By Paul Nicholson
November 30 – Scottish giants Rangers are taking steps to rid themselves of the spectre of Mike Ashley, or at least his £5 million loan to the club via his leisure retailer Sports Direct.
Ashley, owner of floundering Premier League club Newcastle United, has had an even more miserable time in Glasgow with Rangers, having lost battle for control of the club, but still retains a significant shareholding with almost 9%.
More significantly he has a much larger ownership of Rangers Retail, the cash cow merchandising operation that was separated out into a limited company divorcing retail from the playing side and other commercial operations of the business by the previous board.
The Rangers board have said they want to renegotiate the terms of the deal between Rangers Retail and Sports Direct. Something that is easier said than done.
Back in January Ashley was handed 26% of Rangers Retail shares to go with the 49% he already held as part of a deal put in place when Rangers took up the emergency £5 million loan needed to keep the club solvent.
Earlier this month joined the Rangers Retail board giving him the boardroom power balance over King and the club 3-2.
Since Ashley was thwarted in his bid to take control of the club he has aggressively pursued King with legal action for revealing details of Sports Direct contracts with Rangers, which are private under the conditions of an injunction.
Now King and the Rangers board have decided enough is enough and that its is time to repay the loan, presumably as a first step to ridding the club and its retail operations of Ashley completely.
“It took me one hour this morning to raise the £5 million from major shareholders,” King boasted at the club’s annual general meeting. “We will advise Sports Direct we will be repaying that loan.”
It is unlikely Ashley will be so easy to dislodge, presuming he wants to remain but he is not a man who has ever been too bothered by unfavourable public opinion. He actually seems to thrive on it.
King described the litigation from Ashley and Sports Direct as an “on-going hassle”. But it is a hassle he needs to take seriously as Ashley is a formidable, uncompromising foe who is happy to gamble with high stakes.
“If you look at the financial strength of the club, once the Sports Direct loan is paid off, other than shareholder loans which I’m saying should be treated as an equity substitute, Rangers Football Club has no debt,” he said.
“You’ll go far to find a single football club in the world that’s got a balance sheet as strong as Rangers’. We’ve got no debt at all, a strong supporter base and own all our assets. We’re one of the strongest clubs financially in the world. Once Sports Direct is paid off we’ve no external debt whatsoever.”
May be so, but without the retail arm under their full control can they generate the money needed to take them back to the top of the Scottish Premier League (they currently lead the Championship).
An analysis by fans recently reckoned that just 50p out of every £10 spent on club merchandise made it to the club. Fans have been running a campaign to not buy club merchandise in the hope that a huge drop in sales will force Ashley out. So far he has only become more aggressive.
One hope for Rangers’ board and their long suffering fans might be that Ashley may turn more of his attention towards Goals Soccer, the five-a-side pitch operator that has been struggling financially. Ashley loves a bargain, and recently swooped for 5% of the company’s shares in what some are seeing as a potential takeover of the £95 million valued company.
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