Rangers and Celtic should be selling the TV rights, not buying
Football finances have always defied logic but the union of Glasgow’s top clubs to outbid Sky for the Scottish Premiership television rights takes madness to new levels. Celtic and Rangers are supposed to receive the rights money, not pay it.
The rights are back on offer following Setanta’s collapse and the clubs think the bid for them by Sky and Disney’s ESPN is too low. But pushing up the price makes no sense if the clubs have to pay the money.
It is akin to asking Sotheby’s to auction one of your paintings – then going to the sale to bid up the price. It works if it pushes other bidders higher; it fails spectacularly if you end up buying your own painting.
Setanta agreed to pay £139m to show Scottish Premiership games for five years. Sky and ESPN are offering £65m but the 12 Scottish clubs have banked (literally) on receiving Setanta’s money and think others should match it.
What the clubs seem to have missed is not only that Setanta went bust but that it went bust because it paid too much for football rights. The £139m was unsustainable then: that’s why a canny organisation like Sky wouldn’t offer that much then and won’t offer it now. Indeed Rangers preferred the low bid from the reputable Sky to a higher offer from an upstart but was outvoted by other clubs.
Sky was never going to match Setanta’s impossible bid therefore, even if a recession has not subsequently devalued sporting rights. And now that Setanta is excluded from the auction, and with the BBC and ITV too poor to overpay, Celtic and Rangers are learning a lesson in market economics.
And then there are the practicalities. Where would the Scots clubs transmit their matches? Rangers TV and Celtic TV were operated by Setanta and collapsed when the Irish broadcaster went bust. They are not mass-market subscription channels anyway and the internet could not earn enough to justify paying more than £15m a year. Where would indebted Rangers find the cash anyway?
And even if the two Glasgow clubs can form an unholy alliance, will the other 10 teams want to work with them? They have only until mid-August, when the season starts, to resolve these conflicts – and then there is the problem of finding someone to give an unbiased commentary on Old Firm matches when the two teams employ the commentator.
When Sky tried to buy Manchester United for £1bn in 2000 it was blocked by the old Monopolies Commission. The conflicts north of the border would be just as great.
But the real reason for abandoning this idea of owning their own rights is that the clubs want a high price to balance their budgets. It doesn’t work if the clubs have to burst their budgets to finance the high price.
July 15th, 2009 at 3:49 pm
Off course they have to buy the rights from the other 10 clubs in the SPL, not their own rights. Their own rights are incidental. They could just broadcast the fours Old Firm SPL games and not pay anything to the other 10 members of their league, assuming the League Management Committee allowed it. However that might not be a viable proposition.The Old Firm couldn’t survive as football entities without other teams to play against and those other teams therefore have to be paid for giving their rights to broadcast. If the Old Firm feel that they can make substantially more than the basic 25 million thought to be the amount they would have to pay out for a two year period then this would probably become a viable business plan.
July 15th, 2009 at 4:01 pm
I’d like to address a couple of issues this article raises.
Firstly, I understand that Sky’s original bid was in the region of £120m for 5 years - has the value of sporting rights decreased in value to the extent that Sky are only willing to commit half the original bid?
I think that by joining with ESPN, they are ensuring that there is no competition for their ‘derisory’ bid.
Secondly, I’d argue that Setanta’s demise was due to the inflated price they paid for the Premiership as opposed to their investment in Scottish Football.
Thirdly, in terms of production infrasturcture, I understand that much of this is already in place and the clubs need only sub-contract to, for example, STV.
This is a much more viable proposition than I think you give it credit for. Scottish Football has a value considerably more than the Sky/ESPN.