WICB Cash Flow vs Profitability

How can the West Indies Cricket Board (WICB) have a cash flow crisis at a time when press releases are being issued boasting of back-to-back years of profitability?

The answer to that question lies in the way the board's profitability projections are made and the public relations strategy used to talk about financial matters.

After the Barbados Nation reported on Thursday that the WICB had not paid the US$10,000 prize to groundsmen who won the "Pitch and Grounds Incentives," the board issued a statement explaining that payment was delayed until October 31 because of a cash flow problem.

"The Board's cash flow has been adversely affected by the significant refund requirement following the abandonment of three One-Day Internationals during the Home Series as well as the tardy receipt of expected funds," the WICB said.

That statement appears to contradict with another press release issued earlier this week where the WICB boasted that it was looking at a second straight year of profitability. In that release, the WICB said profit projections for 2004 was $2.8 million, a figure that exceeds the budgeted figure of US$2 million.

"This difference was due primarily to ticket sales surpassing expectations," WICB spokesman Leonard Robertson said a week ago "The final figure would be an improvement on the previous year when the Board recorded a profit of US$1.25 million. This reflected the positive impact of the revenue streams, particularly television rights fees from and England tour."

In June this year, the board said it turned a profit of US$1.26 million after two straight years in the red.

Asked by CaribbeanCricket.com to explain the cash flow crisis at a time when the board is boasting about being profitable, Robertson said the press release earlier this week dealt simply with "forecasted" monies and did not automatically mean that funds were available for the WICB to pay its bills.

"[F]or the period, all the final details are not as yet in but according to the figures available when everything is collected and disbursed for the financial year ending September 30, 2004, the board will realise a profit of 2.8 million. As you would understand if there are payments to be made or collected under contractual obligations, these must be recorded even if not disbursed as yet," Robertson explained.

"This is what would affect a cash flow situation along with the fact that the board in three of the previous four years 2000-2002 recorded significant deficits amounting to $16 million, as is well known," he added

Robertson pointed out that the combined profits for 2003 and 2004 does not add up to a quarter of the accumulated deficit between 2000 and 2002.