Last week, on Tuesday 19th September, the Club held an extra Middlesex members’ forum, in the Middlesex Room at Lord’s, to offer some clarity to the Club’s members around the background to the sanctions which have been imposed on the Club by the England and Wales Cricket Board (ECB), and to allow members the opportunity to raise any questions or concerns they had in relation to this matter.
The meeting was audio recorded, so that the Club could provide the wider membership with a record of the matters raised and discussed.
Chief Executive Officer, Andrew Cornish, was joined by the Club’s newly appointed Chair, Richard Sykes, the Club’s Chief Financial Officer, Illa Sharma, and the Club’s Director of Cricket, Alan Coleman.
Given that this forum was put on for the sole purpose of discussing the ECB sanctions and matters that led to those sanctions being put in place, the following is a summary of the meeting, with any questions that did not pertain to the matter at hand removed.
Any members wishing to ask any questions to the Club around this matter particularly, or any other Club matters they have, will have the chance to do so again at the Club’s End of Season forum, which is being held on Monday 2nd October 2023 at Lord’s, in the Thomas Lord Suite from 6pm.
Meeting summary
Chief Executive Andrew Cornish began by welcoming members to the forum and apologising for the hastily arranged and somewhat overcrowded meeting venue, as this had been secured at very short notice, to ensure that members could attend the forum in a timely fashion after news of the ECB sanctions had been released just the week before.
He began by explaining that there were two main topics for discussion on the forum on the agenda – firstly, the main topic of the ECB sanctions, and secondly, he wished to clear up some confusion around the circumstances which led to the appointment of Richard Sykes as the Club’s new Chair, which had been mis-reported in the press.
Cornish explained that the last eighteen months to two years had been an extremely difficult time for the Club, however stressed that with the conclusion of the ECB’s investigations and the sanctions that they had imposed as a result of their findings, the Board felt that this was very much a watershed moment, which had drawn a line in the sand, and was a point from which that we could begin to move forwards as a Club, with all this behind us.
He acknowledged that as a members’ Club, the members have every right to understand what has happened and why we are where we are now, with these sanctions imposed upon us, hence the purpose of this forum. He welcomed all members to make their own opinions in six, twelve, eighteen months’ time, as to how the Club was now being run under the current management, which is very different to how the Club was run under previous administration.
Cornish stressed that most of the media coverage around this matter had been largely accurate, although acknowledged that there were some corners of the press that were trying to put a more sensational spin on the ECB’s announcement, however the Club’s Communications Department had worked closely with a number of leading journalists in the cricket media world to ensure that coverage was accurate and non-sensational and broadly reflected the facts as they are.
He went on to explain that the investigation launched by the ECB came in the wake of the pension scheme administrative oversights, which were well publicised at the time, and the ECB looked into all areas of the Club’s financial governance, hence the launch of their investigation into our financial practices at that time.
Four to five years ago, the ECB encouraged all First-Class counties to effectively merge their county cricket clubs (responsible for delivery of professional cricket) and their county cricket boards (responsible for the development of the recreational side of the game), with both entities working closely together moving forwards as one pseudo entity. The Club did just that, and this is how Middlesex Cricket became an entity.
The ECB’s investigation centred largely around the management of funds between those two entities, the county cricket club, and the county cricket board, and it was clear that some of the financial transactions between the two entities were cause for concern to the ECB. Cornish explained that importantly, the ECB investigation found no evidence whatsoever of their being any financial misappropriation of funds between the two organisations, however what they did find was a general lack of financial governance between the two entities, a lack of clarity, and some poor practices which they weren’t happy with.
When this was presented to Middlesex Cricket by the ECB, the Club could have gone down a regulatory review process, which would have cost the Club an enormous amount of money, taken anything up to two years to resolve, would have taken a large amount of Executive Management time to resolve, and would offer no guarantees at the end of the process that the Club would come out of it having won the case.
Instead, the Club opted to effectively accept the ECB’s findings, sign a jointly agreed Compliance Agreement, and take what can best be described as a wrap on the knuckles, which does seem a little unfair, given that the Club of today hasn’t done anything wrong per se, other than acknowledging that it has been poor with its financial governance in the past.
Cornish went on to explain that under CFO Illa Sharma’s direction, the financial governance of the Club today is in a very different place to the Club of the past, and assurances were given that the issues that had occurred in the past would simply be unable to occur again under the current administration and financial governance and transparency that exists today.
The net result of the ECB’s findings is that Middlesex has a £50,000 deduction applied to its payments from the ECB, which has already been budgeted for in our forward planning forecasts, so whilst this is far from ideal, it is a manageable outcome from a very disappointing and regrettable process. These reductions would be spread over a period of ten months.
All other suspended sanctions that are mentioned by the ECB, whilst disappointing, are not of any real concern, as the Club will be producing a Business Plan that the ECB will have sight of, which isn’t anything different to what we would be doing as a Club anyway. This will be worked on and built, will outline our objectives, our plans and our forecasts, and is something that we are in the process of putting together for the ECB to review and approve. If they Club meets and delivers on this Business Plan, as it will, the suspended sanctions will not be triggered.
In relation to the salary cap that the ECB are ‘imposing’ – this again has no significant impact on the Club moving forwards, as given the current financial situation the Club finds itself in, we are operating significantly underneath the salary cap that exists anyway, so moving forwards, this will have no detrimental impact on the Director of Cricket needs when working within the Club’s existing budgets.
The Compliance Agreement we have signed with the ECB also outlines the requirement for the Club to conduct a governance review, to look closely at how these issues occurred in the past, and safeguard against them ever happening again. Cornish explained that he would let new Chair Richard Sykes offer further expansion on this when he spoke.
Cornish then moved on to discuss the recruitment process for the new Chair.
Some of the reporting of this in the media has been factually incorrect, so Cornish wished to address this for the benefit of all members, to set the record straight.
Initially, when the Club were looking to replace former Chair Mike O’Farrell, the Club embarked on the recruitment process itself. Richard Sykes was involved in that initial process, but at no time met or interviewed any of the candidates on any long or short list. At the point in the process when Sykes announced his interest in applying for the role, he withdrew himself from any further involvement in the recruitment process. Ultimately, at the end of that process, the Nominations Committee had three candidates that were shortlisted, but the Committee felt unanimously that none of the three were the right fit for the new Chair’s role and opted not to offer the role to any of them.
The Club then regrouped, having been unsuccessful in the search, and appointed the services of an external Executive Search company, recommended by the ECB, called Perrett Laver, who began the process again, independently, with Mike Gatting Chairing the Nominations Committee. The job description and the long listing of candidates were done entirely and independently by Perrett Laver, who put forward candidates for interview. These candidates were interviewed in two rounds, meeting ten different people, including members, Board Directors, specialists, and members of Perrett Laver, and from that process, the recommendation of the Nominations Committee, which was independently verified by Perrett Laver, was that Richard Sykes was the unanimous choice as new Chair.
Sykes was duly offered the role, which he accepted, which will need ratifying by members at the Club’s Annual General Meeting next April.
Having explained that recruitment process, Cornish then handed over to Richard Sykes, who introduced himself to the members.
Sykes began by summarising his credentials and his ties to Middlesex Cricket before going on to thank Mike as former Chair, and Gus Fraser, for the role he has played as Interim Chair over the past few months in what has been an extremely challenging time for the Club.
Sykes repeated Cornish’s clarification of the recruitment process and explained that he had been frustrated with inaccuracies in the media around how the process had been run. He went on to explain that whilst his appointment was only made public last week, he had in fact accepted the role back in June/July when it was offered, however wanted to wait for the ECB investigation to conclude before commencing his appointment and announcing his appointment to the role. The reason for this was that as a Director that has been on the Board for a few years, he wanted to be sure that nothing came out of the ECB’s investigation that would impact upon his appointment. With those assurances in place, he has since spoken with the ECB, the MCC, and other stakeholders about his appointment and has received nothing but unanimous support for his appointment.
He next went on to speak about the Compliance Agreement and specifically the governance review that will now be undertaken. He explained that he would be leading this review, to build a full understanding of what occurred and what went wrong in the past. He wanted to be certain that the governance structure of the Club moving forwards is up to the required standard, in terms of us having the right skill sets at the club, that our governance committees have the right people on them, as does the Board, and that the structure of the Club is in place to ensure that all elements of the Club thrive, be that Sunrisers, Middlesex Cricket or Middlesex In the Community.
This review will take place over the next couple of months and may or may not force some considerable changes, however he gave assurances that the process would be thorough, and that appropriate feedback would be provided to members upon its competition.
Sykes acknowledged the role that Cornish and Sharma had played in getting Middlesex to the point where it is now, and that the Club was in a good place to build moving forwards.
He then welcomed questions from the members in attendance.
The first question was around the shortfall in the pension contributions of £500,000 over a twelve-year period, and what impact does this have on the Club moving forwards and does this and the ECB sanctions seriously impact the Club’s ability financially moving forwards?
In answering, Richard Sykes confirmed that the member’s understanding of the pension situation was correct and that the figure of £500,000 was broadly correct in terms of the level of shortfall. He explained that the pensions shortfall has all now been accounted for and that there would be no further outlay in relation to this, however this had obviously impacted significantly on the Club’s reserves.
Illa Sharma then added, in answering the question of what would be the impact be on the Club moving forwards, by explaining that the Club now has a very firm control over its cost base, with each department operating within strictly agreed budgets that they were each accountable for. These budgets are forecast over a rolling two-and-a-half-year period, which has enabled the Club to get full control of its cost base, allowing us to forecast accurately moving forwards, manage our cashflow better, and reduce our outlay significantly. All these are processes that weren’t previously in place, and the impact they have had is that the Club, at this stage, is predicting to make a profit in 2023, which is something the Club has failed to do in recent years. Sharma explained that there will be some tough decisions to make moving forwards, and that expenditure would be limited to maintain control of our cost base, but as a Club we were in a much better position now than we have been previously.
The same member than asked whether membership fees would the obvious place the Club would look at to increase income for the Club moving forwards?
Cornish explained that the Club were only planning inflationary increases to membership rates and that the Club was extremely grateful for the ongoing support of all members who had accepted the increases the Club made to membership rates in 2023, after the rates had not been increased for many years, however was clear that any increases the Club were planning moving forward would only be in line with inflation.
A question was then asked whether the ECB’s sanctions would impact on the Club keeping its playing staff at the Club or whether it would restrict additions to the squad?
Cornish answered that with the Club’s finances being as they are, the likelihood of us going and securing two high profile ‘crackerjack’ overseas players would be slim, however the budgets that had been agreed and set by the Club would allow the cricket department under Alan Coleman to continue to operate without any significant impact moving forwards and that the ECB’s sanctions would not restrict this any further, as we are already working within the budgets that are available and are well below the salary cap. The addition of Leus Du Plooy highlighted the fact that the Club will still be able to attract and secure the talent it needs to strengthen the playing squad.
A question was then raised as to the credibility of the auditors who were in place throughout the time that the ECB investigated our finances, and how were they being held to account?
Sykes confirmed that those auditors had been removed and replaced two years ago. He explained that the Club had looked closely at their working practices, however confirmed that the Club had not pursued any action against them, as we were always liable for the shortfall in pension contributions that had to be made. In short, no action was taken against the auditors, other than their services being disposed of and replaced with another auditor.
The same member also then asked a question about how closely the Club would be looking into the Directors who were in place at this time as to their levels of competence?
Sykes confirmed that a number of those Directors had already left the Club and that the Club would be looking at all elements of our governance and running of the Club when it conducts its governance review. There had already been many changes, and he was not able to confirm at this stage, until the conclusion of the governance review, whether further changes would be made. He assured members that they would be made aware of any changes arising from the governance review upon its completion.
A member than stated that he had formerly worked as an investigator with the Inland Revenue, and that in his experience, when there were discrepancies involving large sums of money, it was rare that this was merely down to incompetence. He suggested that the Club would benefit from the services of a forensic investigation into the hundreds of thousands of pounds involved with resolving the pensions shortfall.
Richard Sykes answered that this had been looked at and closely scrutinised already, and that the matter had now been satisfactorily concluded by the Club, with all shortfalls now settled. He explained that there were only smaller amounts of contributions involved, which had built up and accumulated over a period of many years, which ultimately equated to the total figure in question. It was always a liability the Club were accountable for, however those payments should have been regularly paid at the correct time, and as they weren’t, when rectifying the matter, it equated to the significant figure that was involved in resolving the situation.
A member then asked whether the Club felt that any members of the previous board were responsible for this?
Sykes explained that as Mike O’Farrell, the Club’s former Chair, had previously explained, the Board bear overall responsibility for this as it was their role to oversee the running of the Club. He acknowledged that there were clearly shortcomings and errors, and in the process of conducting his governance review he would be looking closely at how things happened, why things happened, and to ensure that things like this don’t happen again. He wants to ensure that the Club has the right people in place moving forwards and will be making recommendations after the governance review takes place to ensure that we have the right people and right skills in place to drive the Club forward.
A member then asked why it took ten years to discover the pensions issue?
Sykes explained that because this was an accumulation of very small amounts of money, going back over many years, involving lots of different individuals, it hadn’t been picked up and had fallen under the radar. It was the actions of one whistleblower who had brought this to the attention of the Club that first raised this is as a concern, and when this was subsequently then investigated, the full extent of the problem became evident and was then investigated and subsequently rectified.
The same member then asked where the money had gone that should have been paid into pensions?
Sykes further explained that the money hadn’t gone anywhere, it just hadn’t been paid correctly as pension contributions at the time. Over a period of ten years, the accumulation of these smaller amounts was then paid out by the Club in one go, to settle the historic shortfalls, hence this showing as a significant liability in one year’s accounts, whereas it should have shown as smaller liabilities over a number of years.
The next question then related to the ECB sanctions, and how did the Club explain why it had been reported that money paid to the Club for the Middlesex Cricket Board had in fact been spent by the County Cricket Club?
This question was collectively answered by the panel, who explained that the initial allegations made did focus on this, however when the ECB investigated this matter, they were satisfied that this had not actually been happening. There was movement of moneys between both organisations, by way of cross charging for facilities etc, however the sanctions that were issued by the ECB were not directly as a result of this allegation, which had been alleged by a whistle-blower. The ECB statement cited financial mismanagement, which the Club has acknowledged, and it has now drawn a line and is looking to move forwards under tighter and more robust financial governance.
A question then was asked how the Club’s sponsors had reacted to the news?
Cornish explained that relationships with the Club’s sponsors were strong, and that all sponsors had been spoken to, that we had been open and transparent with them, and that they were understanding of the situation and the facts of the case. He further confirmed that no sponsors had turned their backs on the Club as a result of recent events.
Another member then asked how supportive the MCC had been through this matter and were the Club still getting the same level of investment from the MCC?
Cornish explained that much like the sponsors, we had been very open with the MCC and had kept them abreast of the situation at all stages. He explained that the relationship we enjoy with the MCC was very good, was far more of a strategic partnership than merely a landlord/tenant relationship, and that both parties understood the benefits that working in partnership brings. MCC have been very supportive throughout this period and were continuing to be so.
The next question then asked what impact relegation to Division Two of the County Championship would have on the Club financially?
Sharma answered that from a straight revenue perspective, Division One or Division Two status made little financial difference to us as a Club, and Sykes then added that whilst this is true, the bigger picture is that from a membership, commercial and strategic partnership point of view, a more successful Middlesex on the field equates to a more successful Middlesex off the field. The better we are as a playing unit, the more attractive we are to potential sponsors, to attracting new members, to developing our partnership with MCC, however in true straight income terms, there is little to no difference between us playing in Division One or Division Two in terms of the revenue we receive.
A member then asked what impact the off-field matters was having on the morale of the players?
Sykes initially answered that this had obviously had an impact on the whole staff at the Club as well as the players before he then passed this to Coleman to answer in respect of the players’ morale. He confirmed that the players were not happy with their on-field performance and that whilst these issues certainly hadn’t helped, he acknowledged that the players were taking responsibility for their poor performances. He acknowledged that the players were receiving information from the Club and that they’d been kept fully up to date with proceedings from the Club, but were also getting conflicting information from their agents, which they weren’t finding helpful. It’s created an element of uncertainty however the players aren’t using this as an excuse – they take full responsibility for their own performances. Cornish then added that undoubtedly, things like the pensions issue had created a breakdown of trust and uncertainty, however the Club had worked extremely hard at managing the morale of staff and had created an open and honest environment and was communicating everything to staff to ensure they are aware and understanding of the situation, with a view that honest and transparent communication from the Club was far better than mixed messages being received from agents and other external influences.
A question was raised about the financial impact of the Club not playing more games at Lord’s and having to play at out-grounds and what impact this had on the players?
Cornish answered that the Club played the vast majority of its cricket at Lord’s, however when Lord’s is not available, we simply have to play at out-grounds – it is out of our hands, with Lord’s being unavailable for certain periods of the season. The Club has elected to play at selected venues, like Radlett and Merchant Taylors’ School, where we can work with those venues to improve facilities for both the players and the spectators at matches. Members will have seen improved seating, with temporary stands, improved catering, members’ discounts in bars etc, so the Club is doing as much as it can, given that Lord’s isn’t always available to us. He then passed to Alan Coleman to expand upon this, who explained that the Club had been working with both venues, Merchant Taylors’ especially, to improve playing facilities, where a new indoor training facility has been built, a new bank of outdoor nets, with the same slope as Lord’s built in, were all available to us in the coming seasons, with Middlesex having preferential access to all facilities. Effectively the Club is trying to create a full-time training facility for the playing group in Northwood, which makes them feel more at home when they train. This has already been done successfully at Radlett, where we have exclusive access to their gymnasium facilities and regularly train at the venue, as do Sunrisers.
Another question was then asked whether the governance review would be shared with members, when would it be completed, and did Richard Sykes feel he was the right person to handle this review, given his involvement on the Board over a number of years previously?
Sykes answered that he felt that he was best placed to lead the review, given the fact that he was aware of many of the issues that had occurred, and felt that this would be advantageous in looking into the reasons of why and how they occurred. He stressed that he didn’t want to review to become a witch-hunt but said it that it was critical that the Club establishes why and how these things happened, to ensure they simply can’t happen again. Looking at how the Club was structured at the time these issues happened was important, as the Cub needs to ensure the structure of the Club is right moving forwards. In terms of sharing the results of the report with members, he confirmed that members would be made aware of this when the review was completed.
A member then thanked the current management for steering the Club through what has undoubtedly been a very difficult period, and asked for the panel’s views on whether being a members’ Club was the best way forward for Middlesex, given publicity in the press in recent weeks stating that the game was looking at external investment coming in?
Sykes answered that this was certainly a topical issue that would no doubt be discussed and debated within the game moving forwards, however stated that his personal view was that he felt that maintaining the Club as member owned was really important, as the members are the heart of the Club, who create our values and culture, however, he said he was certainly not ruling out considering other external investors if this was manageable and that the right corporate structures could be put in place to maintain our status as a members’ Club were those conversations to happen.
A question was then asked what does the Club expect to achieve over the next three to five years, given the recent ECB sanctions that have been put in place?
Sykes explained that there were plans for the Board Directors to have strategy sessions and an away-day in the coming weeks and months in the process of building a robust business plan that the Club would work to delivering over this period. He confirmed that they would be looking at the Club’s strategy, which will be built on the new business plan, but it’s vital that we establish what we want from white-ball cricket, red-ball cricket, Sunrisers, the recreational game etc, and all this would be looked at closely in the coming period. There are external factors that will influence how our plans evolves, like the ICEC report, which looks at how inclusive the game is, as we will need to work strategically to dovetail into the objectives the game has and those that we have as a Club in this area, and we need to consider the issue of external investment that has already been raised. Lots of issues to consider, but all were in hand and were being considered.
The final question was in relation to the MCC relationship, asking whether the money we receive from the MCC reduces if we play less matches at Lord’s, whilst our costs are obviously increasing when we play more out-ground matches?
Cornish answered by explaining that in the past, this would have been the case, however the relationship we have with the MCC now and the revenue we receive from them now is not linked to the number of games we play at Lord’s. We receive a fixed payment from MCC for playing at Lord’s, irrespective of how many matches we play at Lord’s. It gives us greater financial stability over a longer period, which is a huge benefit to our financial planning and avoids the need for us to negotiate with MCC every year about the volume of games we play at Lord’s. Our desire is to maximise the volume of cricket we play at Lord’s, but this isn’t linked to revenue we receive from MCC.
The meeting was then bought to close by Chair Richard Sykes and members were thanked for their attendance and involvement.
The Club would like to remind members that the usual End of Season forum for members is being held on 2nd October from 6pm in the Thomas Lord Suite.
We look forward to seeing members there.
