Yorkshire's failure to buy their Headingley headquarters last year was a major reason for the club suffering a deficit of over £m in 2004, members will hear at the annual meeting on March 12.

But chairman Robin Smith will also tell the meeting 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 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.

It had been assumed that Yorkshire would carry on with the purchase of the freehold of Headingley and its income streams, but this had not happened yet.

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 and running as efficiently and effectively as could be expected.

Overall income of £3,262,718 was up by £20,000 but subscriptions were down by £52,000, which was in line with decreases at nearly every other county club.

The England and Wales Cricket Board 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 believes people prefer to pay on the day rather than through subscriptions.

During 2004, Yorkshire financed their activities through a £1.2m 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.

It was conditional on the purchase of Headingley cricket ground and its income streams, and if the purchase does not go ahead Yorkshire will have to sit down with the ECB and discuss a new agreement.

If either Yorkshire or Leeds CFAC pulls out of the Headingley negotiations they will have to pay costs to the other party - said to be around £m.