is reliant on central distributions has some merit, but the sport is no more or less reliant on handouts than other sports that are only financially viable because of broadcasting income negotiated and distributed by either local (PL,EFL and FA) or international (UEFA & FIFA) bodies. Football clubs in League One and League Two in England only survive due to solidarity payments from the Premier League, although these receiving clubs have nothing directly to do with the Premier League. 

I am not sure that the financial problems of county cricket are necessarily due to poor financial management at club level (line 514). The four day game has a very restricted demographic appeal and exists mainly to provide a production line for the national team rather than a standalone sport in its own right. The national team then reinvests the proceeds  of test matches and one day internationals via the ECB. Clubs see the grants from the ECB as a dividend for the work they put into player development. 

Realistically to be independently financially sustainable at the county level would involve a substantial reduction in the number of counties in the domestic game as the non-test playing ones are unable to generate revenues independently. Therefore the conclusion that the ECB should be encouraging self sustainability is a wish rather than a realistic proposition. 

Author Response

Thanks for your positive review and the nature of the comments provided. We've made the changes as per your recommendations and detailed these below;

Added the note about FRS 102.

We agree that the 75% debt threshold is outdated. However, the purpose of the paper was to compare, directly, to the findings of the 1997 paper, hence the use of it. In a follow-up we will move this debate forward via the inclusion of EBITA/Net Debt. It is, as you say, a more effective metric/measure.

Your point about other sports, is again, absolutely true. What we have tried to do here is isolate cricket and see how/if their business model has changed over time. While other professional sports face similar, even more significant challenges based on subsidy (your L1 and L2 comparison polarises this), it makes no tangible difference on cricket (unless NGBs start cross sport subsidy). However, we have added a line or two in the conclusion to make that point that other sports face similar issues in addition to the link to findings authors made in Rugby League. This point is also repeated in the original submission at the very end of the conclusion.

The point made about the 4 day game is an excellent one. We have used these words in the conclusion to soften the criticism of club boards.‍

We completely agree that the point on self sustainability is a wish but do think that the promotion of such an idea is a fair one, albeit rather utopian.

Thanks again for your review. It gives us confidence in our work and more to think about. We hope that the responses are fair and acceptable.