The Scottish Premiership, English non-league clubs and possibly the FA stand to lose the most from the prospective collapse of Setanta. The Scottish Premiership may be able to negotiate another deal. But Scottish Television had been hit by the downturn in advertising revenue like all ITV companies and would not be able to offer a fraction of the amount provided by the Setanta deal which has nearly five years to run. Setanta were prepared to pay over the odds for Scottish top flight football as part of their effort to build up the business.
The Scottish Premiership, English non-league clubs and possibly the FA stand to lose the most from the prospective collapse of Setanta. The Scottish Premiership may be able to negotiate another deal. But Scottish Television had been hit by the downturn in advertising revenue like all ITV companies and would not be able to offer a fraction of the amount provided by the Setanta deal which has nearly five years to run. Setanta were prepared to pay over the odds for Scottish top flight football as part of their effort to build up the business. Now the rumour mill is suggesting that as many as three SPL clubs could be in danger of going into administration.
One of the clubs thought to be most at risk is Kilmarnock. They are a club with high debt, meagre gate receipts and no benefactor. Television accounts for a quarter of their income. Liabiliies total £11.4m, around 130 per cent of typical turnover. Attendances have dropped by almost 1,800 in the last three years, and last season were around the 5,800 mark. Former guarantor Jamie Moffat, having sold his travel company A T Mays, has stepped back from the lifelong passion of his late father. The club has substantial non-football assets in the form of a hotel and a health club but they have added to its debts. Kilmarnock have only been able to post profits in the last two years because of an outflow of players.
The sums that English non-league clubs receive from Setanta are not that large, but they are still an important part of their income. Each Conference club gets a minimum of £75,000 a year and the more successful clubs receive around £100,000. Blue Square North and South clubs get £15,000 each. There has been some whistling in the dark in non-league circles about Setanata surviving in a lower cost format with a mixture of Scottish premiership, English non-league and rugby but that would be unlikely to yield enough subscribers. It is estimated that the television money could yield 10 to 25 per cent of the budget of Conference clubs. There are also substantial indirect benefits in terms of higher profile and commercial sponsorship. On the other hand, without television gates could be boosted as clubs would no longer have to play attractive games on a Thursday night which is regarded as a football graveyard.
The FA faces a provlem because Setanta holds the rights to England home friendlies, the FA Cup and the Community Shield as part of a £425m four year deal with ITV that runs until 2012. The FA said that it had reached a solution with Setanta overtheir contract, but it had been contingent on the Premier League also finding an agreement with the broadcaster. ‘We are very disappointed with the news,’ said FA chief executive Ian Watmore. Under the terms of ITV’s deal with the FA it would pick up eight England friendlies between now and 2012 if Setanta collapses. The FA would try to resell its other rights, including England Under-21 matches, to different broadcasters but would struggle to attract the same price in the current economic climate.
Setanta’s Premiership Contract Cancelled
After Setanta failed to make a £10m payment to the Premiership, it lost its rights to broadcast football fixtures next season. The Premiership said it was with ‘considerable regret’ that Setanta had been unable to meet its obligations and that the licence agreement between the two had been ‘terminated with immediate effect.’ The 46 UK live matches available for the 2009-10 season will now be auctioned off. ESPN, the US sports channel owned by Walt Disney, is expected to bid for these rights. However, if there are no bidders, the Premiership may not be able to recoup all the money it would have received from Setanta.
Setanta now faces a wave of subscription cancellations and is expected to appoint Deloitte as administrators. Setanta had been locked in survival talks with potential investors all last week and had explored the possibility of a merger with TopUp TV, the pay television company. Len Blavatnik, TopUp TV’s owner with about a 70 per cent shareholding, approached Setanta offering £20m for control of the company. TopUp TV, with more than 100,000 subscribers, is likely to come under pressure as it is dependent on the revenue it receives from Setanta to distribute the broadcaster’s sports channel to its digital terrestial television subscribers. However, the deal could not be done. The underlying problem is that Setanta was unable to attract enough subscribers to make its model viable.