Executives of Setanta spent yesterday frantically trying to raise money to safeguard the future of the troubled broadcaster.
The Irish pay-television firm said that it was not in administration but that it had suspended all new customer subscriptions as it tried to organise a £100 million rescue package.
Setanta’s collapse would leave British sport needing to plug a £500 million-plus black hole, with football and rugby union clubs at risk of having their incomes cut.
Setanta has television contracts with the Barclays Premier League, the FA and the Scottish Premier League (SPL), but also to screen Guinness Premiership rugby union (from 2010), the Professional Golfers’ Association (PGA) Tour in the United States and Indian Premier League cricket.
Barclays Premier League
Advertisement
Although this is owed the most money — £130 million for next season and £158 million for the three seasons combined thereafter — the Premier League is probably in the strongest position because it is confident it will find a rival broadcaster willing to take on other games.
Richard Scudamore, the League’s chief executive, has been playing particularly tough with Setanta in recent weeks, arguing that the Premier League could not allow Setanta to cut its payments because that would expose it to similar demands from Sky — in which News Corporation, parent company of The Times, has a 39.1 per cent stake — the BBC, which holds radio rights, or a range of overseas broadcasters.
Setanta’s Premier League games would, if the company went bankrupt, revert to the top-flight body. For next season it could sell half of Setanta’s 46 games directly to Sky, if the satellite broadcaster was keen, but to meet competition requirements would still have to find a rival broadcaster for the remaining fixtures.
It is hardly the ideal time to look for new buyers, with the credit crunch leaving ITV and Five with limited funds to pick up events. But ESPN, from the United States, has long wanted to break into football and bid unsuccessfully this year.
However, with Sky already providing the lion’s share of television income, even if the Premier League could raise only £100 million it would mean an average drop of a little more than £1 million per club. Even for a club with modest finances such as Portsmouth, who turn over £70 million, the loss of £1 million is not close to catastrophic.
Advertisement
The FA
The governing body’s newly arrived chief executive, Ian Watmore, also proved reluctant to agree to Setanta’s demands for its £150 million four-year deal to be renegotiated last week. Like Scudamore, he believes that the FA Cup and England matches will be picked up for the same money or even more, especially as England are making confident progress to World Cup qualification under Fabio Capello.
Watmore’s predecessor, Brian Barwick, a former head of ITV Sport, also put two safety measures in place.The FA has already received about half the £150 million due, even though it is only a quarter of the way through its television deal. Plus, any England competitive matches held by Setanta at present would revert to ITV for a cut price of about £2 million a game.
The FA Cup
Income remains relatively modest for clubs, with most of the FA’s money going to the grass roots of the game. Portsmouth’s FA Cup triumph in 2008 helped the club to generate £2 million of television income. Their Premier League broadcast revenues were much larger at £49 million.
Advertisement
Clydesdale Bank Premier League
If English football feels confident, Scottish football faces a crisis. Setanta is the sole broadcaster of live matches north of the border, with five years to run on a £125 million deal. Scottish clubs, who shared £20 million in the season just completed, were expecting a significant step up in their income next season under the terms of the agreement.
As England’s sporting bodies played tough, representatives from the Scottish Premier League clubs met last month and agreed that they would negotiate with Setanta about a cut-price contract. Even now, with Setanta owing £3 million, the SPL has little desire to take the broadcaster to court for the cash, a claim that could push Setanta over the edge.
Sky has shown little obvious interest in taking on the SPL if Setanta fails and there is no obvious broadcast partner. Even if BBC Scotland — the only other broadcaster with a stable income — could be persuaded to stump up licence fee-payers’ money, schedule commitments mean that it could not show anything like the existing level of matches.
That helps to explain why chairmen of Scottish clubs have dominated the air waves in recent days, voicing concern about Setanta’s finances, while leading English clubs have barely uttered a word.
Advertisement
Rugby union
The sport faces similar problems. Setanta is scheduled to share coverage of next season’s Guinness Premiership with Sky in a £54 million, three-year deal that represented a 45 per cent increase. Two thirds of the matches, and therefore the cash, will come from the ailing broadcaster. Sky, with no obvious competition, can pick up the games at a far lower rate, leaving the 12 top-tier teams short on cash in a sport whose commercial prospects are not so different from Scottish football.
Other sports
Setanta’s collapse would mean less, at least financially. Setanta has already fallen out with Frank Warren, the boxing promoter, claiming that he broke an exclusive contract by doing a deal with Sky.
Meanwhile, the IPL, in which Setanta has just begun a ten-year deal, and the PGA Tour in the US generate the lion’s share of their television income in their home countries. The question for both bodies is not any financial damage they suffer but whether, if Setanta switches off, they will be on air at all.