Sky Sports & Football Broadcasting Rights in Scotland

It has been suggested that if a NewCo Rangers is not admitted in the first two top leagues in Scotland, then Sky would have to cancel the current broadcasting rights deal. It is unknown what ESPN would do in such an event. If that is the case, it is not necessarily a pessimistic outcome, nor one that could affect the finances of the SPL clubs in a negative way.

It is arguable that both Sky and ESPN received a rather good bargain, regarding the SPL's broadcasting rights, after the collapse of SETANTA. You cannot blame the two broadcasters for negotiating a TV deal favourable to them, which under the circumstances, it was considerably low than the true and actual value of these TV rights. It is, of course, a matter for negotiation and those who are selling the product must ensure that they use alternatives that could create a viable bidding process. Such alternatives, of course, could only derive from an attractive product and it is up to those who run the national game to create ways of making the product more attractive. We are of the view that this could be achieved.

The current deal runs until the end of the 2016-2017 season and it is worth an estimated £80 million. We understand that the current deal was achieved on the premise [and Sky's insistence on it] that there would be four Celtic v Rangers games per season. This, of course, could not be a method of effective negotiation, at least not for the rest of the clubs in the SPL, as the SPL negotiates collectively and attention must be paid to the wishes and needs of the other 10 clubs in the league. One would argue that without the two big 'guns' in the league, broadcasters would not offer the best possible deal, as the current agreement indicates. We are not convinced this is entirely accurate.

It could be argued that with Sky's insistence on four Celtic v Rangers games per year [which under the present circumstances could not happen], the SPL could not expand. Such situation is probably no longer viable, given that Rangers are no longer eligible to participate in the SPL. This opens the ground for the SPL's expansion. With 16 or 18 clubs in the top flight, more teams could offer a different perspective in the competition. This could have sporting and financial advantages that we plan to analyse in a different post. 

The expansion of the league would raise the sporting and financial standards of the teams that could be admitted into it and it would give the SPL a stronger position in terms of negotiating a new TV deal. Clubs need to assist in this situation too. They need to lower their ticket prices in order to attract more people into their grounds. This would possibly create a domino effect, as potential sponsors would be interested in advertising in grounds that are 'packed' with people. Any loss of revenue from the decrease in ticket sales would probably be recovered from an increase in the sponsorship agreements. When there is a plethora of sponsors waiting to advertise their products, the clubs automatically have a powerful negotiating tool in their hands, in that, their product becomes more attractive. When the product is attractive, the potential TV broadcaster would want to gain exclusive rights, given that other competitors would attempt to gain similar rights.

Finally, one may suggest that the above analysis would require the continuation of collective bargaining agreements. We do not argue that this an absolute scenario, nor do we argue this from a literal or teleological point of view. In the case where individual clubs decide to negotiate their TV rights on their own, rather than collectively, via the SPL's central role, then the dynamics would certainly change, but not necessarily in a negative way.

We understand that in every negative situation, there are always positive scenarios. We advised, recently, a major European league on a collective bargaining agreement deal and we identified several ways in which a league can make its product more attractive. Scotland has a major advantage, in that it is a footballing nation. The ingredients are present, but they need to be brought together by those who organise and run the game. We have suggested some ideas here,  although such ideas may have been considered already. We are of the view that Scottish football has the dynamics to become more competitive and, therefore, more attractive.

Dr. Gregory Ioannidis

1 July 2012