The Sports Direct deal and the coming showdown

Last updated : 28 May 2015 By Grandmaster Suck

Traditionally the Retail Division was the only part of Rangers which made money year in and year out.   Whatever the ups and downs of ticket income or money from European competitions the Retail money was the cash cow we could always rely on.

Then David Murray’s management of the club necessitated a selling off of the family silver to bail him out with the JJB deal.   We were told at the time that changing sales patterns meant that the partnership with JJB would give us a guaranteed income no matter what and a bonus in those years Retail performed particularly well.

We lost control of our brand then and when JJB had it’s problems we were chained to their fortunes - it meant the stock was not there on time or only in certain sizes and you could forget finding anything in overseas stockists.   Northampton Loyalist gave his take on it in this article -

In the glory years we had 64 page catalogues, strips provided by Adidas and Nike, a vast range of goods, our own healthy network of Rangers shops and a push to maximise revenue via the Rangers Direct mail order operation.   From memory our best sales years was 463,000 sales of the first team shirts which meant we were only second to Manchester United.

We now find ourselves in a new reality.

The deal done between Charles Green and his merry men was not good for Rangers - I had my open views of it here - and I don’t believe Charlie and Co ever intended to stay around long enough to have to face the music on this deal.

I suspect that the current Board will have been focussing on the period between Green’s takeover and the conversion of loans from Green and his backers into shares and looking for a trail regarding the retail operation and who did what and why.

We had snippets of the Retail deal in the RIFC prospectus - worryingly enough were the 49/51 split in profits with the deal-breaker clause - and now we find the notice period for termination of the contract is seven years.

Common sense tells you Mike Ashley is in the retail business and he wants to sell shirts - his problem is his past association with the Green regime and the terrible deal (for Rangers) he did with him.    Our support is now so interested in this aspect of the club that the current directors will have an almost impossible task of selling any renegotiated deal to the support unless the bottom line for the club is substantially improved.   

The bad news angle of this deal would have a normal company rushing to the negotiating table - it’s a horror show for Sports Direct - the split, the percentages, the removal of Llambias and Leach, the trouncing of their allies at the EGM.  The problem is Ashley has such a large operation he’s gambling no-one will care about Rangers and our little local difficulty and the rest of Sports Direct will easily cope despite the sideshow in Scotland.  And he didn’t get so rich getting many of his guess incorrect.

Ashley’s always played the hardest of hard balls - and calling an EGM despite the recent negotiations is typical.   But this time he is up against a man of a similar stature and intelligence - the response of the Board under Dave King was clever - an escalation to reveal the operation of the deal in terms of the level and timing of payments for one thing.   The Rangers EGM threatens to run out of Ashley’s control in a manner similar to the appearance of the SD Chairman Keith Halliwell before the House of Commons committee where he and his company were publicly filleted - it was a horror show.

Ashley runs Sports Direct and has his own investment arm.  For both of these their relationships with football clubs are crucial - Sports Direct has become cancerous at Ibrox - and the cancer is starting to spread with Newcastle fans beginning to turn against him, with fans of the other clubs he has relationships with in England (he’s got a new business model which involves a combination fo shirt sponsorship and control of retail operations) - and Ashley does have his own shareholders to  consider.

Those Sports Direct shareholders have with their interventions cause Ashley major problems in the last few years in seeking to curtail his running of the company and the renumeration packages to key staff.   The operations of the company are now under major scrutiny regarding employment practises and exploitation and he needs more bad publicity like a hole in the head.

Common sense tells you a renegotiated contract makes sense all round - Ashley has a route to market which Rangers would take years to build for themselves and Rangers need retail income - no income kills the goose that lays the golden egg for both parties.

The other factor which has changed is that the club is now mostly owned by Rangers fans and the the Board is only composed of Rangers fans.   Those Rangers fans may have large or small shareholdings but they united to trounce Ashley’s allies at the EGM - and if the Board provides coherent leadership the fans will be a great factor in this.  We’re as united as we ever have been or ever will be.   Which Rangers director at the EGM if asked a direct question about the Sports Direct deal will either lie or hide?  Not one.

We need to back our Board 100% in this fight and take our lead from them.