Still in $19m debt Zim Cricket continues to walk the financial tightrope
IN a year when Zimbabwe’s cricketers have used their limited opportunities to make some tangible progress on the field, the administrators at Zimbabwe Cricket (ZC) have expended significant energy keeping the wolf from the door.
Under pressure from the banks to whom they owe millions of dollars, other members of the ICC, who pushed for tighter financial regulations, and facing the need to spend money to take the game forward, ZC has emerged from a challenging year with good news and bad news.
The bad news is that they are; the same amount as in July 2016. The good news is that the figure has not increased.
“If you look at how we have managed our finances from October 2016, we have done very well,” ZC chairman Tavengwa Mukuhlani told Cricbuzz. “We implemented some drastic measures insofar as our expenditure and controls are concerned. We brought in an external auditor to run our finances and also do an internal audit for us and help with budgeting. That really helped us, to an extent that we have not increased on the loan account. We have not been able to make major reductions, but we have not added or gone to the bank to look for loans.
“We still have that balance of about $19m with the banks. In so far as restructuring, that is ongoing. We have engaged government and the ICC is working closely with us. We are confident that we will come out with a proper structure.”
While news of a stable loan balance may not sound encouraging, it is worth putting into context. This year ZC has spent significant money on sending an academy team to the UK for three months, giving the Under-19 team extra exposure and re-contracting Brendan Taylor and Kyle Jarvis. With the majority of their loans car r ying an interest rate of around 20 percent ZC will have spent more than $3m servicing their debt. And with the Zimbabwean economy in freefall and sponsors few and far between, ZC is almost entirely reliant on the ICC’s funding for income.
Yet that funding was close to being cut off earlier this year when the ICC debated the merits of imposing new financial controls on its Full Members. The measures would have included a favourable debt equity ratio, requiring organisations who held debt to have a certain amount of capital or assets to support that debt. With few assets to speak of, ZC would not have been able to comply. In the event, the ICC decided to only apply the new measures to new members, meaning that Ireland and Afghanistan will need to fall in line butb Zimbabwe do not.
The decision allowed ZC to keep its “get out ofo jail free” card, given that full membership is effectively keeping it afloat. “One thing that the auditors raised was the going concern. That’s where the ICC’s future funding model came in,” ZC managing director Faisal Hasnain told Cricbuzz.
“In fact the auditors independently checked with the ICC about the funding that Zimbabwe Cricket is due to receive. That’s what in effect meant a qualified audit report, not a heavily qualified audit report.”
Mukuhlani admitted that ZC could have been taken to court “a long time ago” by several of the banks to which it owes money, but that engagement had allowed a continuing relationship with the various institutions.
“Everyone we could meet, we engaged them and they now know and accept our story,” he said.
Walking this financial tightrope has not been without slips. ZC was unable to pay its staff and players in full for October. But the Logan Cup, which suffered regular interruptions in previous seasons due to financial constraints, is yet to be affected this year.
“We’ve tried to channel expenses to where we think they would be of maximum benefit, but we haven’t gone on a cost-cutting spree,” said Hasnain.
“For example, we’ve put more resources into the Under-19s because we want them to be as well-prepared as they can be for the World Cup (in January). We’ve cut back in certain areas, but re-channelled that into cricket and development.”
One area where ZC may look to cut cricket costs is when it comes to hosting Tests. With Zimbabwe languishing at the foot of the ICC’s rankings table and not part of the new Test league that will launch in 2019, focus is expected to shift to the shorter formats. ZC asked the West Indies Cricket Board to change the recent two-Test series into five ODIs — a move that would have cut the $1m hosting costs in half — but their request was rejected.
With finance in mind, ZC has been an advocate of four-day Tests and is not dissatisfied with the team’s omission from the Test league, given the regular hosting costs that it will entail.
“We are not in the Test league but we still play bilateral Test cricket with whoever we choose to play. It gives us the flexibility to make choices, which I think is acceptable to our cause at the moment,” said Mukuhlani.
What ZC really need is a bailout that frees them from the interest burden. But the ICC is sceptical after the previous ZC regime failed to adhere to the terms of a $6m loan in 2012 that is yet to be repaid. Discussions are ongoing with the government, but in Zimbabwe’s current economic and political turmoil, that appears a long shot.
All that remains for the moment, then, is to continue walking the tightrope, exhibiting the financial prudence and good practice that was missing so badly when ZC threw itself into this mess. — Cricbuzz.