Can Scottish football afford Rangers in the bottom tier?

 

The Scottish Premier League clubs have spoken. They have officially rejected the transfer of the SPL share from Rangers’ old company to the new company, meaning in all likelihood one of Scotland’s biggest and most successful teams will be playing in the Scottish Football League next season.

The financial collapse of Rangers has shocked many and will have a hugely significant impact on Scottish football, and indeed Scottish society.  Rangers playing in the First Division/Third Division will mean the Ibrox club will have to cut costs, meaning there will be job losses.  However, whatever league they find themselves in they know they can rely on the support of a global fan base that will rally round the team like never before.

Of course, no-one expects a 50,000 sell-out at Ibrox for a game between Rangers and Elgin City, but in my opinion Rangers will be attracting bigger crowds in the Third Division than any other club in Scotland bar Celtic.  A bold claim, but one I’m willing to say will happen.  The highest average attendance in the SPL last season was 13,381 at Hearts, and it is the Edinburgh club that holds the highest-ever average out-with the big two since the SPL’s birth in 1998.  On average, 16,937 went to Tynecastle in season 2006/07, the season after they split the Old Firm to finish second. (Stats from SPL site)

 

 

I don’t think many will claim that Rangers fans wouldn’t average more than 17,000 in the Third Division, especially given the bond and unification that has occurred since it all began on Valentine’s Day, and the historic start to the story of Rangers rising through the leagues. 

With Rangers definitely out of the top division, it means there will be no Old Firm derbies for at least a year.  Sky Sports’ television deal to broadcast SPL games is reported to have a stipulation in the contract that says four Old Firm games must be played for them to show on their channels, and this has been a big hurdle in the reformation of the structure of Scottish football for a number of years.

Currently, the £65million deal signed after Setanta Sports’ withdrawal has two years left to run, and a recently announced £80million deal to extend the contract to five years is on the table. But crucially it remains unsigned.  The Scottish Football Association’s CEO Stewart Regan has spoken about the financial Armageddon facing the clubs.
He said: “We have had dialogue with the broadcasters and we understand what the various stakeholders from Sky television, ESPN, Sport Five and a number of the SPL’s other commercial partners are likely to do in the event Rangers are not in either of the top two tiers.  It’s not pretty.  That’s why we cannot sit back and let that happen without trying to get all parties to accept this is the only solution which can keep the game afloat.”

The SFL will vote next Friday on proposals from the SPL to parachute Rangers into the First Division, instead of the usual application to join the SFL in the Third.  In the briefing to all 30 SFL clubs, the SPL said it would cost the game £16million if Rangers were sent to the Third.  It also stated five clubs, all in the SPL, were in serious financial risk if this happened.  The SFA and SPL have made it clear that they want Rangers in the First Division, and have hinted at asking Sky to cover Rangers’ games.

Sky have not officially said either way yet regarding what they would do if Rangers were not in SPL for one or more years.  Going by Regan’s statement, it doesn’t look good for the SPL clubs one bit.  You can see why Sky are privately bullish about this by looking at some viewing figures facts from season 2010/11, available on Kilmarnock’s website.

The key facts to take from the lengthy document are;

- Out of the top ten average audiences in Sky’s SPL games in 10/11, only one didn’t involve Rangers or Celtic.

- That game was St Mirren vs Hibernian, and that was shown straight after an Old Firm derby.

- The top three of the ten are Old Firm games, the fourth game not there because at the time of the report’s publication the game hadn’t occurred.

- Matches featuring Rangers produced slightly higher average audience levels (174,419) than matches featuring Celtic (164,317).

- Average audience of all games included were divided up into 65% watching Old Firm derbies, 14% watching games involving Rangers, 14% watching games involving Celtic and 6% in the ‘other matches’ category.

Going by the 2010/11 statistics, 79% of the viewing figures for SPL games will disappear with no Old Firm games and no Rangers games against SPL opposition.  And with the much talked about mass-unsubscribing of Sky packages from Rangers fans if they go to Division Three, this will not make Sky’s boffins happy at all, given the money they have offered for the new unsigned TV deal.

Talk behind the scenes has said that ESPN will walk away if Gers are out the top flight.  So without potentially ESPN and Sky’s £65m/£80m deal, how will SPL clubs survive?  A common theme among SPL fans has been that the fans will come back in their droves to support their clubs.

Questions must be asked of these clubs and their fans who are urging other fans who have discontinued their support to come back purely on the basis that they have rejected the newco Rangers entry to the league.  The issues that led to these fans, and there are A LOT of them, to stop their support of their teams will not have been resolved purely by their clubs saying ‘no to the newco’.  Issues like;

- A poor product on the park being presented to fans

- Over-priced ticketing

- Two clubs dominating the league

- Their own team’s failure to be successful

Why haven’t they changed?  Well actually, they HAVE.  But for the worse.

- With a vastly reduced Sky deal/no Sky deal and no ESPN, along with lost income from Rangers away support, will mean clubs cannot sign players they hoped to, including Celtic.  The league’s product will go down as more young players are brought to first-team, and decent players leave for pastures new in England and the like.  Clubs will look to offload the best they have to get much needed cash.

- Ticket prices have been steadily rising in modern football and in Scotland it’s no different.  With the lack of much needed television income and loss of Rangers away support income, clubs will have no option but to push ticket prices up to try and fill the shortfall.

- Two clubs will no longer fight it out for the title, only one club will.  Paddy Power have made Celtic 1/50 favourites to win the 12/13 SPL.  So no chance of a league title.

- With dwindling income from all corners, the success of the majority of SPL clubs will be limited.  Of course, second place is up for grabs and a place in Champions League qualifying.  But soon that will change to Europa League qualifying due to a plummeting Scottish co-efficient and the lack of quality due to lack of income will again be shown to Europe when SPL clubs are bumped out in late July.

Research conducted by the Copland Road Organisation estimates that one SPL visit from Rangers is worth just under £235,000 to Aberdeen. 

Imagine Aberdeen in the top six and therefore potentially having Rangers twice (£470,000) or even three times (£940,000) which sometimes occurs in the barmy SPL.

These figures were based on information released by Motherwell to its fans when they asked them to vote on allowing Rangers into SPL or not.  The Steelmen estimated a loss of £315,000 from two Rangers visits.

Also on the research, the percentage of their attendance against non-Rangers SPL teams compared to attendance when Rangers are in town are always significantly smaller, with perhaps the exception being Hibernian.  Inverness saw a jump of 36% when Rangers arrived compared to standard SPL fixtures.

Fans who say an extra x-amount of fans buying season tickets will cover the loss of one, two or three Rangers visits to their stadiums are forgetting the biggest financial factor in this – the television income from Sky.  Even with a deal on reduced terms, SPL clubs (out-with Celtic) will struggle without Rangers in the league and the harsh reality is that some of them may end up alongside the Gers in Division Three.

 

Stenhousemuir in their recent statement also projected that if a Rangers Newco was playing in Division 3 of the SFL, the financial impact of this would be;

 

- Loss of Sky broadcasting payments of circa £10m/season

- Loss of ESPN broadcasting payments of circa £5m/season

- Loss of Sportfive broadcasting payments of £2.7m/season (overseas broadcasters)

- Loss of sponsorship of £1m/season

- Additional new broadcasting deal with income of £3m/season

 

- The net loss of income therefore would total £15.7m/season. The above is on the basis that each of the contracts have termination clauses should either of the Old Firm not be involved in the SPL.

The sooner the SPL clubs and fans wake up and realise the financial reality the better. With Sky reported to be ready to withhold a £640,000 payment to SPL clubs due in early August, the clock is ticking.

 

SPL stats:  http://www.scotprem.com/content/default.asp?page=home_Statistics
2010/11 viewing figures:  http://www.kilmarnockfc.co.uk/staticFiles/71/72/0,,10291~160369,00.pdf
CoplandRoad.org research:  http://coplandroad.org/269029