Friday, July 17, 2009

The deal of the century?

The ink has only just dried on the contract, but already the fall-out from the deal that will save quite a few of the SPL clubs is starting to accumulate.

At a meeting held at Hampden yesterday afternoon, the 12 clubs that make up the SPL voted to accept a combined ESPN/Sky TV deal worth £65m which will see the broadcasters show 60 games between now and the end of the 2011/12 season. The deal also included an option to extend the contract for a further two years after that.

On the surface, it would be easy to think that all parties to the negotiations walked away from the table with broad smiles on their faces. In what looks like a win-win situation, member clubs get the security of a fixed income for the next few years, while ESPN/Sky adds more product to their already expansive portfolio of football goodness. And for the fans and the clubs, this means transfer money and the prospect of new signings, together with the ability to view their teams in glorious HD-O-vision.

But as the day wore on details started to emerge from the meeting - and it would appear that not everyone was overjoyed at the decision.

Quite simply, the SPL faced a tricky situation. Caught on the back foot and dealt a weak hand going into the negotiations - especially as Rangers and Celtic, the aces in the pack, where busy putting together their own deal - the league and its member teams had no alternative. Finding themselves looking for a deal that would assure the clubs of at least some income (reduced as it would be by some £60m), the league acquiesced.

The vote that required an 8-4 majority was carried in favour of acceptance, but according to St Mirren chairman Stewart Gilmour, it was not carried unanimously. Although the exact nature of the vote will not be released it is safe to assume that both halves of the Old Firm voted against the deal, with the rest voting in favour.

Lex Gold, chairman of the SPL, said: "We are pleased that in just over three weeks we have been able to strike this deal".

The statement would imply that furious behind-the-scenes negotiations where taking place to secure an even better deal for the SPL, but the harsh reality is that ESPN/Sky where holding all the cards. The league had been under pressure for some weeks now to secure funding for the upcoming season, in a climate in which Scottish sport generally has been taking a battering from all sides. Earlier on this month, the kit suppliers to the Scottish national side, Diadora, went into liquidation, as did Canterbury, a New Zealand company that supplied kits to the Scottish Rugby Union.

The biggest critics of this new TV deal have been the Old Firm. Both clubs have issued statements in the last few hours voicing their opposition to the deal, but have agreed to go along with the wishes of the other teams. The question though is for how long they're prepared to continue letting the tail wag the dog.

Both Rangers and Celtic, along with Aberdeen, had been against signing up with Setanta in the first place, citing their concern over the future financial viability of Setanta. The three teams preferred to enter into the deal offered by BSkyB, which, though worth less money, they felt provided more security. The other nine SPL teams however thought the risk was worth it, especially when taking into account the enormous sums of money on offer at the time. And so, the SPL entered into the now infamous deal with Setanta, valued at approximately £31 million a season, and which is to this date still the most lucrative TV contract in Scottish football history.

We all know what happened next. Setanta overstretched themselves with the various packages they purchased and failed to meet already ambitious subscriber targets, targets which looked even more unrealistic when Setanta won only one of the six big EPL football packages on offer. The Irish broadcaster went into liquidation at the beginning of June, an outstanding payment of £3m to the SPL being paid by the SPL themselves in order - it has been reported - to save some senior clubs from financial ruin.

It emerged in recent days that both Rangers and Celtic had been in private negotiations to launch a bid to purchase the TV rights themselves, given the combined ESPN/Sky deal was very low (£60m less than the previous Setanta deal). But whether the Old Firm would have been able to put together not just the financial package but also the infrastructure to broadcast the games was remains doubtful.

Some saw the move as an attempt to force ESPN/Sky into increasing their offer, using the four Old Firm games as leverage, as these are undoubtedly the biggest draw to any broadcaster looking to show Scottish games. If this was indeed the strategy behind the Old Firm move, then it was one always doomed to fail: both ESPN/Sky make enough money from the EPL rights they have picked up following Setanta's demise that the additional SPL revenue would be a mere drop in the ocean.

Simply put, ESPN/Sky could take it, or they could leave it.

Perhaps in a move to save the deal before ESPN/Sky walked away, the SPL met at Hampden and held a vote on accepting the deal, foregoing its own rule that member clubs must be given two weeks advance notice ahead of any vote on such issues. This didn't go down well with the Old Firm who felt they where not given enough time to put together an alternative offer. But while both clubs have stated that they'll comply with the wishes of the SPL (they have little choice), Celtic chairman John Reid has said he's bitter at having been locked into a deal that will cost his club some £70m over the terms of the contract.

The armchair fans can now look forward to watching 60 games a season, split between Sky and ESPN. For those lucky enough to already have Sky, the games will be free, but those games shown on ESPN, they'll have to pay an extra £9 (if already a Sky subscriber) or £12.99 on a pay-per-view basis.

That neither Rangers or Celtic are happy with the new deal means that while peace reigns for now, don't expect this to continue. John Reid has said that both his club Celtic and Rangers would "continue to consider alternative plans for the future", meaning that at the end of 2011/12 season, another debate will no doubt rage the future of televised Scottish football and who owns it, and who is going to be showing it.

And they're right to force the discussion.

We have already seen that putting all your eggs in one commercial basket, no matter how large that basket may be, carries with it a big risk. We've seen in the days and weeks following the collapse of Setanta just how many clubs counted their chickens before they hatched. We are currently in the middle of an global recession the world had not seen for a long time, and while ESPN and Sky are both thriving now, what guarantee is there that this state of affairs will continue into the future?

Both ESPN and Sky have bet heavily on the continuing appeal of the EPL, but the balance of power seems to be shifting away from the English leagues, and over to La Liga. Spain, reigning European Champions and tipped by many for a glittering World Cup 2010 campaign would appear to be the place to be.

Real Madrid have spent more money on three players than the entire Setanta deal would have paid out over the duration of their deal with the SPL had they survived. With Barcelona installed as the current Champions League winners, it is to Spain that the big guns are heading - no doubt lured by big money, a lovely climate, away from the top clubs in England, with its 50% tax rate and overly physical play, if Andrei Arshavin and Ronaldo are to be believed.

If the appeal of the EPL is indeed declining (evidenced by the lack of activity in the transfer window of players coming to play in the EPL), it's not unreasonable to expect both ESPN and Sky to be looking to renegotiate their deals in years to come. And if that happens, you only need to look at the debacle in Scotland to see what that would mean.

Perhaps the SPL should have given the Old Firm more time to put together an alternative. Perhaps this alternative could have seen the clubs take ownership of their own TV rights, removing the dangers of tying themselves to deals with companies as much at risk as any other in this fragile economic climate. We'll never know.

In the boardrooms of the clubs outside of Glasgow, sighs of relief can be heard. In the medium-to-short term, Scottish football can continue. Perhaps not with the grand plans it had a year ago when the Setanta deal was signed, but continue it will.

For now.

For more articles about Scottish football, please visit Inside Left.

No comments:


  © Blogger template Psi by 2008

Back to TOP