YORKSHIRE'S failure to buy their Headingley headquarters last year was a major reason why the club suffered a deficit of more than £500,000 in 2004, members will hear at the March 12 annual meeting.

But chairman Robin Smith will also tell them that talks are continuing with their Headingley landlords, Leeds Cricket, Football and Athletic Company, over the purchase of the ground although an early outcome is not expected.

Only a month ago, Leeds CFAC boss, Paul Caddick, announced that Yorkshire had pulled out of negotiations but this was strongly denied by the county club and the two parties are understood to have communicated privately since then.

The silver lining in Yorkshire's balance sheet is that, despite a deficit of £504,000, they still managed a cash surplus of £64,000, but this is of little comfort after Yorkshire had budgeted for a small overall profit of around £3,000.

Finance director Brian Bouttell said that following a deficit of £215,000 in 2003, it had been hoped to break even on the assumption that Yorkshire would carry on with the purchase of the freehold of Headingley and its income streams.

Depreciation was now a very large figure in Yorkshire's accounts and in 2004 it totalled £568,000. The club's normal income and expenditure, however, was now well under control.

Overall income of £3,262,718 was up by £20,000 but subscriptions were down by £48,000 which was in line with decreases at nearly every other county club.

The England and Wales Cricket Board had reported that in 2003 total membership had dropped from 108,000 to 101,000, a decrease on the previous year of six per cent, while Yorkshire's membership in 2004 had decreased from 7,043 to 6,696 which was a drop of 4.9 per cent.

The ECB believed that one of the main reasons for the general decline in membership was that people seemed to prefer to pay on the day rather than through subscriptions.

Last year Yorkshire financed its activities through a £1.2million bank overdraft facility, a term loan and a construction loan. Last month their bank made available a further overdraft facility of £800,000 and consolidated the current loan of £4,682,624 and £1m of the overdraft into a two-year term loan with the first repayment in April 2006.

If a staging agreement with the ECB for a minimum of ten years is then in existence the bank will extend the consolidated loan for a full ten-year period to August 2014.

Last September Yorkshire entered into a 15-year staging agreement with the ECB conditional on the purchase of Headingley and its income streams. If the purchase does not go ahead Yorkshire will have to discuss a new agreement with the ECB.

If either Yorkshire or Leeds CFAC pull out of the Headingley negotiations they will have to pay costs to the other party - said by Leeds CFAC to be around £500,000.

Yorkshire chief executive Colin Graves has guaranteed that he will meet these costs if it ever proves necessary.

Total attendances at Yorkshire home matches in 2004 was 83,078 which was around 18,000 down on the previous year and this was due to a combination of poor weather and disappointing performances.

Updated: 10:15 Tuesday, February 15, 2005