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The fallout from Setanta's collapse

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Mihir Bose | 17:46 UK time, Tuesday, 23 June 2009

Setanta's rights may well ultimately be picked up by other broadcasters following its fall into administration today - at least that will be the hope of the various sports affected.

But more significant may be the collateral damage it has done to football's governing bodies, in particular the less than brilliant relationship between the Premier League and the FA.

On Friday when the Premier League decided to take its ball home, effectively sentencing Setanta to death, the FA did little to hide its displeasure.

The feeling at Soho Square was that the Premier League had been far too hasty - its decision had caused the FA and the SPL problems when it could easily have given Setanta the 72 hours it requested to organise its rescue and meet its payment commitments to the League.

The Premier League's version of the story is that far from being uncaring, it had been more than considerate and mindful of Setanta's problems for many months.

Talks between the Premier League and Setanta have been going back to last November. League officials lost count of the number of times Setanta asked for "another 72 hours".

Setanta Sports has gone out of business Matters were not helped by the fact that it never seemed to be clear who was in charge of Setanta. It seemed every time the League picked up the phone to Setanta, there was a different person to speak to. Not the sort of thing that inspires confidence if you are worried about getting paid on time.

In fact, the tipping point was not reached last Friday, when the rights were withdrawn, but Monday last week.

That is when the League made clear that while Setanta had until Friday to come up with the money, it had also started a parallel process of searching for another broadcaster.

It was quite clear from this that it did not expect Setanta to meet the deadline and anticipated getting another call asking for a further 72 hours. As indeed transpired at the end of the week.

The Premier League may also have known that there was a VAT bombshell ticking away inside Setanta which would make a rescue of the company difficult.

Registered outside the UK, Setanta had been in discussions about its possible VAT liability. It was clear there was a potential VAT bill of £50m and this emerged during the due diligence carried out by investors keen to rescue the company. It was this that scuppered the anticipated rescue bid last week.

All this meant that on Friday, when Setanta made yet another plea to the Premier League for more time, the answer was very brief.

The Premier League feels fully justified in what it did and its prompt reselling of the rights to ESPN means it has - as marketing men like to put it - come out revenue neutral.

All through the Setanta saga, the FA has also been very bullish, believing the improved state of the England team means its assets are more attractive and could be easily resold.

True, ITV has the option on England matches but they have to exercise that option on home friendlies which can hardly be that attractive, especially given ITV's delicate current financial position.

The rest of the FA's portfolio - FA Cup, Community Shield, and under-21 matches- is decent. And it did front load its Setanta contract, so £50m of the £150m was already in the bank.

But for all the talk in Soho Square, this hardly compares with the live rights to the Premier League. And though the FA is believed to have made a 45% profit on its previous contracts when it signed with Setanta, its faith in its football rights will be severely tested back in the market.

Setanta does have some money in an escrow account but the administrators are unlikely to allow any sports bodies access to that.

Other sports who had signed with Setanta will also be affected, but in the main, it was overseas rights for things like US golf and the IPL, so the impact on them should not be that great.

The situation is very different for the SPL however.

Not for Celtic or Rangers who are big enough to withstand what will be for them a small loss of income.

But even if another broadcaster, like Sky, does come in, some of the smaller Scottish clubs might struggle to cope with the chill winds in the wake of Setanta's demise.

Those chill winds will also blow between Soho Square and the Premier League as the implications of Setanta's collapse unfold.


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