There has been a lot of discussion recently about how Sky would walk away if RFC are demoted to SFL 3, but no facts to back up the statements. In this post I will use official viewing figures of SPL matches during season 2010-11 pre split to demonstrate that financial losses to clubs outwith Rangers and Celtic may not be as drastic as is being reported.
All figures below relate to season 2010-11 pre split.
The 3 OF games are 33% of the SPL’s total viewing figures.
Sky add approx. 100% to viewing figures for their matches (ex. OF games). This is the average viewing figure for matches including RFC & CFC. This figure varies when looking at individual matches however it is broadly correct, therefore a claim that Sky have better matches than ESPN cannot be made.
Matches involving non OF teams have an average viewing figure of 43% (Sky) and 41% (ESPN) of the average game involving either Rangers or Celtic. This figure is also massively skewed by a St Mirren v Hibs match immediately following an OF game, which had double the audience of the next highest non OF participating game.
There are more figures and stats available (links to my spreadsheets and the source of viewing figures below) however it is apparent that if you remove the 3 OF games Sky would have a legitimate case to reduce the new SPL TV deal (£80m over 5 years, between Sky and ESPN) by 33%, possibly more due to the increase in costs of televising 37 matches as opposed to 3.
We then lose a further 27% (of the remaining 67%, which is generous) due to no RFC matches being broadcast. Therefor the total reduction in viewing figures, by removing Rangers and assuming the people that watch Rangers matches do not watch any other games, is 49%.
There does not appear to be a correlation between success of non OF teams and increased viewing figures, however, Motherwell v Hearts achieved the highest viewing figures for a game not involving either of the OF and they both finished in the top 6 that year, Hearts 3rd.
It could therefore be argued that clubs with larger fan bases, Ie. Hearts, Hibs and Aberdeen, success could bring a rise in viewing figures.
My conclusion, based solely on viewing figure, is if RFC are relegated, Sky/ESPN WILL slash our TV deal by 50%, minimum. I wouldn’t be surprised if Sky walked away and left it all up to ESPN who now have a shortfall of British football, after losing EPL rights. This would have a damaging effect to all clubs sponsors due to the probable 50% reduction in viewing figures from being on ESPN. It would however be good for armchair fans who would only have to shell out £11 a month for all SPL matches.
Further, I note that Sky/ESPN use SPL football as a filler for their EPL football and they may not be overly concerned with a drop in viewing figures caused by no RFC matches, however it would be naive to belive that they would not use the above statistics to negotiate a drop in price.
Prize Money
Below is the existing (estimated) prize funds for the SPL this year. The total pot consists of £13m from TV revenue by Sky/ESPN, and £3m from other sources (BBC highlights, radio, foreign TV, sponsorship etc)
The second column contains the estimated prize total with a reduction in the £80m over 5 years deal to £40m. With £3m a year added as above. (figures rounded to nearest £10k)
1st £2.72m £1.87m
2nd £2.40m £1.65m
3rd £1.52m £1.05m
4th £1.36m £0.94m
5th £1.28m £0.88m
6th £1.20m £0.83m
7th £1.12m £0.77m
8th £1.04m £0.71m
9th £0.96m £0.66m
10th £0.88m £0.60m
11th £0.80m £0.55m
12th £0.72m £0.49m
Loses in revenue ranger from just over £200 for finishing 12th to almost £900k for finishing 1st. The major losses are weighted heavily at the top of the table Ie.1st and 2nd places.
Redistribution of Wealth
The points above paint a pretty bleak picture not just for Celtic, who presumably would finish 1st, but also the rest of the teams who would have to swallow a minimum £200k a year. However if Rangers were to be expelled from the SPL it is assumed that the remaining clubs, bar Celtic, would vote to redistribute the prize money for the SPL from the current system which gives a large proportion to the teams finishing 1st and 2nd. I have estimated the likely redistribution of prize money (linked below) with a reduced TV deal.
This creates an even bleaker picture for Celtic. However if Rangers are removed from the SPL every team will finish 1 place higher than they normally would, except Celtic obviously. The second column below is the loss in prize money from the current season, with a reduced TV deal, with redistributed prize money (as per column 1) but also taking into account the fact that each team would finish 1 place higher. Ie. Motherwell this year finished 3rd being awarded £1.52m if Rangers were not in the league Motherwell may finish 2nd and would be awarded £1.42m, a loss of only £100k.
1st £1.60m N/A
2nd £1.42m £0.10m
3rd £1.26m £0.10m
4th £1.09m £0.19m
5th £0.99m £0.22m
6th £0.87m £0.25m
7th £0.77m £0.28m
8th £0.71m £0.25m
9th £0.65m £0.23m
10th £0.60m £0.20m
11th £0.55m £0.18m
12th £0.49m £0.49m Gain
The maximum any club would lose would be £280k for the club finishing 7th. The biggest winner would be the team in 12th who would have been in the 1st Division. Celtic would be far in the way worst off with a reduction in prize money of £1.2m.
Delayed Effect
The new TV deal would not take effect till 2013/2014 so the above would not come to fruition until year 2. In the mean time every club would have benefited from a £200k windfall due to an automatic increase in league position for the season 2012/2013, without Rangers. This completely negates the loss that would be felt be almost all clubs for the following season. With only 4 clubs standing to lose between £50k and £80k over the two seasons. The big reduction would come in year 3, when all clubs would be even for the 3 years or in a losing position to the tune of up to £360k (1 club only).
After this 3 year period it is expected that Rangers would be back in the SPL and presumably, Sky/ESPN would increase the amount on offer to near what we have at the moment.
Therefore the thought that Rangers leaving the SPL would decimate Scottish football is a fallacy. A handful of teams would lose in the region of £200k to £300k over 3 years, the rest bar Celtic would near enough break even.
Increased Competition
None of this takes account of the revival that would be seen in Scottish football if the main contender for the championship saw their budget for the season slashed by over £1m. This would make an enormous difference to the ability of other clubs to compete with Celtic week in week out. I would still not expect another team to win the league, but it would be a closer affair than at the moment.
Rangers being expelled to the 3rd division is not only, not bad for Scottish football, it appears it will be a boon! The only people who will benefit from RFC playing in the SPL over the next 3 years are Rangers and Celtic, just like the last 15 years.
Sources
http://www.kilmarnockfc.co.uk/staticFiles/71/72/0,,10291~160369,00.pdf
https://docs.google.com/spreadsheet/ccc?key=0AsDbjb5N2ysUdDFpMDBYTUY1enlRR3I5QlFtZVg3clE
Note: The spreadsheet is not the sexiest I have ever produced, it is not terribly clear but is provided so numbers can be verified.
Cloud cukoo land but hey Rangers fans don’t want to be with scum, We want a 3 year holiday. We’ll revisit your tabs then. Hopefully Kilamrnock will still be in existence.
Excellent comment. Kilmarnock may or may not be in existence, but one thing is for sure Rangers FC are no longer in business. You need to get used to calling your new team by its correct name.
You also have to take into consideration the attendances if Rangers were to be placed in the SFL3.
With no away support going to matches have you worked this out on how much each team in the SPL except Celtic would lose each season, that would be interesting.
Dons Supporters Together have already been public with figures, that have been approved by Duncan Fraser of Aberdeen FC, which state Aberdeen would need to sell 300 extra season tickets to nullify the loss of RFC fans. They also stated that Dundee would bring large crowds to Aberdeen which would reduce that number further. It is speculated that Dundee bring 1000+ fans to Pittodrie for a game.
Very little after policing costs and damages have been paid for
As regards “lost” revenue from gate money – there’s plenty anecdotal evidence that people don’t go to their own club games when Rangers visit for a variety of non-football issues – I am not sure where you might get hard stats on that Lee, but I’d be interested to see them. You would have to factor in that the remaining SPL teams would still be playing a game – and it would be one that their fans would be hoping to win as it would be against the team replacing what was previously Rangers.
If you wanted to go further you should probably factor in the boost to revenues that all these additonal Rangers fans visiting grounds in Peterhead, Arbroath & Dumbarton as they travel back up leagues 3 to 1 and again, it would probably be a boost for Scottish football as a whole.
Who would have thought so much good could come from so much wrongdoing?
Yep, you came to the same conclusions I did based on St.Johnstone. The finance argument has been invented and never proven. I sent my workings and article to Saints, and all other 10 SPL clubs asking them to point out where I was wrong if I was… no one has responded. #notonewco
http://saintinasia.wordpress.com/2012/06/04/saints-without-rangers-a-question-of/
I’d like some number cruncher to see if they can determine just how much Sky, ESPN, or whoever will pay for the rights to broadcast SPL games if (when??) The Rangers are voted into the SPL and they (the broadcaster) suddenly realises that The Rangers are a busted flush due to not being propped up by
David Murray’s business empirethe Bank of Scotland and various unlikely to be repeated sources in the same manner as the last 20 years: £40m Joe Lewis, £20m Dave King, £51m MIH write-down, £20m JJB, £30m NTL, £4m tax, £45m tax, £14m tax.Now consider the amount of money gained on the back of that, remembering that Rangers non-CL/EL income is approx £35-40m, although being kind we’ll say that it is £40m.
Since 99/00, and not including 2011′s figures (as they are slimmer on content and certainly shadier than Marshall Mathers III), Rangers have posted £561m of income, of which at least£120m is absolutely directly attributable to European competition. Add to that, the Dave King money (2000), various tax dodges (~£65m), JJB (~£20m), MIH debt to equity (~£51m) and of course the various sums taken by out-sourcing parts of the business.
I think we can postulate that Rangers, in the 11 seasons from 99/00 to 09/10, Rangers have benefited very directly by easily £200-250m that The Rangers could not ever count on.
Think about that for a moment.
Being handed £20m+ per season still couldn’t prevent them going bankrupt.
Being handed £20m+ per season still couldn’t prevent their nearest rivals winning the same amount during that period.
Being handed £20m+ per season still couldn’t prevent them finishing 3rd
Being handed £20m+ per season still couldn’t prevent them being knocked out of Europe by the giants of Kaunas, Malmo and Maribor.
And being handed £20m+ per season still saw them sold for a single shiny (presumably it was shiny) pound coin.
We are to believe that the SPL needs The Rangers. And apparently they need to be strong, as Rangers once were.
I ask: who is going to pay that £20m+ per season for The Rangers to be strong?
What a superb post, dirtymac!
This well-researched and coherently argued article is yet another direct hit on the already mortally wounded argument that Scottish football will perish without the presence of RFC in the SPL. The evidence in the original post is further supported by some excellent comments.
What they all show is simply that most clubs will have to budget carefully and restrain themselves from spending more than they can afford. That’s hardly a revolutionary innovation in the principles of sound business practice.
Articles like this are the reason that more and more fans of (almost) every club in Scotland are ignoring the media scare-stories and are instead becoming increasingly determined to insist that the football authorities finally do the right thing. Great work.
what about european appearance money… without rangers in europe… more teams will have a shot at europe and therefore more income from these money spinning one ofs with like of real madrid, etc etc
The financial outcomes of being in Europe are so vastly different depending on which competition you are in, which stage you enter, which teams you may play, that it is almost impossible to quantify how much money it would make, if any. Remember if a team plays in European competition the players receive bonuses which would swallow a large portion of the windfall. There is also speculation that the early rounds of the Europa league actually cost clubs money, as they do not get the large crowds costs for staffing the stadium and security, floodlighting etc cost more than they take in.
The benefit of Europe is in being guaranteed it for the OF as they are able to offer players smaller salaries with large bonuses for playing in Europe. Whereas a team like Aberdeen may offer the same player a similar contract but he is unlikely to take it as Aberdeen are unlikely to be as successful as the OF.
I think your assumption of only a 50% drop in the value of the TV deal is very optimistic. As you say Sky could walk away.
ESPN might not want to take up Sky’s share of the games, and if your figures of a 50% drop in audience are correct, they might offer only half of what they contribute to the current deal i.e. £20 million.
If Sky walk away that would leave ESPN as the sole bidder, with the possible exception of BBC Scotland. They could offer the SPL a take it or leave it deal of as little as they like. As long as it is worth more than BBC Scotland can afford, which won’t be much given their budget has been cut by 16%.
You also say that the new TV deal doesn’t come into effect until 2013/2014 but both the BBC and STV say that it starts in 2012/2013.
http://www.bbc.co.uk/sport/0/football/15824173
http://sport.stv.tv/football/clubs/aberdeen/281116-spl-announce-new-tv-deal/
If that is true it puts Sky and ESPN in an even stronger position. The BBC’s budget for this year will have already been decided and they will struggle to find any extra money to bid for live SPL games and there is no way the SPL can set up their pipe dream of their own TV channel before the start of the season.
If the new TV deal does start this season it also blows a fairly big hole in your figures and argument. The clubs will not benefit from a £200k windfall and that won’t negate the loss that would be felt by almost all clubs for the following season.
It is also optimistic to suggest that the £3 million from other sources such as overseas TV and sponsorship won’t be affected by Rangers being outside the SPL. Any company thinking of replacing the Clydesdale Bank as SPL sponsors are going to use Rangers absence as a tool to bargain down the cost of sponsorship. As an Australian resident I can tell you that the only interest in the SPL and Setanta’s TV coverage of the league is in the Old Firm.
Finally there is the matter of individual clubs sponsorship deals. If any of them run out in the next couple of years you can bet that companies will use the reduction in media exposure caused by Ranges not being in the SPL as an excuse to reduce the amount they pay.
In short, using your optimistic assumptions “A handful of teams would lose in the region of £200k to £300k over 3 years”. If the BBC and STV are right and the new TV deal starts this season all clubs will lose an additional £200k.
If the TV companies and sponsors use Rangers absence the SPL as an opportunity to play hard ball every club losing between £200k and half a million over the next three years could be very much a best case scenario.
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Have come late to this party having been promopted by saintinasia blog. Excellent critique of the numbers being bandied about by SFA/SFL. Have you sent your numbers to SPL and SFL clubs and if so did you receive any response?
There is a great need for transparency at the moment and the MSM are not doing it. It would be interesting to see if Mark Daly or Alex Thomson could use your analysis and saints recent projections on values.