Smile For The Camera: Football-Business.NET

SMILE For The Camera

As accountancy giants Deloitte & Touche release their annual football finance research, Sports Business Group partner Dan Jones speaks to Football Businessmagazine about the changing face of television sports media, and why there are so many reasons to be optimistic as we prepare for a new dawn of commercial broadcast

FB : With two landmark TV rights deals announced over the past year, what effect will the new revenue have on clubs’ spending habits and willingness to spend?

Transfer windows are often a guide to what future effect TV money will have on the game, and when the Sky/Setanta deal was unveiled for season 2007/08, there was ample time for it to make an outward statement through the January window. Yet most clubs held back and that leads me to suppose that the overall long-term result will be calmer than many people think.

We must give credit to how well the deal was down, both through home and international TV rights. It’s a colossal amount of money on the table, and despite what the doubters might say, the end result will be a strong filtering down of this money through the English game.

Clubs’ spending habits don’t change too much from one year to another if all other things remain equal, and the pursuit of success will always see our sides at somewhere between the 60-70% mark of turnover to wages. I’m quite certain that won’t change.

FB : Is the part-leverage of power away from Sky a good thing?

Without a doubt, it’s definitely good to have more than one supplier. Setanta have weighed in and it will be very interesting to see how they go about changing peoples’ mindsets from what has been a Sky-dominated creature for so many years.

There were a raft of competitors going for the various packages and the likes of NTL, BT, Virgin Media wouldn’t needed to have been told of the commercial rewards on offer.

There is further good news for the consumer with BT’s deal with Setanta that enables them to show live Premiership football over BT Vision. BT will be sure to undercut Sky’s pricing structure for Pay-Per-View, which may lead to an overall reduction in prices for these types of matches, across the board. Sky won’t really suffer through all of this though. Their product is clinical, expansive and clean, and consumers will always go back to that clarity and choice because that’s what they’re familiar with.

For that reason it will be interesting to see what Setanta come up with. Sky will admit they made mistakes at first, but having a model to which they can learn and relate, I suspect Setanta will get there very quickly. They’re not new themselves and have been around a while, and having landed Trevor East from Sky, have someone who can guide and manipulate their content to offer somewhere near the quality of their illustrious big brother, if not the quantity.

FB : Despite the progress of the TV deal, is money in the game becoming increasingly immoral?

The sheer scale of the deal remains surprising to most. But no-one should be in the doom and gloom camp over this; in fact, most people who I have spoken to have been pretty bullish.

There will always be negative publicity about money in football, and really it’s pretty difficult to understand. There’s the classic example that the media roll out of how much players are getting paid. Well, sadly, that’s the market, as it is the market in Formula One, in the City, everywhere.

These people have a worth and if one employer won’t pay it then another will – supply and demand.

If supporters really felt the money in the game was so unpleasant they wouldn’t buy football shirts, would cancel their Sky subscriptions, and turn their back on all other merchandise.

New money from new investors is always good for any industry. What’s the alternative? A return to the times of crumbling terraces and poor supporter facilities?

Of course, there are some standards that need to be scrutinised. There has been a deeply unpleasant approach given to non-UK investment in some areas this year, and at times supporters and industry people are entitled to ask if this person or these people are ‘fit and proper’.

I still believe there are better tests that we can be doing under company law, and I don’t subscribe to the football authorities adding their own test and showing absolute faith in that. It has proven itself to be flawed in the past and will do again in future. But when it works, the money is there to benefit everyone at every level of the game, and that can only be a good thing.

FB : Going back to the Premiership TV deal, are there any comparisons to the ITV Digital deal that may be cautiously drawn?

I don’t think the deal really bears any comparison. At the end of the day we’re talking about a tremendously strong product – Premiership football – one of the world’s most lucrative entertainment commodities.

The broadcast business model consistently proves the Premiership’s worth, and the contribution Sky have made to that model makes sense.

ITV were basing their aims and expectations on a different sort of model; a different property. You can see their perception of tapping in to a market that Sky had popularised beyond all expectations, but the level of football didn’t match the input and the end result was hugely damaging for the game at so many levels.

FB : But Setanta have followed Sky into the Nationwide Conference, screening ninety matches next season. If the ITV Digital deal proves that the lower levels of football don’t warrant the coverage, why do these broadcasters persist with the lower leagues?

Different content brings about different things. You are talking about a smaller local audience, but there are factors that bring in neutral supporters through the novelty or interest value of watching different levels of football.

As genuine football broadcasters both sides know what they really want, and that’s the Premiership, but there are programming hours to fill, and leagues such as the Conference – as well as being of a fairly good standard these days – can offer the scope and flexibility for them to broadcast such matches.

Setanta have also based their model on two types of supporter, rather than just the one breed that ITV Digital were relying upon : that being the fan who will show a reasonable interest in any type of football of any level. Setanta have retained significant interest in the other type of football fan : the Premiership club fanatic who watches little more than their own side, though will ensure they take in every minute of every match possible.

There’s also a perceived commitment to the game. Fans see Sky and Setanta giving time and energy to the lower leagues and thus take away with them a very real, and at the end of the day, genuine perception that these broadcasters have vested interests in all levels of the game, and as a marketing tool that is very strong.

FB : So there is no threat to Sky and Setanta’s investment, even with the ever-enlarging technological angles on offer?

I don’t see there being any real threat. What you’re talking about is a different type of product, and if people want to view matches on their mobile phones or via streamed media over the internet, then that is in addition to the base product which is television; it has to be.

FB : Could we see a wage to turnover cap - as currently exists in the Conference - ever implemented at a higher level?

Never say never, but to implement this in the Premiership you would have to have agreement from across Europe. There is the perception that at Premiership level some clubs need saving from themselves, and we have seen examples of clubs getting in all sorts of trouble as a result of pushing too fast and too hard. But the Premiership, as a whole, works at around the 60% mark and there isn’t too much variance from that figure, so I don’t think it is something we need to be concerned about. The Football League has introduced a code of best practice, but if anything, the new wave of foreign ownership is bringing more experience into the game, so I think at most levels the chances of over-spending and under-budgeting are more something of the past.

FB : With the FA Cup fresh in peoples’ memories, how is the competition faring against the vast range of alternative television media?

I think the BBC’s Cup campaign was good and solid. Of course, people will always dust down the obituaries, but the Cup always comes back. The 2006 Final in Cardiff was a great example, and largely more exciting than any Champions League game from that season. People will always write the Cup off after Christmas, and sometimes rightly so if the set-up of the draw doesn’t offer a traditional David versus Goliath tie, or a glamour clash between a couple of the big sides. But it still has the capacity like no other to entertain, and I don’t think that will ever go away.

FB : Why is the overall picture for English football so promising going forward then?

Where do you want to start? Revenue continues to grow, that’s more money in the game at all levels, better stadia, better facilities and better players; and yes, that’s better homegrown players as well as the high-profile imports.

Those stadia developments are superb all across the board, and it is easy to forget how far ahead we are now of pretty much every other country in the world. Look at the state Italy is in with their facilities, for example.

Manchester United’s Quadrants have been the latest step in the continuing growth of a world giant, Arsenal have the Emirates, and Liverpool move closer to Stanley Park – money has achieved all of that, and it’s evidence to show that it’s not just going on players’ wages.

There is much more sustainability in the game than there was five years ago, and that filters through to a sustainability in clubs. This enables them to make concerted long-term plans in the knowledge that they have the foundations on which to build.

And finally the fans. There is more of a fans voice these days than ever before. Some are not happy splashing out and would rather themselves be stable. I don’t think we’ll ever have a fans backlash, but there is much more consumer awareness these days and a growing trust between between all components in the football mechanism. The game is on-form and we should all welcome the future with great positivity.

Download Article