Fears for football clubs as Setanta crisis deepens

THE directors of sports broadcaster Setanta were locked in desperate talks to save the business last night, amid growing concerns that its demise could prompt a major crisis in Scottish football.

The Irish firm, which defaulted on a £3 million payment to the Scottish Premier League (SPL) earlier this week, cancelled its subscription services for new customers yesterday, after failing to raise desperately needed fresh investment.

As Setanta's board met in London to consider its next step, the accountant Deloitte was already on stand-by to act as administrator.

The broadcaster's demise could have dire consequences for a number of Scottish football clubs that rely on the income from television rights to remain solvent. The Scottish Football Association (SFA) said last night the game would survive whatever happened to Setanta – but warned that some clubs could be casualties.

Asked if clubs could go out of business, SFA acting president Campbell Ogilvie could give no assurances all would survive and admitted: "We have to accept that people and companies are affected, so there will be some impact on the game.

"We know there are problems within the game in general and that some clubs have maybe overspent at certain times. In any organisation, you have to allow for downturns. In football, as in business, there is risk management."

The SPL, which has already paid out £3m from its emergency central funds this week to its 12 member clubs, now faces a desperate effort to secure a replacement television contract in time for the 2009-10 season. But it has little hope of negotiating terms anywhere near as lucrative as the ones it has with Setanta.

The existing £13m-a-year contract had been due to expire in 2010, when a new four-year deal, worth £31m a season, would begin. The first indications of Setanta's financial difficulties emerged earlier this year, when it asked the SPL to renegotiate the terms of that contract.

Setanta, which also shows cricket, golf and rugby union, has been badly hit by the loss of most of its English Premier League (EPL) rights to rival British Sky Broadcasting.

The Irish broadcaster is losing an estimated £90m a year. With no prospect of being able to come up with its next scheduled payment of £30m to the EPL next Monday, administration started to appear inevitable.

In its attempt to piece together a rescue package, Setanta asked Sky for a £50m interest-free loan in return for access to its 46 live EPL matches next season as an add-on option to Sky Sports. The request was firmly rejected.

"Our job is not to fund other companies," Sky's chief executive, Jeremy Darroch, said yesterday. "This is a huge amount of money. We have been talking to Setanta, and trying to work with them and help them. But at the end of the day, we are not a bank. We are a broadcaster, not a supplier of working capital to a business and rights holder."

Mr Darroch denied Sky would be happy to see Setanta go out of business. "Quite the opposite," he said. "A rising tide lifts all boats. The more sports broadcasters there are, the better for sport. It is additional competition, and we welcome it."

ESPN, the Disney-owned American broadcaster, has been monitoring the situation and may step in to try to secure some of Setanta's contracts.

New customers attempting to access Setanta's online subscription service yesterday were met with a message saying: "Oops! Something has gone wrong…" Its customer services confirmed new subscriptions were unavailable but hoped the situation would have returned to normal by today.

SFA chief executive Gordon Smith admitted the Setanta situation was a concern but tried to play down the possible implications.

"I wouldn't use that word 'crisis'," he said. "We don't really know what is going on. It is an SPL broadcasting deal, but obviously it is a concern if there is a problem for the league.

"We have listened to what has been going on, but we have had no discussions with the SPL. So we have no real comment except to say that we hope it works out well. We know how important it is when you have a broadcasting deal that it works out."

The EPL should not be too badly affected should Setanta go into administration as the company won only one of the six live broadcast packages for 2010-13.

The Football Association, which has a £150m deal with Setanta for England internationals and FA Cup games has more significant problems, even though its agreements have been front-loaded in terms of cash being paid in advance.

Under a pre-arranged deal, ITV would take over the rights to up to eight England away friendlies for a pre-agreed sum. The FA Cup would provide more problems but it is understood the FA would approach ITV in the first instance to see if it wanted to take over any live games.

Setanta's sports

• English Premier League – 46 live and exclusive Barclays Premier League games, plus European league action, internationals and live FA Cup games.

• Scottish Premier League – Setanta dominates the market in Scotland, with exclusive broadcasting rights to all SPL action.

• Blue Square Premier – Setanta was set to screen more than 50 matches live this season of the top division of the Football Conference.

• IPL cricket – this year Setanta showed all 59 20/20 cricket matches live.

• US golf – The Setanta Golf channel follows the US PGA Tour, plus the Champions, Nationwide and Asian tours.

• Boxing – Setanta has deals to screen David Haye's biggest fights exclusively live in the UK and Ireland and has coverage of top US fights.