SPL TV: a television soap opera

It had it all. The feuds, the brinkmanship and the wheeling and dealing in a small-screen drama.

By Paul McDonald

This article first appeared in Issue 1 which was published in September 2016.

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What Celtic and Rangers began pushing for was a revenue distribution model in excess of how Spain’s La Liga has operated over the past decade.
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I met with both Celtic and Rangers every single day. Every single day I asked them if they were up for it, and they said ‘yes’, until the April before we were due to launch when they turned around and said ‘no’.

£8.5 billion. Not the annual budget for a department of the NHS, or an amount ring-fenced to construct social housing, but the sum commanded by the English Premier League for global TV rights over the next three seasons. The team finishing bottom of the EPL in 2016-17 can console themselves with the knowledge that their broadcast revenue will be in excess of £100m. In accountancy firm Deloitte’s annual Money League report, clubs such as Sunderland, Swansea and Stoke are positioned to overtake Italian institutions Inter, AC Milan and Roma in the world’s top 20 richest clubs. The marketability of the Premier League has fundamentally changed the football landscape; the concept of a super league of the super-rich, one that has been threatened for years but for a multitude of reasons has never materialised, has now arrived, albeit via the side door.

Last September SPFL chief executive Neil Doncaster expressed his delight at an agreement reached with Sky and BT for the right to host Premiership games until 2020. From 2017, the 12 clubs will earn £18.75m per season, or £56.25m over the length of the deal. It’s perfectly conceivable that an English Premier League side will pay that amount on a single player before the season is out. And yes, comparing the riches bestowed upon the clubs south of the border to our modest returns is very often a meaningless exercise. But here it merely serves the purpose of highlighting how our paths have deviated in the past 15 years.

Back in 2000, the SPL was halfway through a £46m, four-year deal which guaranteed exclusivity of live matches for Sky Sports. Sky had backed Scottish football as well as the English game as it looked to position itself in the market as the principal broadcaster of football in the UK and the deal at the time, while still dwarfed by the then-English Premiership’s £670m deal between 1997 and 2001, was, in terms of market forces and relative size, something the clubs could work with. The league was expanded to 12 teams for the 2000-01 campaign and with genuinely bankable talent featuring on a regular basis teams were financially competitive. Furthermore, ticket prices hadn’t extended into dubious worth and as such the average attendance saw around 3.35m head through the gates (for comparison, in 2011-12 when Rangers were last in the top flight, the number of paying customers was 25% down on this number).

Not everything was rosy: Craig Brown’s failure to secure qualification for Euro 2000 triggered the chain reaction that led Scotland to Berti Vogts and 20 years in the international dead zone, but there was a degree of stability, just waiting to be crushed by the most unorthodox series of events.

November 2001. Chief executive of the SPL, Roger Mitchell, had been in discussions with Sky regarding a renewal to the current TV arrangement. Murmurings – in the media, but not perhaps in reality – suggested a grandiose range of numbers could be offered; £100m, £125m, even as much as £150m – in effect a 200% increase. Stewart Weir, journalist and editor at the Trinity Mirror Group at the time, recalls that Sky’s relationship was perhaps not as celebrated as some believed.

He recalls: “The first match of the 1998-99 season broadcast live was Hearts versus Rangers at Tynecastle, which drew excellent viewing figures, as did Aberdeen defeating Celtic at Pittodrie the following week.

“However, the third match shown was Dundee against St Johnstone which barely drew 20,000 viewers. The numbers were similarly unimpressive when Motherwell played Dundee United the Sunday after, and from that point on Sky was wary of the potential of Scottish football beyond televising the Old Firm every week.

“Sky had already decided by 2001 that they weren’t getting the value for money they had initially thought they would. I think Sky had sussed the Scottish game was all about four games a season – and so too had Mitchell, who was more realistic about the true net worth of any TV deal compared to some chairmen.”

As such, when the renegotiations begun Sky informed Mitchell and the SPL that an extension would only be agreed on the same terms as before – £46m over four years.

The timing was unfortunate, to say the least. The post-millennium dotcom bubble had yet to burst and so media rights in a variety of disciplines were being drastically oversold. In May 2000 Sky paid £266m to purchase Sports Internet Group (SIG), whose main online property was Planet Football, a site that accumulated just 1.5m unique visitors and is effectively forgotten today. In June of the same year, English football broadcasters went into overdrive, with Sky renewing their Premiership contract for £1.1bn, almost double the previous agreement. ITV paid £180m for the highlights package, while the BBC responded to losing Match of the Day by agreeing a £400m long-term deal to screen FA Cup matches live. The eye-watering levels of the sums involved were all eclipsed by the newly-formed ITV Digital and their valuation of the English football league – i.e. everything below the Premiership – at £315m in August 2001. Just nine months later ITV Digital defaulted on £180m of that sum, leaving the football league clubs with a gaping hole in their budgets for the next season. Director General of the BBC, Greg Dyke, claimed: “There is hardly anyone running a television company who doesn’t think that they paid too much.” This inaccurate appraisal of the worth of TV rights impacted Scotland at precisely the wrong moment.

Roger Mitchell and the SPL, well in advance of renewal talks with Sky, sought to find their own place in this volatile market. Mitchell explains: “For 18 months we had Mark Oliver and David Kogan, who worked as advisors to Richard Scudamore and the FA Premier League, independently value our rights and they produced a figure of between £60m-£80m per season.

“No-one in the market thought that the valuation was unrealistic given what ITV Digital and others had paid, and so when our clubs heard this there was an almighty fight about who was going to get the money.

“The Sky offer came in at £11.5m per year, precisely what they had offered for the previous four seasons. In December 2001 the clubs had Oliver and Kogan’s detailed report in front of them and they informed me that they wanted to reject Sky’s proposal.”

Oliver and Kogan’s analysis had not only taken into consideration the economic forces at play, but also that the Old Firm, with average attendances each in excess of 50,000, would be required to feature in the vast majority of matches in order to convince a broadcaster to subscribe to such a valuation. Any deal would need Celtic and Rangers totally invested in retaining their 40% share of the revenue for more than 80% of the TV time.

Mitchell adds: “On the £60-£80m, when you come up with a valuation like that, you are required to granularly value each and every game to derive your numbers. So we worked it out and when we had finished it was clear that 70-80% of the matches had to involve the Old Firm.

“I spoke to Rangers and Celtic just about every day at this point and they would say to me, ‘Roger, this report says that we are involved in 80% of the matches, but are only getting 40% of the income. Why is that?

“Eventually Celtic and Rangers said, ‘You have to change the distribution model of the SPL or we simply won’t sign [a new TV deal].’”

What Celtic and Rangers began pushing for was a revenue distribution model in excess of how Spain’s La Liga has operated over the past decade. There, Barcelona and Real Madrid have collected anywhere up to 45% of the overall TV income; in 2014-15 the Spanish giants earned €320m of the €760m available, while third-placed Valencia banked just €47.5m in comparison, ahead of Atletico Madrid (€41m). The folly of the disparity in Spain has destroyed the competitiveness of the league, particularly in the bottom half. Teams now treat a trip to the Camp Nou and Santiago Bernabeu with the same level of contempt the duopoly has shown them, and, in the main, merely put a cross through the fixture on the calendar.

The Old Firm were pitching for considerably more than 45% of the pot as they sought to increase the viability of the SPL by ruthlessly destroying the ability of the other ten teams to compete on anything akin to a level playing field. But these discussions proved to be completely superfluous. Their stubbornness, complemented by the remainder of the clubs’ belief in the SPL’s ability to markedly increase its broadcast revenue, sat in juxtaposition to the only real fact available: the Sky bid had been rejected, and another, from them or indeed any other network, was not forthcoming.

History has written Mitchell, perhaps unfairly, as the villain of this particular piece. The media were keen to portray him as the failed negotiator who had proven irksome enough that Sky weren’t willing to resubmit their offer. Indeed it was suggested that Mitchell’s relationship with Sky’s managing director, Vic Wakeling, had deteriorated to such a degree that the notion of the pair re-establishing a working relationship was unfeasible.

But Mitchell has made it clear that he simply relayed to Sky the message that the clubs wanted transmitted. After that, there was only one route left to explore: launching a standalone TV channel for Scottish football. At that point, SPL TV entered the conversation and it was, in effect, the emergency option.

“I wasn’t a visionary [for SPL TV],” he admits. “Did I know that people now would be discussing ingesting video online and all these other things?

“No, but we had no option. The deals were off the table and I had people asking me, ‘is this a goer?’, and I would say ‘yes it is!’ based around the numbers, the appetite, all of the factors that come into it.”

So, while interest from TV companies cooled, a straightforward model for SPL TV was devised. In the absence of a broadcaster willing to secure exclusive rights to SPL matches, the league would absorb the costs and logistics themselves and offer the final product via a subscription service. Granada TV were approached to produce highlights content in addition to ‘quarterbacking’ a minimum of two matches per week aired live on the station and SPL TV would be made available via Sky set-top boxes. (The network had piloted a similar idea in August 2001 known as Premiership Plus, where the consumer could pay a one-off fee to access an additional 40 live games a season. The channel was disbanded in 2007.)

Mitchell and his team worked through the marketing, production and subscription plans and re-enlisted Oliver and Kogan to derive a valuation of the fledgling channel. This time, their assessment was £40m-£50m per season; less than they believed could have been generated from major networks, but still substantial enough to represent a significant improvement on the Sky arrangement, despite the associated set-up expenditure. Oliver and Kogan were a hugely respected duo who, in addition to their experience with the Premier League, had provided consultation on various other media rights. Once again, their figures were taken as read; in January 2001 the clubs, including Celtic and Rangers, were fully on board, albeit largely due to an absence of alternatives. But as the days passed and the idea crystallised, the more unconvincing the calculations appeared.

Celtic and Rangers, via chief executive Ian McLeod and chairman David Murray, publicly maintained the mirage of support but their private concern prompted a deeper inspection into the project’s legitimacy. In their book Football In the New Media Age, Raymond Boyle and Richard Haynes reference a review from accountancy firm KPMG that began to establish inconsistencies in the numbers. In it, the recommendation to revise subscription figures would reduce the expected income figure for year one down to £15m, which was expected to grow as subscriptions increased. In order to reach these expected targets, an ambitious total of 180,000 were required to sign up, extended to 300,000 by year three, at a cost of £7.99 each.

Celtic and Rangers’ concern at this point wasn’t entirely down to the viability of the product; rather, according to Mitchell, their own long-term interests came into play.

He states: “The fact of the matter was that for Celtic and Rangers, TV revenues only represented maybe £2m per year to them – a small amount compared to season ticket sales, merchandising and such. But to the other ten clubs the money they received, around £750,000 each per season, was absolutely essential.

“They [the Old Firm] would still have made something in the first year of SPL TV. It wouldn’t have been as much as the £2m they were earning, but in general terms it wouldn’t have been that much of a financial issue for them.

“You need to remember that at the time the idea of moving our clubs – not just the Old Firm, but all of our clubs – to England had a lot of momentum. In fact [then-Celtic chairman] Brian Quinn said that it was ‘inevitable within the next five years’. People thought it would happen. And that’s where the full thing fell down.”

Put simply, Celtic and Rangers were wary of being tied into a domestic TV arrangement that, should the English league follow through with their flirtation, could foil what they deemed to be their ultimate destiny. They were also acutely aware that under the SPL’s bizarrely skewed voting system at the time, an 11-1 majority was necessary to ratify any motion. With their two votes the prospects of the channel were completely at their behest. Alongside the KPMG report, the Old Firm’s scepticism had begun to pique and though they remained invested in the idea a pivotal moment arrived when, in March 2002, ITV Digital collapsed.

The network’s commitment of £315m had led to its bankruptcy. The majority of football league sides had already spent revenue that never arrived.

It was at this point that Celtic and Rangers flipped. Sensing an opportunity, McLeod and Murray withdrew their support for SPL TV because, as Roddy Forsyth references in the Daily Telegraph in April 2002, ITV Digital’s demise had the potential to create open positions in the lower divisions as clubs went to the wall.

Their dissent commenced with specious threats and caveats to the conditions of membership to SPL TV; both wanted clauses inserted that could facilitate their swift exit should subscriptions not fall in line with forecasts. Then, their involvement was to be limited to a fixed term (yet to be agreed) where the success of SPL TV would be ultimately defined by whether Celtic and Rangers benefited from the arrangement.

Finally, it was rumoured that the Old Firm had held clandestine talks with Sky regarding the potential of creating their own standalone channels to air home matches, and although this mini-rumination quickly disappeared, the green and blue tide had already turned.

Mitchell recalls the day, April 7, 2002, when they eventually announced their withdrawal. “I met with both Celtic and Rangers every single day. Every single day I asked them if they were up for it, and they said ‘yes’, until the April before we were due to launch when they turned around and said ‘no’.

“The other ten clubs went absolutely berserk. They were asking, ‘who are you going to play?’

“It was clear that neither of the Old Firm wanted to be tied into a domestic TV deal while the idea of playing in England was an option.”

Celtic chief executive Ian McLeod, backed by Rangers vice chairman John McClelland, went on record to explain their reasoning; the expected subscription base and, by association, revenue figures should have been reassessed to a more realistic level in the aftermath of ITV Digital’s demise, and cited a ‘lack of clarity’ in the SPL proposal.

As Mitchell suggests, the remaining ten SPL clubs were indeed apoplectic at this insubordination. On the one hand, the Old Firm patently felt weighed down by the responsibility of supporting the smaller clubs by virtue of TV deals that were worth far less without their involvement. Conversely the Gang of Ten (as they collectively and boorishly became known) had long grown weary of the Old Firm’s self-importance and the manner in which they perceived playing in Scotland as a necessary chore until a better offer came along. That particular argument could just as likely take place in a boardroom next week, let alone 15 years ago, but at the time the Old Firm underestimated the Gang of Ten’s response to the SPL TV betrayal. They tendered their resignation from the SPL, commencing from the 2003-04 campaign, with officials from Aberdeen to Edinburgh spitting forth fury.

Hibernian managing director Rod Petrie said: “The Old Firm killed this channel. They voted against it, undermined it and took a decision that meant the channel was massively damaged.”

Aberdeen chairman Stewart Milne added: “I think they were quite shocked and taken aback. I don’t think they believed that the ten clubs would do that. Perhaps that was part of the problem. What we are seeking to do is get Scottish football into a position where the majority dictate the progress of the game – not the minority.”

Chris Robinson, Hearts’ chief executive, was more diplomatic: “I think all of the clubs have got to do what they think is in the best interests of the game as a whole. The feeling is that they wanted us to go ahead and no longer be an oppressed majority.”

With two sides so diametrically opposed in their objectives, the territorial positioning was unlikely to last for too long. In May reports leaked of conversations between Murray, Celtic shareholder Dermot Desmond and Keith Harris, chairman of the Football League, and amidst the fiscal chaos a 26-team first division was floated, with the Old Firm in tow. The Gang of Ten maintained their poker face and eventually the speculation receded; it soon became clear to all parties that a reconciliation of some kind was necessary to avoid the 2002-03 season descending into farce.

In late May tentative steps were made to bring both sides to the table, the Gang of Ten only willing to reconsider their resignation if a change to the voting system, from an 11-1 to an 8-4 split, was endorsed. The Old Firm dug their heels in, and with each unsuccessful impasse the first fixture of the new season edged ever closer with no camera in place to capture the action.

By the start of July, however, Celtic and Rangers came to the realisation that Scottish football, in the short term, was their only home and so conceded to a new voting structure, and a slight reduction in their joint television revenue. All they needed to do now was ensure that revenue represented more than zero.

The recession in the media market, with ITV Digital the first domino to fall helping to create a Europe-wide re-examination of broadcast rights, meant there weren’t many offers. The BBC stepped forward holding all of the power. A two-year, £16m deal was agreed, £7m less than Sky’s initial offer and a lifetime away from the figures quotes by Oliver and Kogan. Reality had bitten. Hard.

Doomsayers in the years since SPL TV was buried have correlated the events around its demise with an economic malaise that the league has never escaped from, but while the tittle-tattle and fantastical financials hardly helped, clubs were already chasing an undefinable dream.

As these events unfolded, Motherwell entered administration, with owner John Boyle required to invest £11m of his own money to balance losses of more than £2m per season. Boyle cited the SPL TV collapse as one of the contributing factors, but Andy Goram, John Spencer and Ged Brannan had been tempted by unfeasible salaries long before SPL TV was ever mentioned. The club’s wage bill represented 97% of their earnings and they weren’t the only ones involved in such recklessness. Dundee and Livingston held similarly unsustainable ratios, and the former followed Motherwell into administration a year later. But it wasn’t the SPL who signed Claudio Caniggia and operated with a 42-player first team squad, or who brought in Fabrizio Ravanelli and Craig Burley two months before administration arrived with the club losing in excess of £100,000 per week. Livingston, too, were naïve in expecting significant following for a club so freshly in existence given the tribal nature of supporters. They lasted until 2004 before the Royal Bank of Scotland came calling for unpaid debts.

TV deals have also come and gone since – the decision to side with Setanta in 2007 and reject Sky (once again) proved calamitous, with Setanta’s UK operation going bust in 2008 leaving an initial £3m debt unpaid and a TV contract worth less than nothing. But SPL TV was undoubtedly a turning point, primarily in terms of how Scottish clubs and, indeed, external influencers viewed what could be extracted from a league where only two teams can ever realistically compete.

Mitchell has, for a decade and a half, denied that SPL TV was his vanity project but feels that it could have set Scottish football in the role of the ambitious trendsetter – for a short while, at least.

“Do I think it was ahead of its time? 100%. In fact I would say it was maybe ten years ahead. If it had happened I think we could have been seen as leading the field. In year three, if the marketing plan was right, we would have reached our subscriber numbers and other leagues might have looked at our model and wanted to follow.

“But really, it also comes down to the size of the market. We would have got plenty of credit for being creative and innovative, but we would still have been small fry because there are only five million people in Scotland.”

The ghost of SPL TV has reappeared in the corridors of power more than once since 2002, most notably in 2011 when chief executive Neil Doncaster unimaginatively made reference to “a number of European leagues going down this route or exploring the option [of their own dedicated channel]”, but with Rangers’ participation in doubt a deal was done with Sky in August 2012 on reduced terms. Perhaps SPL TV was just never meant to be.

Could it have been a success in this day and age? Mitchell is of the opinion that the quintessential Scottish football supporter is far more interested in club rivalry than sustained quality and so, in that case, the model still works.

“The fact is, does it matter that Henrik Larsson doesn’t play in Scotland? Is the appetite less?” Mitchell asks. “Some Scottish football fans don’t care about the quality on show, or whether they can hold on to a young player for longer than a season. It’s all about being able to turn up with your mates. The level of one-upmanship and bragging rights is more important. Therefore, if you have potential customers that are unconcerned by the standard of football, then the subscription numbers don’t need to be particularly different.”

Stewart Weir, however, feels that by televising a number of Scottish matches, more people were exposed to the distinct lack of depth in the division.

He states: “Archie Macpherson once told me he used to commentate on games during the 70s and 80s that were dire, and he wondered how anyone could edit fifteen minutes of highlights. But they did, and made every game, goalless or a 5-5 draw, look like the best game ever.

“With the Sky deal and so many live games, people sussed Scottish football – outside the Old Firm – wasn’t that great. After all, would you pay £150 a year to watch Scotland’s top flight?”

How we consume football is continuing to evolve and so it would be of no surprise if the concept of SPL TV was to infiltrate the conversation once again, albeit with a refined prototype that places emphasis on online streaming, particularly on mobile devices. We want to consume content on our terms, when we want, in the length we want, from live matches to brief highlights. We don’t want to, say, wait until 10.30pm on a Sunday night to watch our team when the fixture finished 36 hours previously.

Concurrently, the value of our game has battled to find some sort of equilibrium. From the irresponsibility at the turn of the millennium through the collapse of Setanta and into our current deal, we finally seem to be in a more comfortable position. But sometimes you are left wondering; teams such as Hull, West Brom and Sunderland are no more palatable or watchable than a strong Aberdeen, Dundee Utd or Hearts. How different would our game look if SPL TV had been a successful venture?

This article first appeared in Issue 1 which was published in September 2016.

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