Sydney, Newco and the £10m liability
Not all contracts are fulfilled. Usually, the failure is caused by an underperformance, less often, by one party wilfully reneging on their obligations.
Newco’s fans, and other fans, have bought tickets for games at the Ange Coming Home Tour that will not happen, leaving the promoters with an obligation to refund money. Money paid for promotional events has been wasted, as has costs sunk into the setup. Perhaps only the lawyers’ fees were not wasted.
Contracts have been concluded with Celtic, at a sum more than twice as high as Newco’s, agreements are in place with other clubs too. The promoters need to fulfil those contracts – in Celtic’s case, the deal is not dependent on Newco attending. Celtic contracted to play the tournament without mention of any other club. The promoters have a £6m liability to Celtic and doubtlessly a few million to other clubs, venues and elsewhere.
If you detect some frustration from the promoters in response to Newco’s unilateral withdrawal from the Ange tour, it is not difficult to imagine why. They will now attempt to line-up an alternative attendee that allows them to sell the tickets and the TV rights necessary to keep the project afloat.
Now that other clubs know Celtic bid the price up to £6m, the promoters are unlikely to find a suitable draw who are as disparate as Newco and to accept the first offer of £2.5m. Any substitute club capable of selling the required volume of tickets will demand parity with Celtic. That’s a bitter £3.5m pill to swallow.
I expect they are looking at a £10m liability if the project fails to go ahead. The costs of starting again with another club are likely to be £5m more than the promoters initially budgeted. These tours always carry a commercial risk for the promoters, but no one ever makes this kind of money. The project is underwater.
Today the promoters will be running various scenarios. I expect they will try to get a big English club to step in. Either way, they will tally up the costs and get the lawyers on the phone. The £2.5m fee Newco will not now collect, is only the first phase of their exposure.
Newco made a mistake in signing the initial contract. Without wanting to be petty here, they are a newer corporate structure than Celtic, with less experience and expertise. They cannot be expected to be as accomplished as more experienced clubs.
Neither sets of fans wanted the game, but in bowing the pressure, Newco exposed themselves to far greater risks. Sometimes you need to take an unpopular stance for the good of the club, even if you were the one who made the initial mistake. Fans never say, “Indulge our demands and expose the club to a £10m liability that could do longterm harm to our strategic aims”, but scenarios like this are played out by angry mobs everywhere.
Despite the unpopularity of the game, Celtic had an easy decision to make. We still do not know if we will get Champions League money next season, but the Ange Tour money will cover the fee being asked for, for one of our top signing priorities. As I mentioned, sometimes you need to take an unpopular stance for the good of the club. Insert our own “Indulge our demands… strategic aims” quote here.
Newco apparently briefed that one of their objections to the tour was that the phrase “Old Firm” would not be used. I know this subject has been covered at several AGMs, on here and other places many times – but some people live to wind up Celtic fans. Through copywrite, Celtic and Newco have a legal veto over the commercialisation of the phase “Old Firm”.
If you have any connection to football, you know this is because Celtic moved to kill the phrase in any commercial sense. If, when this tour was announced, you used this copywrite to claim the exact opposite, that Celtic cherish that phrase and status, you need to take a good look at yourself in the mirror. What are you trying to do to Celtic fans, what are you trying to do to the club?
For the watching CSC.