Selling Ireland by the pound

The extraordinary attention attracted by fallout from the FAI/Sky deal has been dismissed in some corners as silly season stuff, distracting the media gaze away from more serious stories. Yet what the story suggests about the criteria applied by some of our cultural institutions in developing the public properties placed in their trust, makes it anything but trivial.

Now that the government have abandoned their initial blithe descriptions of the Sky deal as “done and dusted” and have belatedly insisted that they can and will ensure that the games are screened on free-to-air television, the focus has shifted to another institution: the Football Association of Ireland. The FAI has moved to distance itself from further controversy, parroting the line that Sky now own the rights and that whatever happens next is Sky’s problem. This is an interesting rhetorical position but is not legally correct. The government’s legal position assumes that the FAI (and other sporting organisations) have been on notice for two or more years regarding the possibility that “their” events might be listed under the Major Television Events Coverage Act 1999. In effect, the FAI knowingly negotiated a deal involving subscription rights that were not definitively theirs to sell. This is a dangerous game to play, especially given the FAI’s repeated assertions that the future of the game in Ireland is reliant on such income.

However, those assertions seem highly dubious. The FAI have argued that the Sky deal is vital to fund the non-senior international and coaching and development programmes. More generally, the Sky deal is portrayed as necessary “to foster the development of the next generation of Robbie Keanes and Damien Duffs”. Although these assertions have gone largely unchallenged in the media, they are – remarkably enough – convincingly refuted by the FAI’s own literature, specifically their latest annual report and their Development Strategy document.

As of March 2002, the FAI has just under €1.2m in its revenue account. In that context, the extra €1.425m per annum from the Sky deal will earn over what RTE were apparently willing to pay, looks like a lot of money. Yet that €1.2 figure is more than a little misleading. Firstly, it’s worth noting that the organisation has achieved this figure despite having to make what its annual report describes as “two exceptional payments” totaling more than €7.2m to pay off Eircom Park creditors in 2001 and 2002. In other words, under normal circumstances the FAI would have something closer to €8.4m in its account.

But even that €8.4m figures pales in comparison with the revenues promised to the FAI by the government as a quid pro quo for their involvement in the Stadium Ireland project. Prior to 2001 the FAI was allocated €7.6m per annum by the state. (In passing it’s worth noting that these resources were apparently sufficient to “develop” the current generation of Keanes and Duffs.).Over the next three years, however, this figure will increase to €19.6m per annum. In addition the government has established an additional fund of €38m to match FAI development funding. In this context, the Sky deal revenues become much less significant: in fact the difference between choosing Sky over RTE represents less than 4% of the FAI’s actual turnover.

Weirdly, the FAI have sought to portray the state funding money as someone else’s, stressing that the cash won’t appear on the organisation’s balance sheet but will go straight to the clubs. This is technically true but totally irrelevant since the FAI will effectively determine how that money is spent. The FAI will appraise and make recommendations on applications for these resources to the Minister for Sport and the Irish Sports Council. Their own strategy document points out that the “challenge now facing the Association and its members is to identify worthwhile and sustainable projects on which to spend these greatly increased resources.” And where does the FAI strategy document envisage these “greatly increased resources” might go? On developing – amongst other things – the non-senior teams and coaching, precisely the areas that the FAI now say are dependent on the Sky deal.

Indeed not only does it appear that the FAI doesn’t need the money from the Sky deal, but given the impact of the ITV Digital collapse on the English Nationwide League in the UK, any strategy identifying TV revenue streams as a foundation on which to develop the game would seem hugely risky. Yet if the FAI don’t actually need the deal why risk the public opprobrium that would inevitably follow it?

The answer may lie in understanding the true nature of the modern FAI: it might come as a surprise to learn that the organisation is constituted not as a club or a charity but rather as a private company limited by guarantee. Hence, their repeated description of football as a business and their resort to citing constitutional property rights to defend the Sky contract. In short, it points to a mindset which is unable to recognise the distinction between the price of a sports television rights and their value as expressions of national culture.

Hence also, the FAI’s apparently genuine bewilderment at the public indifference to what they clearly regard as a watertight justification for the deal – the fact that Sky were willing to pay more than TV3 or RTE. Indeed the FAI have consistently attempted to shift the blame for the whole debacle to a failure to apply realistic market criteria on the part of RTE.

There may be some justification in this but the FAI’s line has deliberately obscured some key considerations in this regard. Firstly RTE (and TV3) were never negotiating for the same rights as Sky. Although all three broadcasters were nominally simply looking to screen the home matches, de facto RTE and TV3 were after free-to-air rights whilst Sky sought subscription rights. Of their nature subscription television rights will always be more expensive than free-to-air. Consequently it would never have made commercial sense for either TV3 or RTE to make a bid that matched the subscription market value.

It’s also telling that the FAI have singled out RTE for blame, portraying it as a monopoly behemoth exploiting its dominance of the market. Yet TV3’s 1998 startup means that the Irish television market has been competitive for four years. What’s more, TV3 recorded operating profits for the fiscal year ending August 2001 of £849,000 (€1,078,230), reducing its net losses to £3.9 million. Meanwhile the aggregate profits of TV3’s parent companies – CanWestGlobal and Granada Media – surpassed $US750m in 2001. RTE, by contrast, recorded a deficit of €71m in 2001 and is anticipating a further deficit of €24m. One of these companies is in a strong position to bid against Sky, the other is not. Yet the FAI have chosen not to single out TV3 for criticism, presumably again for commercial reasons, i.e. the fact that TV3 have acquired deferred coverage rights.

For the record, elements of the FAI have done and will continue to do exceptional work in developing soccer in Ireland. Yet it also appears that as a primarily business-oriented organisation, the FAI cannot be trusted to take cultural considerations into account in deciding how to develop the national game. Yet so long as they run out a team called “The Republic of Ireland” (as opposed to “FAI Ltd United”), play the national anthem before matches and use national flags, such considerations must – perforce – be applied. This after all is why the Major Television Events Coverage Act was passed, to allow public representatives to protect such cultural events. If, ultimately, some good comes from the FAI/SKY deal, it will be that it engendered the first protracted debate in years as to the real value accorded to culture in Irish society.