Header Random

Tuesday, 16 June 2009

Setanta & The SPL - Troubled Waters For Both

I’m about to make an admission.

I’m a television rights nerd. Who shows what and how much do they pay for it are questions I regularly ask, and I don’t just mean here in Ireland. Michael Hiestand in USA Today is necessary reading (I’ve probably read everything he’s ever done on their website) and when I go to the Digital Spy forums, I’m normally only in the Broadcasting section.

We watch a lot of sport on television, and a lot of us pay very well for the privilege, so given the impact on the armchair fan, it’s only right that TV sports deals are followed. Some of the quirky facts involved in television rights deals are very interesting – did you know that BSKYB get the Lions tour for SFA because of a deal Murdoch did for the Super 14/Tri-Nations? And in the US, ESPN pay $1.1bn for 17 matches each year on Monday Night Football; answers on a postcard if you’ve any idea how they turn a profit from this. Given this nerdiness, it’s probably not surprising that I’ve been very interested in the financial health of Irish sports broadcaster, Setanta.

For the record, I am a Setanta subscriber and have been for nearly two years. I think they provide a very good service on certain sports. Their Magners League coverage is very good and they’ve done well to give boxing fans fights that otherwise wouldn’t be seen in this part of the world. It’s also nice to see a sports provider for Ireland. For many, Setanta burst onto the scene when they snatched two Premier League packages for the 2007/08-2009/10 seasons for a sum of £392m. Since then, they’ve broadcast 92 matches and they’ve done an OK job. At the very least, they should be commended for offering top-flight English football for a more reasonable price than Murdochvision.

Yet this deal, in hindsight, wasn’t their best. Setanta, quite simply, overreached on this and other occasions. Too much was paid for the PGA Tour, football internationals, an FA Cup deal, the Guinness Premiership and the SPL. From a base of low subscription fees and an all-too-low number of subscribers, Setanta’s business model floundered and it’s reported that they’re losing about £100m a year.

Setanta’s latest troubles started when they lost one of the two packages they had owned for the Premier League. From the 2010-11 season, Setanta are scheduled to broadcast only 23 matches per season, half of their current total. From then on, media commentators speculated about the financial health of the company and now, about four months later, things have come to a head. There are talks of a buy-out deal for the company from ESPN, or Bauer (not Jack), Endemol, Top Up TV or one of a host of other groups.

It looks like Setanta will survive but I’m not going to discuss the consequences of this crisis for the company. Instead, I’m going take a look at how this is going to affect sports fans, both Setanta subscribers and otherwise. Most commentators agree that the SPL would be the biggest sufferer. It is difficult to see any company willing to shell out to cover it – the BBC (previous rights holders) are cash strapped and SKY simply don’t have the space to show as many games as Setanta do, given their Premier League, La Liga and Football League commitments as well as everything else. This means that SPL clubs are in for a huge decrease in revenues, no matter if they re-negotiate with Setanta or are forced to move elsewhere.

So that means that the fans of the SPL clubs will also suffer, through no fault of their own. If their club goes down the tubes or if it is forced to go semi-professional like a lot of clubs in Ireland have done, then they will be given a lesser quality of football and a smaller chance of winning/surviving. Celtic and Rangers will struggle in Europe, while clubs like Hamilton and St. Mirren may struggle to survive. This is down to Setanta’s issues, but also due to the clubs themselves. On one hand, it’s difficult to blame them for spending money that they have budgeted for and are contractually obliged to receive. However, given that Setanta’s troubles were documented for many months now, and given the publicity surrounding the difficulties in the broadcasting sector, these issues are hardly a surprise. If yours truly, a recently finished media student with an interest in this isn’t surprised by the crisis facing SPL clubs, then unprepared clubs really do not have an excuse.

About 12 months ago, my beloved Galway United faced heavily documented financial issues. Players were released and fundraising efforts were stepped up after lower-than-expected earnings left the club falling foul of the League’s spending cap rules. The club’s Chief Financial Officer, Nick Leeson (yes. That Nick Leeson) saw a crisis coming, prepared for it and now the club are in a relatively state both on the pitch and the balance sheet. This clearly shows that clubs who are aware of what is going on can and will survive. In the coming months, we’ll see which clubs are properly prepared.


Post a Comment