Sky extends its grip on the domestic game

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Sky steps into ITV shoes with £95m deal for football

Sky television has not always been seen as an organisation which wears a white hat and rides to the rescue of those in distress. Yesterday, however, the satellite company filled at least part of the gaping hole left in most football clubs' finances by the collapse of ITV Digital, signing a four-year deal to cover the Football League's matches, worth £95m.

The company, which has the rights to live Premiership and half the live FA Cup games, now effectively controls the broadcast of all of English domestic football. It will screen 60 games from the Nationwide League on Friday nights, Saturday evenings and Sunday afternoons, all play-off matches and two ties in each round of the Worthington Cup. It will also show the LDV Vans Trophy final.

Although the deal is worth a fraction of the original ITV Digital contract, signed in June 2000, which offered the 72 clubs an ultimately unrealistic £305m over three years, the Football League should be very grateful for Sky's intervention. ITV Digital went into administration still owing the Football League the balance of the final two years of its contract, worth £178m, and whether they receive it will be decided in a court action, beginning on 26 July.

Sky were obvious partners. Of those who originally bid for the rights to broadcast Nationwide League football in the false optimism of two years ago, NTL and ITV have been overwhelmed by debt, while Telewest never possessed the required resources. This left Sky as almost the only remaining player in an increasingly risky game.

The Football League is actually receiving less than it did under its previous deal with Sky which expired last year (£23.5m a year compared with £25m), although, under the circumstances, David Burns, the Football League's chief executive, declared himself very satisfied, especially as it plans to raise more by selling a highlights package to terrestrial television.

"We have had an awful year with ITV Digital but we are very pleased with this," he said. "It puts the financial stability back into clubs which was missing. The message coming back from the clubs is very supportive and they are very relieved."

Burns had been criticised by some in ITV for refusing to accept a "take it or leave it" offer from ITV Digital's administrators which was said to be worth £62m for the remaining two years of the contract, or £74m for three years. One source at ITV claimed Burns was "scoring the biggest own goal in the history of football by putting ITV Digital into liquidation and getting nothing in return".

The Football League, however, denied that any kind of offer was made and that in any case Sky's five million subscribers dwarfed the audiences ITV Digital was able to muster. In some cases these were so low that it would have been cheaper to have bought every viewer a ticket for the game and put them up in a hotel.

"The clubs and the sponsors were very disappointed with ITV Sports' audiences," said Football League spokesman, John Nagle. "Under the new arrangements we can give them bigger exposure and finally build some stability into the game. We do recognise that the market has changed since 2000, but we were surprised by the number and quality of the bids – it wasn't just a case of taking whatever Sky offered."

The response among the Football League's 72 clubs has been overwhelmingly positive. Some, such as Plymouth Argyle, which could have expected £500,000 from ITV Digital this season after winning promotion to the Second Division, have been forced to suspend stadium redevelopment plans; others, such as Bradford City and Lincoln City, have collapsed into administration. George Reynolds, Darlington's colourful chairman, predicted 27 clubs would go bankrupt because of ITV Digital's failure.

Having been relegated from the First Division, Barnsley were bracing themselves for the loss of the estimated £2m of television revenue ITV Digital would have guaranteed with nothing to replace it. Their chairman, John Dennis, was, nevertheless optimistic a deal would be struck, but he denied that clubs in the Nationwide League acted rashly in spending their television income before they received it.

"I don't think that is a fair accusation," he said. "We were dealing with two of the biggest media companies [Carlton and Granada] in the country who were in the Financial Times top 100 list. It was perfectly reasonable to assume that the income they had guaranteed us would be paid. Just as those men and women who worked for ITV Digital and assumed their mortgages would be paid by their work have now also been let down. Whatever the small print of this deal reveals, the fact is that we can now start planning for the future again."

* The Football Association of Ireland has agreed a new four-year deal with Sky to show live Republic of Ireland matches. Sky have broadcast Republic matches live for the past two years but the new deal will see them claim exclusive rights to show home international and Under-21 matches live.