Clubs Face Closure As Itv Digital is Put Up for Sale
April 23: The Football League was facing a potential financial disaster last night when ITV Digital was put up for sale and the clubs were left facing a lengthy court battle in order to claim any of the £178.5m owed to them.
The Football League was facing a potential financial disaster last night when ITV Digital was put up for sale and the clubs were left facing a lengthy court battle in order to claim any of the £178.5m owed to them.
According to the Football League, as many as 30 clubs may go bust after administrators and league executives failed to settle a dispute over their £315m broadcasting contract. Deloitte & Touche, the administrators for ITV Digital, said it will try and sell the pay-television platform as a going concern, but any buyer would be under no obligation to take on the Football League's contract.
The clubs have pledged to launch a £500m lawsuit against ITV Digital's owners, Carlton and Granada, as soon as the contract is breached. Legal experts say any case could take two years to settle, by which time many smaller clubs may have gone to the wall.
The league is expected to open talks immediately about selling its rights to another broadcaster such as the BBC or Channel 5 to ensure fans can still see games on TV. Analysts warn that at best the league may only get £20m-£25m for a three-year deal. It turned down a £74m offer for a similar period from the administrator last week.
The Football League chief executive David Burns insisted the fight will go on. "This is a course of action that we had anticipated," he said. "It does not alter the league's determination to receive full value of the £178.5m it is owed by Carlton and Granada."
Burns added that, according to the league's lawyers, if ITV Digital could not afford to pay up then its owners would be liable for the bill, even though the broadcasting contract was never signed. The two television companies claim that barristers have told them they are not liable. "Clearly one side has the incorrect advice and is going to come out of this very badly," said one City lawyer.
The Independent Television Commission (ITC) said that viewers who get TV services via ITV Digital would not lose them while the sale goes on. A more detailed announcement about the proposed sell-off is expected on Thursday.
The shadow culture secretary Tim Yeo condemned the government for not taking a lead in negotiations. "This is a disaster for football," he said. "I hope that even at the 11th hour a solution can be found. Stronger ministerial leadership is needed if ITV Digital subscribers and football are not both to be losers."
The culture secretary Tessa Jowell has insisted the government will not bale out clubs who, by paying players so highly, have largely created their own problems.
She called on football's powerbrokers to rally. "It is a great shame that no deal acceptable to the Football League and ITV Digital was possible. I will continue to keep in close contact with all the parties involved, but this matter is now squarely in the hands of the administrator.
"I know that some football clubs have tough times to face. I have spoken tonight to the chief executives of the FA [Adam Crozier], Premier League [Richard Scudamore] and the chairman of the Football League [Keith Harris]; I have urged them to meet as soon as possible to discuss their options. If I can do anything to help those talks, I will."
One administrator, Nick Dargan, who has claimed negative publicity from the league has damaged ITV Digital further, said: "We are now in discussions with the ITC about an accelerated process leading to a sale as a going concern."
Carlton and Granada sources said that a sale of ITV Digital was the only course of action left after the league stood firm on its demand that its contract be honoured. "The business was simply not viable as it was," said a Carlton source.
Executives at both companies down-played talk that they are hatching a plan to buy back the remnants of ITV Digital for a knock-down price but without the Football League contract. Analysts said that while the move would be hugely controversial, it is technically possible and had previously happened with the Canary Wharf development.
As many as 3,000 clients a day are thought to be deserting ITV Digital, which began in November 1998 as OnDigital - launched by the TV presenter Ulrika Jonsson. With 150 staff facing the sack, it could not afford to pay even a fraction of the original contract.
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According to the Football League, as many as 30 clubs may go bust after administrators and league executives failed to settle a dispute over their £315m broadcasting contract. Deloitte & Touche, the administrators for ITV Digital, said it will try and sell the pay-television platform as a going concern, but any buyer would be under no obligation to take on the Football League's contract.
The clubs have pledged to launch a £500m lawsuit against ITV Digital's owners, Carlton and Granada, as soon as the contract is breached. Legal experts say any case could take two years to settle, by which time many smaller clubs may have gone to the wall.
The league is expected to open talks immediately about selling its rights to another broadcaster such as the BBC or Channel 5 to ensure fans can still see games on TV. Analysts warn that at best the league may only get £20m-£25m for a three-year deal. It turned down a £74m offer for a similar period from the administrator last week.
The Football League chief executive David Burns insisted the fight will go on. "This is a course of action that we had anticipated," he said. "It does not alter the league's determination to receive full value of the £178.5m it is owed by Carlton and Granada."
Burns added that, according to the league's lawyers, if ITV Digital could not afford to pay up then its owners would be liable for the bill, even though the broadcasting contract was never signed. The two television companies claim that barristers have told them they are not liable. "Clearly one side has the incorrect advice and is going to come out of this very badly," said one City lawyer.
The Independent Television Commission (ITC) said that viewers who get TV services via ITV Digital would not lose them while the sale goes on. A more detailed announcement about the proposed sell-off is expected on Thursday.
The shadow culture secretary Tim Yeo condemned the government for not taking a lead in negotiations. "This is a disaster for football," he said. "I hope that even at the 11th hour a solution can be found. Stronger ministerial leadership is needed if ITV Digital subscribers and football are not both to be losers."
The culture secretary Tessa Jowell has insisted the government will not bale out clubs who, by paying players so highly, have largely created their own problems.
She called on football's powerbrokers to rally. "It is a great shame that no deal acceptable to the Football League and ITV Digital was possible. I will continue to keep in close contact with all the parties involved, but this matter is now squarely in the hands of the administrator.
"I know that some football clubs have tough times to face. I have spoken tonight to the chief executives of the FA [Adam Crozier], Premier League [Richard Scudamore] and the chairman of the Football League [Keith Harris]; I have urged them to meet as soon as possible to discuss their options. If I can do anything to help those talks, I will."
One administrator, Nick Dargan, who has claimed negative publicity from the league has damaged ITV Digital further, said: "We are now in discussions with the ITC about an accelerated process leading to a sale as a going concern."
Carlton and Granada sources said that a sale of ITV Digital was the only course of action left after the league stood firm on its demand that its contract be honoured. "The business was simply not viable as it was," said a Carlton source.
Executives at both companies down-played talk that they are hatching a plan to buy back the remnants of ITV Digital for a knock-down price but without the Football League contract. Analysts said that while the move would be hugely controversial, it is technically possible and had previously happened with the Canary Wharf development.
As many as 3,000 clients a day are thought to be deserting ITV Digital, which began in November 1998 as OnDigital - launched by the TV presenter Ulrika Jonsson. With 150 staff facing the sack, it could not afford to pay even a fraction of the original contract.
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