This week saw the passing of one of entertainments big spendaholics. No, not Michael Jackson, but Setanta, the Irish broadcaster, whose acquisition of high profile sports broadcasting properties, such as the English Premier League, ultimately led to its downfall in the UK. Its final slide into the administrators arms did not come as a shock to most business commentators, but it is a dangerous result for Britain’s football fans and their clubs, many of whom rely heavily on the income from these broadcasting deals.
But did the fate of so many of our league clubs, and even England’s national team, need to be put in jeopardy in this way?
The rights holders will maintain that selling their properties to Setanta was a way of generating the most revenue for their stakeholders. Yet I’d argue that only the English Premier League can be absolved of blame and that The FA and Scottish Premier League should be held to account. The reason is one of simple economics.
Setanta’s business model set out to emulate the success of Sky, using high profile football rights to drive rapid expansion of its subscriber base. Commentators have argued over the wisdom of such a move which, without the monopoly that Sky’s model enjoyed, was always high-risk. However, I would argue that it was not the lack of monopoly that proved Setanta’s downfall but a lack of timing. In this Setanta themselves might not be held entirely to account but The FA and SPL certainly should.
Sky’s football foray began in 1992 and its monopoly was broken in 2007. These bookends, 1992 – 2007, represent the longest period of sustained growth the British economy has seen in 150 years. And Sky took advantage to build a solid, robust business. However, seen in these terms, launching in 2007 only weeks before Northern Rock first approached the Bank of England for a little help, Setanta didn’t stand a chance. Its need to secure sky-high subscriber numbers to meet its payment terms, at the precise time consumers were tightening their belts, was always going to be a Herculean task.
By late 2007 of course the £392m Premiership deal was already underway but in Summer 2008, when Setanta purchased additional broadcast rights from The FA and SPL, the alarm bells really should have been ringing. Both The FA and the Scottish Premier League would argue that it was a bad business plan that ultimately led to Setanta’s demise. But the responsibility both must shoulder is that they should never have sold the rights to a company, who’s future fortunes were so precarious, in the first place. The SPL do seem to have taken this responsibility seriously, providing £3m from its own funds to each of its clubs, it remains to be seen how The FA will follow suit.