The Latest In Football Economics
US sports team owner has bought ITV's 9.9 per cent stake in Arsenal for about £42m, laying out another £23m for the broadcaster's 50 per cent share of Arsenal Broadband Limited, the club's internet site. Kroenke Sports Enterprises already has a commercial and marketing agreement with the North London club and Mr Kroenke issued a statement saying, 'Because of our long-time involvement in major sports, we greatly admire Arsenal Football Club.' Arsene Wenger suggested that because of what he had seen at Arsenal, Mr Kroenke may have wanted a closer association with the club. However, Mr Kroenke may well be considering a full bid. A real estate developer and billionaire, he is married to Anne Walton, an heir to the Wal-Mart fortune. Three shareholders, led by Danny Fiszman, control more than half the stock in Arsenal. However, if just one of these shareholders were to give way, it would put pressure on the others. Premiership clubs in Manchester, Birmingham and Liverpool are now American owned and it may be just a matter of time before a major London club joins them.
Setanta Challenge Ahead
Some analysts think that Setanta Sports may have overpaid for the rights to the FA Cup and England's home international matches. Setanta has about 250,000 subscribers but needs to hit the 1 million mark to break even. It is planning a marketing push and is spending £15m which is small beer compared with the £70m spent by BSkyB last year. With its channels available on satellite, cable. digital terrestial and TV on the internet, one aim is to reach sports fans who want to watch games at lower prices than BSkyB. It has also joined Virigin Media, BT and Top-Up TV in a complaint that led Ofcom to launch an investigation into whether BSkyB's dominance was preventing the pay-TV market from functioning properly. Setanta started out as a proper commercial operation in 1992 showing coverage of Gaelic football and hurling games in the Irish expatriate market in UK pubs, but its football breakthrough came in 2004 when it won live rights to the Scottish Premiership from the BBC. Benchmark Capital, the venture capital group, bought a 40 per cent stake in 2005 and last year Goldman Sachs and other financial investors put in €315m. These investors will want a return in the short run and there has been speculation about whether Virgin Media or ITV might make a bid.
Sheffield United Boosted by Premiership Revenue
The benefits of being in the Premiership are clearly demonstrated by the figures released for Sheffield United for the six months ending 31 December 2006. Turnover was up by 27 per cent to £25.8m. Operating profits before amortisation of player registration amounted to £4.2m compared with losses of £0.8m in he same period in 2005. Pre-tax profit was £1.5m. Sales from sponsorship, hospitality and merchandising increased by 46 per cent to £4.1m. There is clearly an appetite for Premiership football in Sheffield with an average crowd of over 30,000 making it the 11th best supported club in the Premiership. The only cloud on the horizon is the threat of relegation.
BBC and Sky Lose Out
The BBC's and Sky's eight year grip on the rights for FA Cup and England home matches has been ended by a joint bid by ITV and Setanta that is worth £106m more a year. ITV and Setanta will pay £425m for four years from August 2008 with ITV paying £275m and Setanta £150m. ITV will have 16 FA Cup games per season, including the final, plus 18 England games and eight friendlies over four years. Setanta will have six FA Cup games, three England friendlies, Community Shield and all England under-21 games. ITV takes broadband and mobile phone clip rights for all FA Cup and England games. ITV has paid £3m a match for the games which is more than three times the cost per hour of peak-time drama. Admittedly, BSkyB did pay nearly £5m per Premiership match, but ITV has no pay-television business to help it offset the costs. What this shows is the importance of attracting young male viewers who are the most attractive to advertisers, especially beer and car makers. ITV needs to make friends in the game as it made enemies through the collapse of the ITV Digital deal. Clubs are unlikely to see big benefits from the new deal as much of the money will help the FA to service the debt incurred on rebuilding Wembley.