Demutualisation ... the future?

I've given my thoughts about YCCC's Chair Colin Graves, on the Yorkshire Cricket thread but welcome the creation of this thread by donnylad on demutualisation as a separate subject because although the two are connected, they are not the same thing (at least to me)

I too, voted in an other place but as 'undecided' ( rather than 'no') and in my explanation I said I'm not against demutualisation in principle but 'The devil is in the detail'. I have moved away from firmly wanting YCCC to remain a members club only, to having an open mind. A mutual or members organisation has a sense, feeling or belief of belonging about it, greater, stewardship, safety and protection.

What has caused me to take second stock is the abject apathy from 3/4 of the Yorkshire membership who decline to vote on important issues affecting the continued viability of the club . This was brought sharply into focus at the EGM , which elected Colin Graves , his financial input and changes to the board. The majority of members didn't have the time or inclination to vote. That says to me the majority but not all members regard membership as been akin to a season ticket only . That's a separate subject again.

Being Mutual does not however mean something is better , fairer or ethically better managed than a limited company. You just have to look back under a chair previous to Graves when staff were sacked, a contract torn up, followed by a period of litigation, claims and counterclaims , the unedifying fact that Yorkshire were in the cricket headlines not for cricket matters, employment tribunals NDA's a whole string of lawyers, compensations , damages and costs totalling approx £5.5mill , part of the problem that got Yorkshire into a financial spiral needing urgent treatment.

Conversely a limited company with shareholders (who in many cases also have votes) is no guarantee of a fairer result. Just look at some water companies that have been 'hollowed out' by debt but in particular by dividends paid to shareholders where those same dividends could have been used to invest in repairing leaking pipes or reducing the need to dump 'waste in lakes, rivers and the local wild swimming pool.

It seems Graves having taken a considered view about finance (and more fundamentally something the previous board struggled with for a couple of years over re-financing) that the consensus is that it's harder to finance mutuals than ever before and the future might be outside investment from equity partners or shareholders. We are not at a stage where there are any firm proposals to go down this route and being put for approval to voting members.

It is I think important to understand that the board of directors, including Chair, are jointly and severally liable for decisions they make. Before deciding upon demutualisation the board must take proper independent professional financial (and legal) advice and that advice must be documented. This is something Colin Graves has said a couple of times that YCCC is doing. That doesn't mean the advice would be to demutualise , it might be to carry on as we are, hoping something would turn up eg sale of Hundred shares, or some other course of action

I can’t find a quote attributable to Graves when he said he ruled out the change. The nearest was Stephen Vaughan saying he was the best chance of retaining YCCC as a members’ club. Of course he became the best chance of saving the club from financial meltdown. If Graves has come in and investigated all avenues of investment and come to this conclusion I would reluctantly back it.

Prior to the Rafiq claims YCCC seemed to be financially stable having spent a lot on Headingley to maintain Yorkshire’s presence on the international stage. I am largely indifferent to the England cricket teams since the ECB’s effective takeover of YCCC but see the need for Headingley to be used and used. I would love to go back to the days of greater use of outgrounds but most have closed and there is now York as well as Scarborough.

I'm with you SLA, get the debt off your back asap, give yourself some working capital, and build some contingency reserves.

Of course an IFA would give you much better advice, while making sure he got his cut somewhere along the line.

I think I would vote for demutualisation if it comes to it.

I know it very much depends on your world view and I understand that many have a natural mistrust of business people, of anyone in a suit basically getting involved in sport.

Looking at the history of YCCC for as long as I can remember, basically from the 60's I don't see anything to suggest that being a members club has done us any favours.

I don't know what is going to happen down the track, I probably won't be around to see, but I am convinced that CG and his team aren't looking to make a financial killing at the expense of YCCC.