The Beginning Of The End For The Big TV Pay-Outs?
The news that ITV are trying to renegotiate their contract with the Football Association for FA Cup and England matches will come as small surprise to people that watch the media with any significant interest. Setanta’s recent woes are well documented (the recent loss of part of their Premier League television package has led some within the game to wonder aloud whether the wheels are coming off their challenge to Sky’s monopoly on football already), while only yesterday The Guardian was reporting that ITV’s financial difficulties are such that they are now mothballing their studio in Leeds. They are announcing their annual results tomorrow, too, which are expected to be disastrous.
Clubs in the Football League know the dangers of an over-inflated television deal only too well. It wasn’t so long ago that ITV Digital collapsed leaving dozens of clubs dangerously financially exposed and with a contract that allowed ITV’s owners at the time, Carlton & Granada, to walk away from the deal scot-free. The danger for the Football Association is that they have to walk a very delicate tightrope. No matter what peoples opinions of the deficiencies of ITV’s coverage of the game are, withdrawing coverage from them would not necessarily be the great thing that many supporters might feel that it would be. With no competition for rights, the likelihood is that any revised television deal (struck with, say, the BBC and Sky) would be greatly reduced in value from what they have now, and this would have a detrimental effect on smaller clubs, who currently are able to enjoy significant financial benefits from good runs in the FA Cup.
The buzz in the media seems to be that Setanta are on the brink of financial meltdown. They have spent heavily on rights and are now seeking to restructure their financial commitments with all of the organisations with whom they have contracts. Their loss would be damaging for competition in cable and satellite broadcasting in Britain. Moreover, their coverage has, at times, been uniquely bold, as anyone that has seen them broadcasting a Blue Square Premier match, with their cameras inside the dressing rooms and pitchside interviews. This puts the FA in an even more difficult position than they are with ITV. The only realistic pay-TV alternative to Setanta would be a bid from Sky, which would be likely to be significantly lower than the bid currently on the table. It could be a case of “heads you lose, tails you lose” for the Football Association. Even at the height of the market, they would expect a loss were Setanta to hand back their contract. In the current trading environment, they would surely be looking at a significant reduction in the amount of money handed over for a replacement contract.
The nightmare scenario for supporters is two-fold. In the first, the FA, in their desperation to recoup all of the money promised under the current contracts, the FA sell all rights to a pay-TV channel. There’s nothing to stop them from doing this legally. The World Cup finals, the European Championship finals, the FA Cup Final and the SFA Cup Final are the only football matches required by law to be shown by a terrestrial broadcaster. It’s unlikely, but it’s possible. In the second – and this is a longer term nightmare – high profile collapses like this could conceivably lead to the end of collective bargaining on television rights (the biggest clubs wouldn’t need much persuading to break away), leading to television rights being sold on a club by club basis, exaggerating the gap between rich and poor even more than even now. These are largely concerned that can be saved for the future, but a game that is now dependent more than ever before on television money seems likely, in the turbulent times ahead, to look at more lateral ways of raising money through this particular medium.