How an asset lock could be an appealing option for Yorkshire CCC - John Mann

I spoke in order to help get the Cooperatives, Mutuals and Friendly Societies bill through to its final stages in the House of Lords at the end of March and it will become law imminently.

It has in it the ability to create an asset lock for all mutuals. The big impact is over financial institutions, but it creates a legally watertight possibility for all sports clubs owned by members. Yorkshire County Cricket Club is one such organisation.

Yorkshire Cricket has short term financial problems but it also has a £15m debt hanging over its head. I have just put some potential lenders in touch with the club but in the commercial world it all comes down to money. Somebody will lend if the price is right but the markets are wanting high returns currently.

That is how several football clubs have walked into insolvency, by failing to deal with the fundamental structural problem of unpaid debt. Sport is very keen to always see the good news round the corner, but as football clubs like Darlington, Chester and Bury found, and far too many local cricket clubs, the cash can run out before the good times have returned. Cricket is as vulnerable as football to such pressures.

The beauty of the new Cooperatives, Mutuals and Friendly Society legislation is that it reinforces the option of members creating an asset lock. This is what may soon be needed at Yorkshire.

An asset lock of the pitch and stadium as Headingley would stop any lender from believing that they can capitalise the asset, either as a deliberate policy or by default, should the club go insolvent and they be the secured creditor. It would be all too easy in this scenario to propose transferring debt into shares and privatising the club through the backdoor or merely allowing liquidation and securing the asset from the liquidated company. Both possibilities have been raised with me by those involved in the capital markets recently.

An asset lock creates a significant barrier to such a risk and increases the membership control over future events.

Nobody should presume that members of any club will act rationally at all times, not least because only a handful might participate in any emergency decision making, but an asset lock also protects the majority of members interests being suddenly and unexpectedly removed in a panic. Many smaller cricket clubs might have survived with such a provision in place as it buys very significant time. Yorkshire certainly needs a good partnership deal to come out of its current financial stress, and a tight business plan to consolidate it, but if the preferred or sole option is to continue being in hock to a single entity lender, whoever that might be, then as asset lock becomes immediately very appealing.

John Mann is a member of the House of Lords.