Radio 4 on football finances

[Rex]

Has Southampton had any movement in the window. It could be a come and get a bargain plea for income.

[79Royal]

I hear from a journo this morning that there's a strong rumour that Barclays won't be able to afford to renew their £70M sponsorship of the PL when it runs out next year.

Not that it will make a great impact as it's relatively small compared with the total PL income, but it'll be an embarrassing blow for them.

Given their current share price, I'd be amazed if they can sell the renewal to their share holders. When I left work on Friday, it was 50p per share. Only a couple of years ago (I think) it was was around £7. I know they'll have a budget for corporate sponsorships, but renewing it just doesn't seem very likely at present.

[Whore Jackie]

Interesting article in today's Guardian regarding Setanta's immediate financial commitment under the new PL TV detail.

Premier League clubs will find out early next week about the financial health of one of the media groups that bankrolls them with Setanta due to lodge a seven-figure deposit to secure the live rights it won in last week's auction.

Setanta and Sky, which won five of the six packages of live matches on offer in last week's rights auction, are required to sign a binding agreement by today and lodge a deposit with the Premier League early next week in order to secure their contracts. Having narrowly lost out on the package of 23 Monday night games after submitting a bid around 20% lower than the amount it currently pays, Setanta has approached the Premier League to plead its case in the hope of regaining access to them.

Executives at the Irish broadcaster had hoped that Sky would entertain the idea of sublicensing the matches, given that only having four of six packages under the current deal has not hit its subscriber figures because it was still able to market itself as the home of the biggest clashes, but without them Setanta faces real questions about its future. Insiders have conceded that it will be forced into major cutbacks but have suggested it could refocus as a scaled-down operation, positioning itself as a good-value alternative to Sky.

While the company is engaged in talks with its investors and carries out a wide-ranging strategic review, executives plan to continue with business as usual and expect the deposit to be paid. However, they will have to convince their private equity bankers, who have sunk hundreds of millions of pounds into the business, that they will eventually be able to see a path to selling or floating the company and making a reasonable return.

Both the Premier League and Sky are believed to be implacably opposed to the idea of re-opening the auction or re-selling the matches to Setanta. Next week's deadline for lodging a deposit with the Premier League will send a clear signal about whether or not its investors believe it has a future.

According to sources, the deposit is typically set at or just below 5% of the final rights value. That would mean Setanta having to pay between £5m and £8m, followed by six equal tranches when the deal starts in 2010. It still has at least two instalments to pay on its existing £392m deal for 46 matches per season, which runs until the end of 2009-10. The payments, due before the season in question starts and halfway through, are equally divided and Setanta is effectively paid up until the end of this season.

Setanta has made overtures to the Premier League and plans to take its case to UK media watchdog Ofcom and competition authorities in Brussels. But Sky would argue that the margin by which it was defeated was so narrow, that Setanta's error was one of judgment rather than a result of unfair competition.

[T.R.O.L.I.]

Can't see why Sky would ever consider letting Setanta get a stronger foothold in the market. It's all about survival of the fittest and if Setanta can't cope they should pull out and shut up.

[Wycombe Royal]

So basically Setanta stuffed up and got it wrong by reducing theiur bid by slightly too much. Now they are crying and begging to anyone who will listen to try and get the package back.

A harsh lesson learnt I think.

[Deathy]

Having narrowly lost out on the package of 23 Monday night games after submitting a bid around 20% lower than the amount it currently pays, Setanta has approached the Premier League to plead its case in the hope of regaining access to them.

LOLz. Shite channel.

[Royal With Cheese]

May Setanta and all it's little wizards rot in hell for their shit schedule and shit customer services.

I, for one, will not mourn their imminent passing.

[Silver Fox]

go bust, make ESPN America part of my sky package, thanks for coming

[Dirk Gently]

Meanwhile, at Orient, Barry Hearn is trying to spearate the ownership of club and ground, which is always a dangerous sign.

Under proposals sent out to Leyton Orient shareholders (which include LOFT) on 27 January, the club would sell its home of over 70 years to Matchroom Sports Limited - the main trading company of the club's current chairman Barry Hearn - for £6m. However, £3.4m of this would immediately be used to clear Matchroom's loan to the club (the result of ongoing annual deficits at the football club), leaving £2.6m of "working capital".

Matchroom would then grant only a 20-year lease to the club, rent-free only for the first five years, then £180,000 a year for the next five years, and reviewed again (and no doubt increased) in years 10 and 15.

LOFT has taken legal advice on the proposal, and is continuing to do so. LOFT's view at present is that shareholders have not been sent enough information to come to a considered decision. The proposal refers to "advice from a leading firm of valuers" regarding the offer, but unlike a previous EGM no actual valuation has been provided to shareholders for consideration. Until the full text of a full and proper valuation is received, shareholders cannot possibly consider whether the proposal represents good value to Leyton Orient FC.

In the past four years, two Extraordinary General Meetings have been held to agree to selling off land around the ground to a consortium led by Hearn, yet for arguably a far more important decision shareholders are only being given 28 days to register a postal agreement to the proposal, with no opportunity for discussion at an EGM.

Without further information or discussion between the club, its shareholders or supporters, LOFT objects to the proposal on the following grounds:

- the proposal removes the link between the club and ownership of its ground. While Barry Hearn remains owner of Leyton Orient at the time of writing, any future sale of the club would place Orient in the same difficult situation that the likes of Crystal Palace or Oxford United have faced in recent years, where the previous owner holds an enormous - and usually negative - influence over the financial wellbeing of the football club;
- the proposal would leave Leyton Orient with no certainty as to its future in the London Borough of Waltham Forest, whereas at the moment it has over 990 years remaining on its current lease from the local council at an annual rent of just £1;
the proposal contains no information as to the financial sustainability of Leyton Orient as a Football League club once the £2.6m has been spent (which, based on the current annual deficit, would be in the next two to three years);
the proposal makes no reference to what plans, if any, the club has in place for relocating (either to an Olympic stadium or elsewhere), yet refers to "the sale" of the ground in the future;
- the proposal comes at a time when property prices are at a low at the beginning of a period of economic recession, with no indication as to the possible value of the land once any ground relocation takes place (say, in approximately five years time when a possible Olympic stadium move could take place, and when hopefully the property market has recovered). Given that the land in the four corners of the ground sold for £7.35M to Bellway Homes in 2003, and that Hearn's consortium paid £1.5m and £1.25m respectively for undercroft space in the West Stand (2005) and the land behind the North and South Stands (2006), a value of £6m for the entire ground seems incredibly low for what it could be worth for potential development;
- the proposal allows for 50% of the profit on "any future sale" of the ground during the term of the lease to come to Leyton Orient; if the ground remained in Leyton Orient's name, 100% of any future sale would come to the club and Matchroom's loan could be repaid from that.

http://www.leytonorientfanstrust.com/story.asp?storyChosen=174

[Dirk Gently]

Also, regarding the original point of this thread, the Football League have revolutionary proposals to solve the tax issues, which would bring their level of financial governance up as high as Germany etc.

All that needs to happen now is the clubs to vote them through.

[Baines]

Dirk - do you know if the FA have ever given consideration to a requirement that, as a condition of membership of the Football League, a club own its ground?

[Ian Royal]

Dirk - do you know if the FA have ever given consideration to a requirement that, as a condition of membership of the Football League, a club own its ground?

pretty good idea, but wouldn't it eliminate quite a few clubs from the league?

[Baines]

I'm not sure how many clubs are in that position at the moment - you only tend to hear about it at a particular club after everything's gone tits up.

[Ian Royal]

I'm not sure how many clubs are in that position at the moment - you only tend to hear about it at a particular club after everything's gone tits up.

True. It would screw teams like Brighton that were without a stadium for a while. I'm not even sure if we technically own our own stadium...

[Dirk Gently]

Dirk - do you know if the FA have ever given consideration to a requirement that, as a condition of membership of the Football League, a club own its ground?

Firstly, it'd be the Football League rather than the FA, and about five years ago they did introduce a rule (section 4, rule 13.9, if you're interested!) that that a club requires a minimum of a season's security of tenure at that ground.

That may seem a ludicrously short period, but it's a vast improvement on what they had previously, which was nil.

I'm not sure they'd ever be able to have a rule stating ownership because of the way that so many clubs are run by umbrella companies or rent grounds - it'd knacker Reading, for instance. And clubs like Dagenham & Redbridge, who are as safe as houses because the ground is Council-owned, would also fall foul. So it's more about security of tenure than ownership.

[Baines]

Where it is a question of group company ownership, it wouldn't be too hard to police. A regulation that the ground remain in the same group ownership as the club (say, using related companies definitions from tax, or some similar, legislation) should be workable. Can't think of an answer to the rented grounds point though. I guess that, as with so many things, we're not starting from year zero, so "perfect" solutions aren't possible.

[Dirk Gently]

Yes. but Mawhinney would no doubt answer that each football club is an individual company, governed by Company law, and so it's not the place of the FL to dictate the way the directors run their company or what they can/can't sell to whom.

Of course, that's a fatuous argument as the FL (and all other leagues) ought to be able to make whatever rules it likes that clubs must abide by if they want to be members of the league. But in this case I do think that ensuring "security of tenure" is the best option available. They've also considerably tightened up on the clauses about moving grounds, so a "Brighton at Gillingham/Charlton" situation wouldn't be allowed to happen again, nor a "Wimbledon to MK".

[Dirk Gently]

It's that time of year when the finances start to get stretched and we start to see clubs in trouble - first up against the wall this season are Darlington, now on the verge of administration.

http://www.darlingtonandstocktontimes.co.uk/sport/4152047.EXCLUSIVE__Quakers_bombshell/

Just a reminder that after a change of FL rules, if a club goes into administration before the 3rd Thursday in March (i.e 20th March) then they get the 10 points deducted this season - if it's after that date the deduction is next season.

[Royal Rother]

Decisions decisions - 19th or 20th March... football boardrooms up and down the country will be balancing it up.

[TFF]

Setanta are fooked

http://business.timesonline.co.uk/tol/b ... 395582.ece

SPORTS organisations including the Scottish Premier League may be forced to stomach deeper-than-expected cuts to their TV income after shareholders in Setanta failed to stump up enough cash to keep the broadcaster alive.

Setanta’s financial position was so parlous this weekend that it asked arch-rival BSkyB, which is 39.1% owned by News Corporation, parent company of The Sunday Times, for a £50m advance payment on a deal that would have seen Sky wholesale Setanta to its own Sky Sports subscribers.

The proposal of an interest-free loan, which was rejected, would have bridged the gap left by private-equity backers Doughty Hanson, Balderton Capital and Goldman Sachs, which have so far offered to inject £50m into the company.

Setanta, which has 1.2m customers, must now return for crunch talks with rights holders, including the PGA golf tour. After initially asking for a 15%-20% reduction in terms, the broadcaster is seeking to negotiate some of its rights deals down by 25%.

The company, which aired the FA Cup Final between Chelsea and Everton yesterday, got into trouble when it won the rights to screen only 23 Premier League fixtures per season from 2010, raising doubts over its future viability.

Refinancing negotiations are led by a new management team that includes chairman Sir Robin Miller, the Emap publishing veteran.

The stand-off between sports bodies and shareholders could yet force Setanta into administration. Insiders described talks with all parties as “fluid”. It has until June 15 to make a £35m payment to the Premier League. Deloitte is already advising the firm and would be appointed as administrator if required.