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Wanna Argument?
Falling out of love with football?
How do you finance the football dream?
In an earlier argument we looked at the impacts of the massive income generating TV deals made with the football industry. As events have moved on, it's clear that the inflationary cycle of TV payments to football clubs is coming to an end. But if the overall cake is smaller, it's a fair bet that the larger clubs' slice won't shrink. So how do
clubs reach this size and status where they stand to be the big winners in future settlements?
There are, it seems, a number of models for building commercial success in football. The relative lack of competition at the very top of the game (illustrated by Manchester United's dominance of the English Premiership) is evidence of the difficulty in finding a reliable formula. In business terms the Premiership could hardly be termed a competitive or 'contestable market'.
ITV Digital
ITV Digital was first launched in the UK in 1998, but it was then branded as OnDigital. It wasn't until April 2000 that it was re-branded as ITV Digital. The company is jointly owned by the media firms Granada and Carlton Communications each of whom have a 50% stake. Granada is the largest company in the UK running commercial television operations and owns seven of the major ITV
licences. Carlton is smaller in television terms, but is the other main player owning the ITV licences for London, Wales, the Midlands and the South West of England.
ITV Digital signed a deal with the Football League worth £315m to broadcast the league matches for three years. However, they have been forced into liquidation by the high costs of trying to compete to gain subscribers and by lower than expected subscriber growth. This has meant higher than expected fixed costs which has therefore raised the level of break-even. This combined with
what may have been an over-optimistic business plan has led to the failure of the business. The pay to view stations were finally switched off on May 1 2002 when it seemed clear that there was not enough interest from prospective buyers. The Independent Television Commission (ITC) will now offer the licences for sale again.
Let's go back to the argument to see what the two ranters make of some of the efforts to build a money-spinning football club.
