By Paul Nicholson
January 27 – With Rangers close to running out of cash and being unable to pay wages at the end of the month, the Scottish club has agreed terms for a £10 million loan from companies owned by Mike Ashley, the shareholder a majority of fans are desperate and aggressively campaigning to keep out of the club.
A board statement to the stock exchange this morning described the company’s financial position as having “been perilous for a number of months exacerbated by lower than expected match attendances”.
The new loan solidifies 8.9% investor Mike Ashley’s potential control over the club though his interests in SportsDirect.com Retail Limited “and associated companies”. Ashley’s growing influence at the club through his Sports Direct company, his loans and the appointment of two close associates in Derek Llambias (also the club’s new CEO) and Barry Leach to the club’s board have been the subject of fan protest and one of the reasons fans have stayed away.
The loan is being provided interest free and comes in two parts, the first half will pay off a loan from another Ashley company, MASH Holdings, of about £3 million.
The second £5 million, which is repayable 5 years after drawdown, and can only be used for working capital purposes, and only with the approval of Sports Direct.
The security for the loan was initially expected to be the club’s Ibrox stadium but this will not be the case. A charge will be taken over the club’s assets, as well as over the training ground at Murray Park, Edmiston House, Albion Car Park, and the club’s registered trademarks.
On top of this, and this is where it gets interesting – and more difficult for the rival investor groups attempting to prise Ashley out of the club – Sports Direct will be allowed to appoint two directors to the board for the duration of the loan. This will give Ashley four directors on the 6-man board who are close associates.
Sports Direct will also take a further 26% of Rangers Retail Ltd (RRL), the club’s lucrative merchandising business, as security for the duration of the loan. Sports Direct already had a 49% share in the business.
RRL is profitable, unlike the club, but there is no RRL without the club. RRL is about to declare a £1.6 million dividend that will be paid directly to Spprts Direct ” in respect of the cessation of onerous leases on unprofitable stores entered into by a previous Rangers management team.”
Whichever way you look it at, the fans groups and other investors look to have been outmanoeuvred by Ashley. Papers calling for an extra ordinary general meeting have been filed and include a vote of no confidence in four of the board members and call for their replacement – but so far no progress towards the egm has been made and it is not certain that all the required criteria for forcing the meeting are met.
Effectively by rejecting the loan offer from a group of wealthy Rangers fans – Douglas Park, George Letham and George Taylor – the board have put more power into the control of Ashley’s companies and associates. A power that will be difficult to break.
Ironically the Scottish FA’s judicial panel today begins a hearing into whether Ashley’s ownership poisitions in Rangers and England’s Newcastle Untied breaks its rules on dual interests in football clubs. Ashley recently tried to increase his stake in rangers to 30% by was blocked by the SFA.
Contact the writer of this story at moc.l1734920805labto1734920805ofdlr1734920805owedi1734920805sni@n1734920805osloh1734920805cin.l1734920805uap1734920805