Is The Football League’s New TV Deal A Sign Of Changing Times?

By on Apr 5, 2011 in English League Football, Latest | 3 comments

For the last two decades or so, the entire financial model of professional English football has been based upon on fundamental source of income – television money. Ticket prices have increased, of course, but the main driving force behind the wage inflation within the game has come from vastly increased amounts of money coming into the game from the sale of television rights. This has not been solely the preserve of the Premier League. The Football Conference signed an exclusive (and, in theory, lucrative) deal with Setanta Sports and had to cut its cloth accordingly when the company folded. To an extent, it’s probably fair to say that the game is now hopelessly dependent upon this money, and this is why we should be troubled by the details of the Football League’s new television deal.

The new contract, which was announced yesterday, is worth £65m per year to the seventy-two clubs of the Football League but, while this sounds impressive at a glance, it is a reduction of a quarter on the deal that is coming to an end at the end of this season and it also marks the withdrawal of the BBC from its Football League coverage. This coverage had received reasonably favourable press but, with the corporation facing swingeing cuts from its budget over the next few years, the decision seems to have been taken that this is one cost that they can afford to cut. As such, there will be no league football live on Free To Air British television next season and, as things stand, even the Free To Air highlights package that the Footbal League is offering hasn’t been taken up by anybody.

It seems unlikely that this will lead to the sort of financial meltdown that followed the collapse of ITV Digital in 2002. At that time, television rights dropped overnight by ar0und 80% as Sky Sports picked up the pieces and Football League clubs, who had already been spending their money on the basis of projections forecast taking into account the colossal amount of money that ITV Digital was offering, found themselves staring at an irrepairable hole in their accounts. In the years that followed, more than half suffered an insolvency event, and it was this rash that led to where we are now, with points deductions for clubs that enter into administration.

Even taking into account that this won’t be the catastrophe that the ITV Digital fiasco was, though, it is not something that can be dressed up as good news. In 2002, the wider economy was in a reasonably robust condition, but in 2011 a cut in television revenue is the very last thing that football clubs of any size need. It feels as if we have not yet seen the worst effects of the new governments cuts, and this may have an impact on crowds next season on its own. It seems unlikely that Football League clubs are going to be able to plug the gap created by this new, lower amount of  television revenue by further increasing season ticket and ticket prices without quite possibly having a very damaging effect on crowds. Couple that with the likelihood of reduced revenue streams from advertising and sponsorship, and it seems likely that the clubs of the Football League will have to cut their own costs accordingly in the summer.

None of this would be a particular concern were it not for the fact that so many clubs either are or have been in such a perilous financial condition over the last couple of years even with the higher television deal in place. The likes of Watford, Crystal Palace, Sheffield Wednesday, Plymouth Argyle, Southend United and so on have all found themselves in what could be described as various degrees of doo-doo over the last couple of seasons, and those listed above are from the only examples. For those weaned on the largesse of the Premier League, that £23m per year shortfall might not sound like a colossal amount of money.

We shall have to wait and see over what sort of damage – if any – this reduction in income may or may not have. The chairman of the Football League itself, Greg Clarke, recently the Football League chairman, Greg Clarke, recently told a parliamentary committee that the game was “heading for the precipice and we will get there quicker than people think”. We may never know whether he was referring to the new television deal – which was not public knowledge at the time – when talking of this. What we can say for certain, however, is that it is hardly likely to help any clubs.

The answer to the problem isn’t difficult to identify, but implementing it seems likely to cause a few headaches for both clubs and the authorities. The clubs of the Football League need to wean themselves off their dependency on television money, so that this sort of news is something that they have a buffer against. There has been little to suggest, however, that this is on the agenda at many clubs and the idea that one has to speculate in order to accumulate still seems to be the modus operandi of the professional game in Britain. How long this can continue is open to question, though. It is, however, a matter that all concerned with the running of the game need to address as a matter of urgency.

The very notion of “event television” is becoming increasingly outdated, with on demand viewing and increasing use of the internet replacing the idea of sitting down “as a nation” to watch broadcasts. Indeed, it’s not wildly over the top to perhaps suggest that sports broadcasting, in which the concept of an event being “live” continues to be of importance (as, we can safely presume, it will continue to be), may already be the only area of broadcasting that clings to the idea of “event television” with any real success. If the idea of revenue coming into football from the broadcasting of matches is to survive as the critical income stream into the game it has been for the last two decades, those running the game need to diversify for the second decade of the twenty-first century. The ramifications of a failure to do so could be very serious for all of us. A little lateral thinking could go a long way.

Follow Twohundredpercent on Twitter here.

Share Button

    3 Comments

  1. The problem is that last time these rights were up for grabs, Setanta were bidding aggressively against Sky which pushed the price up. It was one of the most overpriced TV sports contracts ever. Once Setanta went bust and it became clear ESPN were going to pursue a different strategy, the price of the rights was always going to fall (particularly when it became clear that the BBC weren’t going to bid).

    Liam

    April 5, 2011

  2. One effect is going to be that of increasing the gap between the Premier League and the Football League in terms of finance.

    League clubs are already having to think carefully about the pricing of tickets for next season – due, as you say, to the financial climate. Those that get it wrong could take an even bigger hit through diminishing gates.

    Hold onto your hats for a bumpy ride next season, lower leagues.

    Meanwhile, Mr Scudamore puts his fingers in his ears and goes ‘lalala’

    SJ Maskell

    April 6, 2011

  3. The new Football League TV deal doesn’t take effect until 2012-13, so there will be live coverage on the BBC next season as before.

    Isn’t it written into the nPower contract that they get a rebate in the event of no free-to-air live games?

    Richard

    April 6, 2011

Trackbacks/Pingbacks

  1. Elsewhere… « Killer Pass - [...] Ian King discusses the Football League’s new TV deal over at Twohundredpercent. from → Uncategorized …

Post a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>