This close season, as always, is silly season with clubs around the world paying ludicrous prices, and even more ludicrous wages, for players who don’t deserve it. It is nothing new and with each passing year the amounts just seem to get higher and higher. Christiano Ronaldo’s transfer to Real Madrid of course has been the major talking point. £80 million is the reported transfer fee – thats about NZ$204 million. Real also purchased Kaka from Milan for a reported €65 million – another NZ$140 million.
Real, of course, can afford the money. Over the past four years they have topped the revenue league amongst football clubs – yes, even surpassing Manchester United. Of course they are world famous and have a huge following which generates much of their income but significantly the edge they have is their income from television rights. In 2006 Real signed a seven year deal with Spanish Pay TV company Mediapro for a staggering 1.1 BILLION Euros. Not bad money if you can get it. Mediapro now have exclusive rights to all Madrids games. Real’s huge annual income then seems assured for the next few years anyway…. or does it?
We are all aware that in England it’s the volume of television money from Sky which has enabled the Premiership clubs to shop at the top end of the market but perhaps what isn’t so clear is just how much the television money enables smaller clubs to stay afloat. And this can be said for the majority of countries around Europe.
TV money has become the major source of income, so it was a rather rude shock last month when Setanta Sports made public their financial problems and failed to make a payment to the SFA – a payment that was necessary for the ongoing viability of the SPL. Immediately, we were made aware that as many as five SPL clubs were facing insolvency. That is almost half the league! The Setanta contract was worth approximately £1 million per season for each club, and whilst the bigger clubs like Celtic and Rangers are relatively unaffected, for the smaller clubs this money was vital in them breaking even. There’s not many banks around that will allow a football club to trade in a million pounds worth of debt.
Before stopping their service in Britain, Setanta had almost three million subscribers but despite their popularity, they found the pay-tv market too competitive and as a result failed. Setanta also held partial rights to the Premiership and of course could no longer afford them. The Premiership, being the world wide commodity that the SPL is not, were able to quickly find a buyer and giant American network ESPN stepped in. From the clubs point of view there is little change. ESPN & Sky have offered to step in and save the SPL but their offers have been described as far too low by the Old Firm clubs who hold much of the power in Scotland. They may have little choice but to accept the offer. Because the Premiership is accepted as the strongest league in Europe, it can afford to command a fee, the SPL must take what it can get.
Scottish football remains in crisis and one suspects that in European terms they are just the tip of the iceberg. It will surely only be a matter of time before other leagues from smaller European countries are confronted by the same problem. At one end of the spectrum, a missed payment of £3 million plunges a whole league into crisis and at the other end, a club pays 25 times that amount for a single player. Its hard to believe it’s the same game.