By Paul Nicholson
February 5 – Glasgow Rangers, the fallen giants that had to start life again in the fourth tier of Scottish football, have taken a step closer to cleaning up their financial position with hostile shareholder and business partner Mike Ashley by confirming they have repaid a £5 million from Ashley while at the same time serving notice on the retail deal with Ashley’s Sports Direct.
But despite this, chairman Dave King said in a statement to fans that the board will have to continue to bankroll the club “funding the cash shortfall that is required until we have a sustainable business model.”
Part of that business model will be a return to Rangers controlling its own merchandising activities which were hived off into a separate company in partnership with leisure retailer Sports Direct, who took over the running of the company.
The retail arrangement has become a sore point for everybody apart from Sports Direct. In a deal agreed by a previous Rangers board in 2012, the club earns just 4p in every pound spent in their Ibrox store.
Getting out of the deal will not be straightforward for the club as contract stipulates a seven-year notice period unless Sports Direct agrees to end it. Ashley will not go quietly or without a pound of Scottish flesh.
By the same token King will not be a pushover as he and his board rebuild the Rangers football castle, saying that: “We will continue to put Rangers first and ensure that we get redress and compensation for the poor commercial and business practices that the Club has been forced to endure.”
King won in court this week when Sports Direct stopped litigation after claiming a breach of confidentiality over the commercial deal when Justice Peter Smith describing its court action as “ridiculous”.
This is unlikely to be the only time the two sides are in court facing each other as Ashley will want to extract considerable value from the merchandising deal, particularly as his other ambitions for control of the club have been thwarted.
Ashley is not used to being challenged by the Rangers board, a point recognised by King who said: “For the first time a Board of this Club has stood up to the threats of Sports Direct and has achieved resounding success in court proceedings including the substantial recovery of legal costs. Sports Direct’s motives were severely exposed when a High Court judge ruled that Sports Direct abused court processes in its attempt to bully the Club and me.”
On the pitch Rangers are now leading the Scottish Championship by five points and look destined to return to the Scottish Premier League. Something the league and its clubs will look forward to financially if not socially, with the potential return to the kind of vehement sectarian support that featured the Old Firm clashes between Rangers and city rivals Celtic in the past.
In preparation for its new future the club has invested in its training ground at Auchenhowie and has begun a programme of improvements at its 50,987 capacity Ibrox stadium.
Rangers is still a work in progress as it battles to return to former glories, and there is still some fragility to the cashflow as the club seeks out a sustainable business model, but progress is being made. It is just not the kind of ‘progress’ that all its shareholders had planned to bank on.
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