Communication From CCMG - Hundred Sale: The Disconnect from Reality

 

26/09

Daily Telegraph

Nick Hoult

The ECB has been accused of being “disconnected from reality” in their financial projections for the Hundred and valuations of the eight franchises.

In a 87-page document distributed to interested investors and seen by Telegraph Sport, the ECB claims that domestic TV rights will rise from £54 million to £85 million annually from 2029.

The document – entitled Project Gemini Information Memorandum and produced by the Raine Group, the American bank handling the sale – also projects that Indian TV rights will rise from £1.3 million annually to £1.8 million per year from 2026 to 2029, and then increase to a whopping £15 million per year from 2030 despite the fact Indian players are currently unable to play in leagues outside their own country.

The glossy brochure also predicts that North American television rights, currently valued at just £200,000 per year, will rise to £5 million per year from 2027, before a further jump to £15 million annually from 2030. That would be an increase of 7,500 per cent on the current deal and the result of what the bid prospectus says is the competition’s “global popularity surge”.

Lalit Modi, the man behind the Indian Premier League, called the numbers “far-fetched” and also took aim at the ECB’s valuation of the franchises.

The ECB has not publicly put a figure on its valuation of the Hundred franchises but sources have indicated the game hoped to raise up to £500m from the sale. But Modi believes it will fall far short. He believes London Spirit to be worth around £25m, Manchester Originals £8.5m.

‘Unlikely the Hundred will attract the necessary audience’

“The ECB’s financial projections for The Hundred, particularly beyond 2026, appear overly optimistic and disconnected from reality,” said Modi in a statement posted on X.

“The International TV rights figures make little sense, given the global competition from other cricket leagues like the IPL. It’s unlikely the Hundred will attract the necessary international audience to justify these inflated numbers.

“Domestically, while an increase in TV rights from £54 million to £85 million is plausible, the optimism around sponsorship post-2027 is far-fetched. The ECB’s hope for sustained sponsorship growth into 2029-30 seems more like wishful thinking than a realistic forecast.

“Even giving them the benefit for 2027-28, there’s no solid basis to expect sustained revenue growth at the scale predicted. The ECB’s optimism pales in comparison to the IPL, where teams are valued at $1 billion [£745m] based on 16 years of performance. By contrast, as per my analysis The Hundred’s teams are projected to be worth a mere £5 million to £25 million in the best-case scenario in my MOST CONSIDERED VIEW, with Manchester maxing out at £8.5 million.

“Worse still, The Hundred struggles to match even the Caribbean Premier League’s profitability, a sobering indication of its financial frailty. The Hundred appears to be on shaky financial ground, with projections that fail to inspire confidence in its long-term viability as these look dangerously overambitious and unsustainable.

“THINK TWICE BEFORE INVESTING see the ebitda [earnings before interest, taxes, depreciation and amortisation] of all teams as reflected in the information memorandum given out by ECB to prospective buyers.”

Hundred will wait for large offers

The formal process to sell to 49 per cent stakes in the eight franchises began at the start of September. The ECB planned to have the sales ratified before the start of next season but Vikram Bannerjee, the ECB’s director of business operations, warned this week that may now be delayed. “The most important thing is we get the right partners,” he told the Business of Sport podcast. “If that takes a bit of time, that takes a bit of time. If in this first round, we [find that] either the values aren’t there for one or all of the teams, or the right partner isn’t there for one or all of the teams, it’s fine. We’ll just carry on running it, we’ll do another year.”

The sale of the Hundred is the first time the ECB has welcomed private investment into the English game. Richard Gould, the chief executive, and chairman Richard Thompson remain strong supporters of the county game and resisted temptation to sell the competition in its entirety.

In 2023 the ECB turned down £400m for a 75 per cent stake in the Hundred from the Bridgepoint Group. Modi fronted a $1bn bid to buy the Hundred earlier this year, although talks did not progress very far.

Instead the ECB has gifted a 51 per cent stake to the grounds that host a Hundred franchise and will sell off the 49 per cent interest it retains, splitting the money between the counties who hope the windfall will solve debt problems and protect their futures. However, if Modi’s valuation is right then the expected windfall will be a lot smaller.

There are strong disclaimers on page one of the ECB document about the figures they have put forward. “No representation, warranty, assurance or undertaking is given as to the achievement or reasonableness of any future projections,” it says.

WG Grace cited as great short-format player

Potential buyers will have to weigh up whether they will get a justified return on their money. Modi says the figures show the franchises will be around as profitable as the Caribbean Premier League. The documents predict that London Spirit will offer an EBITDA of £1.3m in 2026 rising to £8m in 2029 if the ECB meets its ambitious aims for television and sponsorship revenue that Modi believes are unrealistic, and the board itself states are not binding.

The 87-page document sells the Hundred as “dominating the British summer sporting calendar” as the ECB tries to tempt buyers. It also boasts that the Hundred is the “premier destination for men’s and women’s global cricket superstars” despite a less-than-stellar roster of overseas men’s players who appeared this year with stars such as Pat Cummins choosing to play in Major League Cricket in the United States instead and Indian players not available.

The document also highlights WG Grace and Alastair Cook as examples of great English short-format players, despite the former dying nearly 100 years before the invention of T20, and the latter never participating in the Hundred.

The ECB declined to comment.

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Hundred’s only (and unrealistic) hope is to get Indian players on board

If the Hundred is to realise English cricket’s hopes, it will need to thrive abroad. The ECB’s document to prospective investors projects that the value of Indian TV rights for the Hundred will soar from £1.3 million to £15 million by 2030; the North American TV rights will rise even more steeply, from £200,000 per year to £15 million.

By 2030, the ECB projects, total international broadcasting rights will surge 15-fold: from £2.1 million a year to £32.9 million. Such ambitions ignore a sobering truth: even in a globalised age, most leagues are overwhelmingly dependent upon their domestic markets to generate revenue. Premier League football is the only major sports league in the world to generate more income abroad than at home.

The ECB is right in one sense: cricket in the United States is growing. Yet North American cricket fans already have abundant options. Generally, supporters there follow a mixture of international cricket and the Indian Premier League. Since last year, they have also had a good quality local competition to watch: Major League Cricket, which has had enough cash to attract more of the sport’s biggest names than the Hundred. Major League Cricket plans to expand in the coming years. Yet the ECB is now planning to make US fans also embrace the Hundred – which will continue to be played at a very similar time of year to Major League Cricket.

“The sums involved look optimistic, particularly in the context of global sport rights – it is a leap of faith,” says Rob Wilson, an expert in sports finance. “Many US cricket fans have an affinity with the IPL in India. Coupled with US interest in their Major League Cricket, there will be huge competition for The Hundred to get eyes on screens.”

The time difference presents another challenge for the US market. Most men’s Hundred games start at 6.30pm local time: 1.30pm in New York, and 10.30am on the west coast. A senior figure in another major T20 league, which has also tried to cater to the US market, told Telegraph Sport there is “no chance” of the ECB meeting its projections for North America by 2030. The only exception, he said, is if Indian players appear in the competition.

Indian players would also be transformative for the Hundred’s hopes of earning £15 million a year in broadcasting rights in India by 2030, an 11-fold increase on current figures. Yet there is little chance of leading Indian players being permitted to play in overseas T20 leagues at any point soon. Leagues in the Caribbean, South Africa and the United Arab Emirates, after all, already have an array of Indian owners affiliated to Indian Premier League teams; Indian players have still been barred from appearing in these competitions.

“Indians don’t love cricket,” a senior figure in Indian broadcasting told me a few years ago. “Indians love Indian cricket.” It is a truth that T20 leagues the world over have long learned. Earlier leagues in South Africa and the UAE, which were due to launch in 2018, with a business plan predicated on attracting significant interest from Indian fans, were both cancelled before a ball had been bowled: they were not financially viable.

Without Indian players, it will become even harder for overseas leagues to monetise the Indian market in the years ahead. The Indian Premier League is considering a further expansion, which could further damage the demand to watch overseas leagues. A more serious problem for the Hundred is a looming merger between Disney and Reliance Industries, the two biggest broadcasters in cricket. This is likely to exert a downward pressure on broadcasting rights, because there will be less competition: it is as if Sky Sports and BT Sports merged. Even without such obstacles, the Hundred’s prospects in India are also hindered by the time difference: a 6.30pm start in England equates to an 11pm start in India.

By 2030, the Hundred’s document outlines, the ECB hopes that the competition will generate 25 per cent of its revenue overseas. That would put the Hundred in rare company: the IPL only generates four per cent of its revenue abroad, the NFL just two per cent.

Over the first 21 years of T20 cricket, an iron law has held true, as one prominent figure in an established overseas league observes: “You make your money locally”. The ECB’s gambit is that this will now change. Whether potential investors agree will go a long way towards determining whether English cricket can raise the £500 million that it has targeted from the Hundred sales.

Firstly, an article from The Cricketer on the ECB Chair:

 

By George Dobell | 20/09/2024 10:00:00

Richard Thompson has admitted he has changed his stance on the scheduling of Test cricket in England after a couple of years in the role of ECB chair. Thompson, who took up the role in September 2022, had previously suggested that the Test summer would not be "squeezed" into a few weeks ahead of The Hundred. Indeed, in an interview with The Cricketer, he said such scheduling, "doesn't feel right". "Finishing the Test season in July means the whole season feels truncated," he said in May 2023. "Those hard, dusty wickets in late August and September are part of the nuance of Test cricket. I don't think it will happen again. The Test summer absolutely will not be squeezed like this in future."

 

But, when the schedule for 2025 was announced, the Test summer again finished before The Hundred. And while the series against India should now slip into August, it will finish, at the latest on August 4. While Thompson, talking to publicise World Alzheimer's Day and the work of the Alzheimer's Society, admits a change of heart, he is quick to defend it. "We've learned from what's happened," Thompson told The Cricketer. "We don't want to have our premium product - which is Test cricket - on when other major competitions are on. In particular, we don't want it on at the same time as the Premier League [football] as that puts everything in its shade.

 

"We looked at the figures from the Ashes in 2023. And whether it's broadcast figures or ticket sales or whatever metric you want to apply, the facts speak for themselves. It works playing Test cricket in that six or seven-week period. "We're the only act in town. We've scheduled the India series then for the same reasons. "So you're right: when I started, I did want to get back to a situation where we played Test cricket later in the summer. But I've changed my mind as I've understood the situation better. I think this is best for our game."

 

Secondly, here is a letter that Alan Higham has sent to the DCMS. You might like to send a version to your MP:

 

Dear Dame Caroline

 

Congratulations on your election as chair of the Select Committee for the Department of Culture, Media & Sport.  

 

I’m writing on behalf of the County Cricket Members Group (CCMG) to ask you to open an immediate inquiry into the ECB’s plans to sell the teams in the Hundred to private owners (the Sale). Bids are invited during the next few months with the ambition to sign deals in the early part of next year.

 

The CCMG is a volunteer, grassroot group of county cricket supporters established in 2022 when almost 7000 cricket supporters responded to a survey on the ECB’s planned changes to cricket.  We have over 3000 county members registered in our group. The Sale represents the most significant change in cricket in the country.  It moves cricket from being ultimately accountable in a democratic open manner to cricket fans towards the situation in football where the sport is dominated by a small number of extremely wealthy people. 

 

We have three main concerns that we ask the Committee to investigate.

 

1. The necessity for this action given its significance
2. The way it is being done: lack of transparency and equity
3. The probable and possible consequences for the broader game

 

The ECB have been extremely selective in who they will talk to and what they are prepared to say when they do speak.  We have 10 key questions that cricket fans ought to know the answers to. It is proving extremely difficult to get answers to these questions.

 

To address member concerns in October 2022, Lancashire CCC put out a statement stating that for any expansion of the Hundred or any sale to occur then 14 of the 18 counties would have to vote in favour.  On this basis, county members across the country have been content to allow the ECB and county chairs to explore the feasibility of a Sale fully expecting that any Sale would be subject to democratic consent.  Lancashire CCC told their members in August 2024 that the ECB was now free to conduct the Sale without any recourse to the counties and thus its members. 

 

We are also concerned about the inequitable proposed distribution across the 18 counties and the MCC. When the Hundred was set up, all 18 counties had an equal stake. Now the ECB proposes to give 51% of the teams to the 7 host counties and the MCC. If the teams are worth £400m as reported then this represents a massive redistribution of wealth towards the already big counties at the expense of the smaller counties. Smaller counties report being threatened by some larger county bosses with a breakaway that could exclude the smaller counties entirely if they continued to block the Sale.

 

The ECB claim that the counties are all happy with the proposals but Essex County Cricket Club recently told its members that they have formally objected and that there are 5 or 6 other counties who feel similarly. The lack of transparency and a failure to put the proposed Sale to a vote is extremely worrying. It does not inspire confidence for the way the game will be run in future. Without an open debate and critical analysis of the potential consequences, cricket faces being salami-sliced into a position where the wealthy clubs become wealthier at the expense of the less well-off and control moves permanently into the hands of a small number of unaccountable wealthy people.

 

County members are not blind to the challenges within cricket and the need to become more open and welcoming to people of all backgrounds.  Anyone can join their local county for a relatively modest cost. We are not against change and we would gladly help remove barriers to participation.  We would be happy to provide further evidence if required.

 

Thirdly, I intend to stand for the General Committee at Notts in the New Year. I hope you will support me! However, if anyone else is thinking of standing, that would be great and I’m happy to use this emailing list to support you.

 

Cheers,

 

Nick