New Sports Direct deal is major step forward for club says King
● Kit sale profits to bring in £5m a year and help close gap with Celtic
Rangers chairman Dave King believes the resolution of his club’s dispute with Sports Direct is the most significant development yet in his efforts to address what he regards as the “unnatural advantage” Celtic have enjoyed over them in recent years.
After two years of what King described as “challenging” negotiations, Rangers and Sports Direct have announced a new commercial agreement which will see the club receive the majority of profits made from the sale of replica kit and other products.
The re-negotiated retail contract is expected to earn Rangers in the region of £5 million a year. It replaces the controversial previous deal, agreed between former chief executive Charles Green and Sports Direct owner Mike Ashley, which saw Rangers tied to a seven-year contract which gave them just seven pence in the pound of any profit. That saw most supporters boycott sales of club jerseys.
After overthrowing the previous Ashley-backed board at Rangers in March 2015, King set out to try to terminate the contract and was met with robust legal action which threatened him with jail. The South Africa-based businessman feels he and his fellow directors have now been vindicated in their determination not to cave in to the billionaire owner of Newcastle United.
“I don’t think they [Sports Direct] came round to our way of thinking,” said King. “What happened was the level of intensity in the litigation, with all our directors being sued in a personal capacity and issued with injunctions which meant we couldn’t talk about Sports Direct, that I could have gone to jail last Christmas for saying unkind things about them.
“We had a level of ferocity at us from Sports Direct for about a year. In my view, it’s the fact that didn’t work and we resolved not to give in. I said ‘you can do what you like, you can try and put me in jail’. We had come to do a job for the club and we will not back down.
“There was a bit of an impasse. Sports Direct applied their mind and asked themselves whether they felt Rangers were going to back down. The answer was ‘No’, so was it not better to seek some sort of negotiated outcome? It was a realisation from them that the initial strategy of trying to blow us away hadn’t worked.
“We eventually terminated the agreement and then we were in a situation where we were at a stand off, only to be resolved in the courts and we knew that wasn’t good for us, because we were giving Celtic that unnatural advantage because of the lack of our retail performance.
“This agreement today is by far the most significant event since regime change from the club’s point of view going forward.”
King was speaking at a media conference convened shortly after the new deal was formally signed just before 3pm yesterday. James Blair, the Rangers company secretary and a lawyer, was King’s closest ally in negotiations and said there had been a telling change in emphasis from Sports Direct within the past year.
“We’ve had some difficulties in the past but actually working with the specific lawyer (for Sports Direct) that we have in the last seven or eight months, he was professionally absolutely excellent,” said Blair. “He was very shrewd, gave no quarter, but someone we could ultimately do a deal with”.
Ashley retains a shareholding of 8.9 per cent in Rangers which has seen him able to block attempts by the current board for a share issue at the club. King also anticipates Ashley’s attitude to change on that front.
“I think that Mike Ashley’s shareholding in the club was linked to an integrated retail deal,” he said. “So I would imagine he is certainly
less interested in the need to have a shareholding in the club at this point in time than he has been.”
King says the successful conclusion of the deal was not budgeted for this summer and that the current player recruitment drive by manager Pedro Caixinha has been funded by season-ticket sales and soft loans from himself and other investors.
“Without bringing in another source of revenue, the only way you could compensate for it was to get people to lend money,” he added. “You had a structural deficit within the ongoing operations. So one of the priorities for us over the last couple of years – the biggest priority if you ignore the football side of getting back to the Premiership and into Europe – was the resolution of the retail deal. It has been by far the most significant and challenging. It has been very time intensive. I’ve spent more time on Rangers litigation over the last two years than I have on my own businesses.
“It has been a really monumental effort, taking a massive amount of time and resources to get to this point. But it was so critical to the club that we got something sorted out. This is incredibly important going forward. Now we have our retail future in our own hands for the first time in many years.
“It is kind of what I would have expected the previous board to have got in place for Rangers. It is something which recognises Rangers Football Club for what it is – the supporters and the number who will now buy the kit and other products.”