Psst! Fancy a franchise?

Cricket auction riches - heads or hearts? A lifeline either way

I dreamt last night that DeepSeek bought my favourite football club. Trouble was that the stadium PA played Glory, Glory Tottenham Hotspur as the players took to the pitch at our next match, Spurs being the away team. I must have fallen asleep riffing on the tech bros who are splashing a staggering £145 million on a 49% minority stake in the London Spirit franchise in cricket’s The Hundred.

The auction of teams in The Hundred has straddled the end of a January football transfer window that saw Premier League clubs spend £403 million on player moves (source: The Athletic). With two of the eight franchise auctions yet to take place, it appears as though the total raised will be over half a billion pounds, far exceeding my sceptical expectations. It is hard to decide which of the two sports’ New Year sales is most bonkers. Neither suggest sane financial underpinnings, but such is the enduring lure of control to wealthy super fans and financial wizards convinced they can transfer their magic to the world of sport.

The London Spirit sale is the outlier in the cricket auction, its new investors galvanised by the prospect of hosting at Lord’s in partnership with the MCC. The venue itself is a trophy asset, even though The Hundred matches will merely be temporary tenants for just four weeks each year. The other seven sales of 49% stakes look to be averaging around £50 million each.

If we assume that outside investors are seeking a venture capital type return of, say, 20% compound per annum, then the London Spirit will need to grow in overall value to £736 million over the next five years. The other teams would have to inflate in total value to around £250 million each. And the only asset this represents, remember, is a pair of teams (men’s and women’s) in a brief tournament with no real estate foundations.

You could buy full control of a bottom end Premier League football club for less than the current overall value of London Spirit - witness relatively recent prices for Bournemouth and Southampton. But why would you if your first love is cricket, and in particular the IPL?

How then to deliver growth in value to justify such punchy purchase prices?

Currently tickets for The Hundred sell well, but at low prices and on the back of hefty marketing spend. Sky and the BBC have committed to a broadcast deal that supports the tournament and they need a backdrop of decently filled venues to burnish their TV product. Reports vary, but overall the competition seems to be losing the ECB a few tens of millions of pounds a season. The budget for player fees is being increased, but the world’s best cricketers are largely not in evidence, in part because the BCCI is blocking the participation of India’s stars.

If The Hundred is to grow in prestige, and hence value, it must attract the very best cricketing talent. This will enable ticket prices to be ratcheted upwards (albeit jeopardising the family appeal on which the current fanbase has been built) and, much more importantly, sizeable international broadcast deals to be struck.

“We’ve all learnt that if you build an amazing product, great things happen. Our view is, if this becomes a great product, the franchise world will explode.” Nikesh Arora, leader of the consortium investing in London Spirit, interviewed in The Times

English football has shown the way. Pay top rates to attract the world’s best players and you can fill grounds at prices that upset long-standing fans and sell broadcast rights for meaningful sums all over the world. Still very hard to make money mind, either in annual returns or selling a club for a profit. It is players and their agents who really reap the reward.

For cricket, Indian participation is clearly the key. Ahead of the auction, insiders expressed fear that IPL franchise owners would end up controlling almost all of the teams in The Hundred. That hasn’t proven to be the case, which may backfire if together the new investors can’t break down the barrier to Indian players taking part in the tournament.

Credit to the ECB and its advisors for gingering up such an outcome from its auction. The eighteen first class counties now have (good) headaches as a result. The seven that host The Hundred must decide if and when to cash in on their 51% controlling stakes.

Lancashire has already ignored the old City adage of ‘half measures, half results’ and cashed in most but not all of its position, presumably to pay down its debts. It is left with 30% of the Manchester Originals. Yorkshire, heavily indebted to chairman Colin Graves’ family trust, has gone the whole hog and sold 100% 0f the Northern Superchargers to an IPL franchise owner.

All eighteen counties have a share of the overall auction proceeds. Nicely over £20 million for each of the eleven who are not hosting franchises, although not in a single payment. The sums are also subject to ECB oversight in an attempt to ensure this windfall isn’t squandered but instead shores up a first class game that currently relies heavily on the monetisation of the England men’s team for its continued existence.

If you look at a cross-section of financial accounts for the counties who don’t enjoy the rights to international matches, you tend to see revenues of £6-7 million a year - of which just over half comprises a grant from the ECB. Net result is either side of breakeven. £20 million plus, even with the strings, could make a big difference, but isn’t guaranteed to be transformative.

Some counties will want to focus on building infrastructure to generate non-matchday revenue from conferences, gyms, weddings and the like. Others will focus on cricketing facilities in the hope of strengthening their talent pathway and with it the standing of their team in the hope of garnering an expanded fanbase. Both physical and human capital, I would suggest, are necessary for a sustainable future. In that context, those £20 million lumps really must be made to sweat.

As one county chair WhatsApped me this week:

“If we fail we will only have ourselves to blame”

Those twin imposters

Sport inc. is triggered by my disrupted sleep patterns this week. I was woken on Saturday by the voice of a colleague from my time at the Palace for Life Foundation. Bobby Webbe was explaining on Why do we do that? how devastated he is when Crystal Palace lose. It’s a fun 15 minute listen for those of us who take our football far too seriously. You can find the programme here