Football's financial integrity

Glasgow Rangers shadow sign

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If you think Rupert Murdoch and his media empire has too much power over politics and even the police, you may have overlooked the fact that it also holds the key to what's happening in Scottish football.

BSkyB, better known as Sky TV and 40% owned (so effectively controlled) by Murdoch's News Corporation, is a strangely silent participant in the fall-out from the Ibrox debacle.

But what it is now doing is shaping the frenzied attempts to cobble together some kind of fix for the sports' finances by Monday's meeting of the Scottish Premier League clubs.

Armageddon

For many weeks, there's been lots of talk about sporting integrity versus the possibility, we've been told recently, of a "slow, lingering death" or, alternatively "Armageddon" if Rangers takes its fan-pulling power off to Peterhead and Annan to play in the Scottish third division. (Biblical scholars will be aware that Armageddon is rarely seen as either slow or lingering.)

What happens to TV rghts?

  • Sky - Already has the £80m, five-year contract. But what will it do now?
  • BT Vision - New market player which could come in if Sky moves out
  • ESPN - It doesn't depend on the Old Firm rights. But the Disney-owned company has lost the rights to English premiership football after the coming season, so it may well turn to Scottish football to re-build subscriptions
  • BBC - Less of a player, but it does have a current TV highlights and radio rights package

It's clear from the vote by members of the SPL top flight of Scottish football to banish Rangers, and from Friday's vote by the lower orders in the Scottish Football League, choosing to consign the Glasgow club into the sporting basement, that sporting integrity has won.

That owes much to the pressure from fans at clubs around the country using threats of boycotts if Rangers were given special treatment and allowed back in a higher league. That has, in both senses, been a game-changer.

The mood seems to be "hell mend them". If sport is about anything, it's about fair application of rules. And if the sport sinks slowly or rapidly, then that's the price that has to be accepted for integrity.

The same "hell mend them" mood is apparent from Ibrox and many of its fans: Rangers, in its newco form, will take its punishment in the third division, and let's see how much it hurts the others financially.

Talk of eight top flight clubs in administration by Christmas might well give Rangers' fans some quiet satisfaction, though their misfortune is that their arch-rivals across at Parkhead seem least likely to be among the casualties. Celtic has financial resilience which others lack.

Paying less

Much of this has been picked over elsewhere in the media and by the myriad experts on social media. But as someone who is somewhat less immersed than most in Scottish football as a sport, what strikes me is that role played by Sky TV.

All the discussions, currently, are based on the assumption that Sky will accept one season with Rangers out of the top division, without tearing up a TV rights contract that assures it four Old Firm league matches each season.

Celtic v Rangers game, action on the pitch How important were the Old Firm games to Sky?

But the prospect of Rangers having at least three seasons before it returns to matches against Celtic would mean Sky pulling out - or at least, if it doesn't pull out, it will pay a lot less to the SPL teams.

We assume this. But nobody knows, and apparently that includes the SPL and its clubs. Everyone's guessing what Sky will do, and trying to base their actions on that.

Among the SPL clubs, experts in football finance reckon they rely on the broadcasting rights (and the consequent sponsorship deals, on shirt logos, for instance, which are based on TV cameras being present) for between 20% and 40% of their revenue.

Tell the finance director of any firm that you face that level of revenue decline over the next few years, and she or he will hit the cost-cutting crisis button. Reassuring words that at least 60% of revenue will probably be secure won't change that. Say it starts in a few weeks time, and you'll see the chief bean-counter Googling "insolvency practitioners".

Boycott threats

From Sky's point of view, there is good reason to keep schtum. It will have watched the frenzy since February that's made a pariah, at different times, out of......

  • Craig Whyte
  • Sir David Murray
  • HM Revenue and Customs,
  • Duff & Phelps administrators,
  • club chairman showing any lack of sporting integrity spine
  • and various football administrators caught in the headlights

What Sky doesn't want is to be portrayed as the enemy of Scottish football. It has a lot of subscriptions at stake, and to be added to the list of those threatened with boycotts is the kind of brand damage that wouldn't make much commercial sense.

That explains why, after Friday's third division decision, Sky could quietly call Neil Doncaster, chief executive of the SPL, and put him on the spot with the simple question - So what are you going to do?

That would be not so much the ball being in his court, as a live grenade being tossed in his direction.

From the broadcast point of view, Sky is dominant, but it's not the only player. ESPN doesn't depend on the Old Firm rights, but it can work with BSkyB to reduce what it pays anyway. The Disney-owned company has lost the rights to English premiership football after the coming season, so it may well be re-thinking its strategy for building subscriptions anyway.

Game of two halves

And Sky will have to calculate on the risk that tearing up the £80m, five-year contract announced with the SPL last winter won't lead to a new auction where BT Vision could become a competitor. The telecoms giant has taken a significant share of the English rights to drive up subscriptions.

The BBC is a lesser player in this, if it's to continue with TV highlights and radio rights. My colleagues at Pacific Quay are not declaring their hand either. Part of the calculation is likely to be what happens if live TV pulls out, the cost of filming for highlights, and the possibility that matches could revert to Saturday mid-afternoon to maximise gate receipts.

So, this is anything but a game of two halves. It's a multi-dimensional, multi-player survival puzzle, the rules of which are now being dictated by a very large company that's not saying what they are.

One final thought: we assume the new incarnation of Rangers will, or would, be promoted from third to premier league in consecutive seasons. That assumes a lot about the quality of its player squad, which isn't yet clear.

It also suggests other teams will only put up token resistance in the face of a light blue juggernaut. Where's the sporting integrity in that?

Douglas Fraser Article written by Douglas Fraser Douglas Fraser Business and economy editor, Scotland

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