Monday, September 17, 2012

Rangers F.C., its competitors, and business decisions

A sports team that is a member of a sports league is beset by conflicting priorities. As a team, its goal is to beat all of its competitors. But as a league, its goal is to ensure the viability of the entire league, thus providing financial security to itself.

In Scotland, the Rangers football (soccer) club has faced financial challenges. After being more than 100 million pounds in debt, the club was placed into administration, and its assets were purchased. The entity that purchased the assets then applied for membership in the Rangers' former league, the Scottish Premier League (SPL).

Initially, indications were that Rangers' application would be denied in the League's July 4 vote. (Yes, they have a Fourth of July in Scotland, but it's not an American holiday.) On the eve of the vote, however, James Traynor reported that some clubs were having second thoughts about their vote:

RANGERS and a breakaway group of SPL clubs were last night on the brink of a compromise deal which would secure the Ibrox club’s place in the top flight.

Without getting into the details of why the clubs were moved to do this, everyone was aware of the potential financial ramifications if the Rangers were not part of the SPL:

[The clubs] have been warned as much as £15million could be wiped off the value of their deals with Sky and ESPN if Rangers are frozen out of the SPL for more than one season.

Already they fear being denied the £645,000 they are each due to receive from the TV companies on August 6.

And without that revenue and additional slices of the financial pie later in the year it is feared several SPL clubs, perhaps including Kilmarnock, Motherwell and Dundee United, could be facing closure.

So it was in the clubs' financial interest to keep the Rangers in the SPL.

So how did this affect the vote? It didn't:

An SPL statement read: "At today's General Meeting, SPL clubs today voted overwhelmingly to reject the application from Rangers newco to join the SPL."

So what has happened? No one is talking, but even Celtic, a leading team in the SPL (and a long-standing rival of Rangers), is not immune to financial loss:

The relegation of Rangers to the Third Division of the Scottish Football League will have cut income. Although Sky do not comment on the value of the five-year deal it is being suggested the sum paid out has dipped from around €20 million a season to €16 million. There is sure to be a further impact on the Scottish Premier League since the Rangers away support now travels to different grounds.

At such a moment, it is wise to remember once again the term “Old Firm” is a scornful reminder the clubs are business partners as much as rivals. The relationship has been as lucrative as it is claustrophobic and Celtic chief executive Peter Lawwell might pine for absent Rangers, even if he could not say so in public.

Why couldn't he say so in public? Because of what the fans are saying (this was written in February, several months before Rangers left the SPL):

If Rangers liquidate and a newco/Phoenix club gain entry straight back into the league; this is a kick in the teeth for the premise of fair and true competition and the whole ethos of what football is about. 1000s of fans of other clubs will simply give up – as there is no value in cheating and straight away having the slate wiped cleaned!

Yes, Celtic and other fans were happy to say "good riddance" to Rangers - "fan" is, after all, short for "fanatic." But it appears that the fans of the Rangers, now playing in the lower reaches of Scottish football, are more fanatic than most of their former SPL partners:

46,015 people crammed into the stadium to watch Rangers’ emphatic 5-1 win (over Elgin City) after a domineering performance from the Glaswegian giants. This was the second highest attendance in the United Kingdom (and the highest in Scotland)—hundreds more than their bitter enemies Celtic brought to Celtic Park for their 2-2 draw with Edinburgh side Hibernian in the Scottish Premier League....

The club’s lowest home attendance this season was just under 30,000; a figure 90 percent of the SPL can only dream of.

Because of other things going on in Scottish football, it is currently not possible for Rangers to rejoin the SPL until the fall of 2014 at the earliest. Rangers would need to be promoted twice to reach the top level again. If they can do this, would the SPL welcome them with open arms? And would Rangers want to rejoin the SPL? As of now, Rangers and SPL are not on the best terms.
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