An economy based on football and television doesn’t sound the most sophisticated, but that combination has been powerful for two decades and will soon decide the future of Setanta, the Irish broadcaster.

Television companies need audiences and despite the range of arts, drama, music, films and news at their disposal, time after time desperate executives assume soccer will provide the answer.

ITV Digital went bust after paying too much for TV football rights. Sky beat off the competition from British Satellite Broadcasting because Sky’s footy coverage brought in the subscribers; the result was Sky taking over its rival and eliminating the competition. BT considered bidding for Premiership rights to attract customers to its BT Vision. The BBC has been sick as parrots at losing football coverage and ITV over the moon at winning it.

And Setanta built its subscription base on winning the rights to transmit English and Scottish football three years ago. But now that it has lost the bulk of its rights in the latest auction, it faces a bleak future. Golf and racing are not enough to make customers switch on and Setanta, faced with a £60m payment to the Premiership League in mid-May, is desperately trying to renegotiate its fees.

The competition for broadcasting rights from desperate TV companies has been a boon for the football authorities and the clubs. They rescue an unprofitable business and allow the high fees to players that would otherwise be impossible. Yet it transfers the economic inefficiency from clubs to broadcasters: TV companies that cannot afford the rights buy them in the false belief it will reverse their fortunes.

Setanta agreed a £392m three-year deal with the Premiership and a £150m four-year deal with the FA. It raised £213m of new capital less than 18 months ago and needs another £100m now, but with no substantial rights for the future and thus no magnet to attract viewers that could be money poured down a black hole.

The football authorities are playing hardball in holding out for their money but they should be careful: they need enough buyers in the ring to keep prices high. ITV cannot afford to overpay and the BBC should not be thinking of it either.

Without Setanta, Sky will win everything, but without Setanta counterbidding, Sky will win at a low price. And that means less cash in future for the clubs. The winner, as usual, will be Sky but the mad economic of football would return to sanity.

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