SBD/Issue 181/Sports Media

Setanta In Crisis Talks To Stay Afloat, Avoid Administration

Premier League Clubs In England, Scotland
Awaiting Millions Of Pounds From Setanta
Setanta was "in crisis talks yesterday in an attempt to stay afloat," and if the company "fails to broker an 11th-hour deal with its backers, then the accountancy firm Deloitte could be appointed as administrators within days," according to sources cited by James Robinson of the Manchester GUARDIAN. Setanta declined to comment on the matter. If the company collapses it would have "serious consequences for Premier League clubs in England and Scotland, which are awaiting payments totaling millions of pounds." The EPL is "confident it can resell the rights to the 46 games Setanta holds for the 2009-10 season, the final year of its contract," and the league also "believes it could match or exceed" the US$256.7M Setanta paid for the rights "to screen 23 Premier League games each season from 2010-11 if they are put out to offer." Sky Sports "could pick up one of Setanta's two Premier League packages for the 2009-10 season but it is barred from buying both under competition rules." Robinson notes while Sky Sports has been "British sport's major benefactor since the late 80s," Setanta has assembled an "impressive portfolio of rights, wooing less high-profile sports with the promise of more money" and spending close to US$806.7M in under five years. Setanta also owes money to the PGA Tour, boxing organizations, cricket's Indian Premier League, rugby's English Premiership and England's Football Association (FA). The "most powerful sports bodies, including the FA and Premier League, privately claim they have water-tight contracts with Setanta," and they argue the financial backers "have effectively guaranteed Setanta's payments." If Setanta does "go under, that claim could ultimately be tested in the courts." Robinson writes, "Not everyone would rue Setanta's demise but its collapse could herald the end of a golden era for British sport and the vast sums of money on which it has gorged itself for more than a decade" (Manchester GUARDIAN, 6/9).

DEFAULTING ON CONTRACTS: Sources said that Setanta "could be placed into administration later this week if new funding could not be secured for the business," and such a move would "threaten 430 jobs, including about 200 in Ireland." In Ireland, Ciaran Hancock notes Setanta "has recently tried to renegotiate" its sports rights contracts, "in some cases seeking to shave 25[%] off the costs." Setanta also owns rights to the Scottish Premier League (SPL), but the company yesterday "missed another" US$4.8M payment to the SPL, putting Setanta "in default of its contract with the SPL, which only recently agreed to a new four-year deal with Setanta for live rights to Scottish soccer." Setanta also is due to pay about US$55.6M to the EPL "later this month as part-payment for its live rights" (IRISH TIMES, 6/9).

Ripples From Disappearance Of
Setanta Would Spread Broadly
LEAGUES TAKE A HIT: The FINANCIAL TIMES' Fenton & Blitz report the EPL yesterday was "taking a tough line with Setanta." An EPL source said, "If people can't run their businesses properly and enter into arrangements they can't fulfil, that's not our fault." Meanwhile, Setanta currently has a five-year deal worth US$202M with the SPL, and Liverpool Univ. professor Tom Cannon said, "It would be very hard to replace Setanta at anything like the rates they are paying currently. The ripples from the disappearance of Setanta would spread very broadly" (FINANCIAL TIMES, 6/9). In London, Ian Fraser wrote the "problem for the SPL is that there is no queue of rival broadcasters waiting to rush in and compete." Fraser: "Having been rescued by Setanta earlier this decade, perhaps it is time for Scottish football to return the favour?" (LONDON TIMES, 6/7).

EVENTS LIST A TAX ON SPORT? In Manchester, Mark Sweney reports BSkyB has "attacked the government's review of the so-called 'crown jewels' sporting events reserved for free-to-air television, arguing the policy acts as a 'tax on sport' that subsidises terrestrial broadcasters." BSkyB also argues that the policy "reduces competition for media rights," and the broadcaster believes that sports governing bodies "should be allowed to make their own decisions to maximise the value of their TV rights, free of political interference." BSkyB in a filing with the U.K. Department of Culture, Media & Sport said, "Listing an event against the wishes of a sports body means that it becomes a forced seller of its rights and denies it the ability to get a fail deal from its chosen broadcast partners." BSkyB CEO Jeremy Darroch today "staunchly defended BSkyB's position" in the debate over cricket's potential inclusion on the list, saying that terrestrial broadcasters "have no appetite for providing the extensive coverage that it offers and which is needed to build the profile" of the sport (GUARDIAN.co.uk, 6/9).

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