Forget the SPL: Rangers vs Ashley could still be the deciding battle to watch

Rangers

August 15 – The hate-hate relationship between Sports Direct owner Mike Ashley and and Rangers FC’s board is heading back to the Scottish courtrooms with Rangers claiming Sports Direct paid itself illegal dividends from Rangers Retail and suing former directors of the club for £4 million.

Behind the current vitriolic animosity between the two parties lies a battle for control of the Rangers merchandising rights which were split from the club in a deal that formed a new company to manage the business, Rangers Retail, but which is majority controlled by Ashley.

Rangers claim former directors Charles Green, Imran Ahmad, Brian Stockbridge and Derek Llambias negotiated various commercial deals with Sports Direct below market value and hence did not act in the business’s best interests. They also claim that Sports Direct had received higher dividends than they should have from Rangers Retail.

The issue over marketing rights concerns an October 2012 agreement in which Sports Direct bought the naming rights to Ibrox Stadium, as well as an advertising deal at the ground. The club claims that both deals were well below market value at the time.

These deals are the subject of the £4 million claim by the new board of the club against the old board.

Allied but separate to this lies a claim regarding the dividend payments from Rangers Retail and concerns the closure of loss-making club shops in Belfast and Glasgow airport which Sports Direct agreed to oversee for £620,000. This money was to be to paid from Rangers Retail’s dividends.

In January 2014 of the £1.61 million profit, £1.39 million was paid to Sports Direct and £220,000 to Rangers FC. It was this month that Sports Direct’s shareholding in Rangers Retail had been bumped up to 75% as security against a £10 million loan the retailer had made to the club.

King disputed the increase of the shareholding at the end of last year once he had been cleared to chair the club board, and said that the dividends were “deliberately and unlawfully deducted”, and that the Rangers FC board had not signed off on the accounts. They remain unsigned. Essentially King argues that the dividend payment was opportunistically made as the security was only in place for a short time.

Rangers completed their journey back to the Scottish Premier League from Scotland’s fourth tier where they were dumped (arguably disbanded and relicensed as a new entity) after the club was wound up by receivers. Ashley, who owns Newcastle United in England, was parachuted in when the new club formation found itself in financial trouble. He would doubtless ask the question of the current board where they and their money was in the club’s darkest days in 2011.

But his relationship with the club and his controlling influences over the club and its operations never won over the fans who boycotted matches and merchandise, and organised protests. Their problem is that with his control of Rangers Retail through Sports Direct, the club cannot shake him or his financial influence off and he is not someone who walks away without a fight. Nor is he someone who loses many fights.

Rangers want the judge to throw out the naming rights deal with Sports Direct. Ultimately they want control of the merchandising business back under the club’s banner. This won’t happen without a costly fight between two heavyweight protagonists whose personal hatred of each other could ultimately prevent Rangers becoming champions of Scotland in the near future.

Contact the writer of this story at moc.l1568693218labto1568693218ofdlr1568693218owedi1568693218sni@n1568693218osloh1568693218cin.l1568693218uap1568693218