A couple of points.
First, From Reading The Annual Report:
The Club continues to be well-managed financially. A balanced reading of the three key financial statements -- Balance Sheet, Income and Expenditure Account, and Cash Flow Statement -- entirely justifies the opening line with which the Director of Finance opens his report: "Financially 2016 has continued to show a steady improvement over previous years."
The good points:
1) EBITDA was over £ 1 million -- probably for the first time ever.
2) The capital write-off and interest deals with Leeds City Council and HSBC last year put us in a much better structural position for debt service.
3) The bank's willingness to hold £ 3 million of our debt, at 2.5%, with capital repayment deferred until Oct 2018 indicates their confidence in the club's finances. Unless things change radically, it probably also indicates their willingness to roll that debt over after Oct 2018 - this does not represent a 'cliff edge' that we face at that time. If they won't, a competitor bank almost certainly will.
4) Not strictly a financial matter, but one other good point is the way that Domestic ticket sales are now a much more important part of our revenues than they were four years ago. These have increased steadily and significantly from £442,000 to £1 million. In the same period, international ticket sales have increased only a little -- from £2.2 million to £2.4 million. In other words, a few years ago Test match revenues were FIVE TIMES more important than Yorkshire's own games -- but now they are just two and a bit times more important. If you add Members' subs -- you and me, and all the members who value YCCC way ahead of the national team -- that is now another £ 3/4 million that can be put in the 'Domestic' column. The Tests are still crucial to our financial stability, but these things have gone in the right direction from our point of view, not the wrong direction.
The bad points:
1) Cash flow was negative over the full year 2016. There are specific reasons for this, and it is well within bounds of normal prudent cash management. Still, it's nicer to end a year with cash at the bank than with an overdraft.
2) The number of non-playing full time staff increased by four over the year. Salaries and associated costs (NI & pension contributions) are the majority of YCCC's costs. If we were just two or three salaries lighter it would make a big difference to the bottom line. The CEO and CFO need to focus on this, and not to let non-playing staff numbers creep up just because there is a bit of financial leeway.
3) Our commercial income (sponsorships etc.) has not increased
4) We depend heavily on ECB money, to the tune of £ 2.6 million last year, which has increased substantially since 2013.
Second, A Note On The Graves Trust Position:
Not quite true that "if (Mr Graves) wanted to maximise his return ... he wouldn't be lending it to the club", as Martin suggests above. The Graves family BOTH makes money out of the club AND has leverage over the future ownership.
Of note is that £13.4 million of the Graves loan pays interest of 4.625%. That is a cash income of £619,000 per year. A further £5.5 million Graves loan is interest free. So the weighted average interest on the Graves' loans is just over 3.25 percent. That is a very decent return in today's interest rate environment, for a loan that is fully-secured (by the legal charge over the ground, which it shares with HSBC). I expect (but do not know) that the Graves Family Trust has other assets -- property, stocks and shares, perhaps other commercial bonds. A commercial bond like this, secured and paying an acceptable interest rate, probably makes up part of a good balanced portfolio. It is not charity, and while Mr Graves is and has been an important benefactor of the Club, we should note that this is now on a commercial basis.
The term of the loan -- capital repayment of the £13.4 million envisaged by end 2020 (the Accounts are silent on repayment for the zero-interest loan) -- seems to imply only one of three options. A) The loan is renewed in 2019 and 2020. Perfectly possible, as long as the interest rates remains acceptable (see above) which will depend on conditions at the time. B) Someone else provides an equivalent loan, or grant to pay it off. C) The Graves Family Trust converts its debt to equity, buying out the Members' ownership of the Club and receiving a future stream of (uncertain or zero) dividends instead of the £600,000 interest. Buying out Members would be pretty damn easy as there is a 'Capital Redemption Reserve' which can easily cover the nominal value of 5 penny shares for each of the 4,000+ members. in order for our shares to have more value than that, we would have to vote to sell Headingley. Pretty unlikely.
Accountants on the Forum may be able to add to my perspective or to correct errors and oversights. I'd be pleased to see such corrections. I am not an accountant, just a careful reader of the information the Club provides, concerned to keep an eye on the long-term health of YCCC and the county championship.