No room for error as details of Setanta deal emerge; Clear scrutiny

0 Comments | Sunday Herald, The, Jul 25, 2004 | by Stewart Fisher

WHOEVER first suggested the SPL's initials should stand for "self preservation league" could yet be proved disturbingly prescient. That is precisely what the country's top division will become if reported worries about Setanta TV's subscriber numbers failing to reach their break-even target of around 80,000 are still borne out around the make-or-break November-December period. The resultant cash shortfall could be translated into a delay in the Irish TV company's staggered payments to SPL clubs.

Until then, with all indications so far suggesting the company will meet at least their first instalment - which, including VAT, is thought to be nearly (pounds) 2.5 million and due on August 1 - the SPL are privately seething about the negative publicity the story has attracted.

But is it any wonder Scotland's twitchiest clubs are already re- examining the small print of the recently signed, four-year deal worth (pounds) 35m? With a business plan vetted by the Royal Bank of Scotland, and some canny personnel appointments, it is far too early to be writing the channel's obituaries. Nonetheless, we can legitimately ponder the doomsday scenario and how it could unfold.

The way in which payments are structured should in itself present problems for SPL clubs.

The Sunday Herald has learned that, in contrast to the previous BBC arrangement, the Setanta deal is backloaded to the extent that the lump sum due next Sunday will be the last the SPL clubs receive until next April. This break should help the channel to sell as many of the (pounds) 119 SPL Live packages for 38 live games (available in June at a discounted rate of (pounds) 99) as possible before they have to stump up the majority of the (pounds) 8m they owe this season.

The consequence of this is that, at best, SPL clubs can expect a long hard winter. At worst, should Setanta and their 25% backers IWC Media realise at the turn of the year that subscriber targets are not going to be realised, the channel could be unable to fulfil their April payment, leaving precious little time for the re-selling of games on an ad hoc basis.

In the view of Dominic Keane, the former Livingston chairman and a man who knows more than most about struggling to keep a provincial Scottish club afloat, any of the smaller premier clubs - ie Livingston, Dundee, Dundee United, Dunfermline, Kilmarnock and, particularly, Inverness Caledonian Thistle - would be ill-equipped to stave off the banks should any deferral of payments occur.

"There is definitely cause for serious concern," said Keane, who has nevertheless already subscribed, "even though I think it is still possibly a bit too early to say about subscriber numbers. Setanta have a good business plan, and I am sure the production will be first class, but numbers have disappointed. It comes back to the quality of the football product."

Two years ago, the ITV Digital saga caused chaos in the lower divisions in England after Carlton and Granada TV, ITV Digital's parent companies, managed to avoid any financial redress when the broadcaster went bust in the wake of signing a (pounds) 315m deal with the Nationwide League.

In contrast, the SPL claim to have performed thorough background checks on how a company with an annual turnover of (pounds) 27m would be able to honour such a contract.

One suggestion is that Setanta have put their entire existence on the line to provide such guarantees.

Keane is cynical about the distinctions. He said: "There seems to be a lot of inter-company relating to back up the deal, but what, realistically, does that all mean when it comes down to it?"

With season ticket sales dropping in most areas of the country, the venture requires to be bankrolled more than ever before by Rangers and Celtic fans, as the parallel enterprise - to provide each side with their own dedicated channels - proves. Keane believes the tardiness of take-up can be traced to the lack of transfer movement so far - apart from at Rangers and, ironically, Livingston - coupled with the focus on Euro 2004 and other summer household expenses, such as holidays and season tickets. The likelihood of more Old Firm fans getting tickets for away games - perhaps up to 15,000 for the visit to Inverness Caledonian Thistle for instance - doesn't exactly help either. An upcoming advertising blitz, fans waiting to see before buying the coverage and the Old Firm game on the third weekend of the season are all important points on Setanta's horizon for increasing subscriptions. The implications of a reciprocal deal with Sky which allows all pub landlords free access to Setanta if they already have Sky digital remain unclear.

Keane also believes that, should anything untoward happen to Setanta, the "box office" of the Old Firm game would help to bail the league out, even in mid-season. With STV happy with their highlights package, the BBC having spent some of their budget on the rights for Scotland away games, the CIS Cup and the Uefa Cup, and Sky having resisted the temptation to re-enter the SPL market, even that cannot be taken for granted.