Rangers’ Retail of Woe

by | Aug 6, 2019

Rangers could be in fundamental financial trouble. And the new trouble is perhaps the oldest trouble in the club’s history, beyond persistent over-reliance on directors/emergency loans.

Sportswear retailers Sports Direct (SD), owned by vulgar-capitalist Mike Ashley, have won a major legal victory which will cost Rangers a yet-to-be-determined but likely seven-figure sum in legal costs, damages and other ‘remedies.’ And when the repugnant Ashley is not the bad guy in a story, there are no good guys.

The latest judgment is the latest searing legal condemnation of Rangers’ business conduct and that of ‘leading lights’ including director Paul Murray and chairman and court-determined “glib and shameless liar” Dave King, the darling of Rangers’ fanbase and, increasingly, of SD’s well-remunerated legal eagles.

Rangers have been trying to exit a retail deal with SD, negotiated in 2012 by professionally-Yorkshire ‘entrepreneur’ Charles Green’s personally lucrative ownership of Rangers. Rangers have never since properly monetised their retail/merchandise operations, with the ‘joint venture’ company managing the deal, ’Rangers Retail Limited,’ proving hugely more beneficial to SD.

In March 2015, King and others ousted a pro-Ashley group from Rangers’ boardroom, the then-latest charlatans to run/ruin Ibrox operations. And King’s populist priority was to oust Ashley entirely (he retained a significant personal shareholding). Rangers appeared to have ousted the retail deal on 17th May 2016. They “served notice on RRL terminating the Intellectual Property and Rights Licensing Agreement” (IPLA), a January 2015 update of the retail deal, alleging “various repudiatory breaches” by RRL.

SD, fearing that a cash cow might moo no more, went to court on RRL’s behalf to maintain the IPLA, “claim damages” from Rangers “for breach of contract” and “claim compensation” from King and Murray for breaching “their fiduciary duty” as RRL directors by inducing Rangers “to terminate the IPLA.” King “in particular,” SD said, “sought to denigrate” the IPLA “with a view to renegotiating (it).”

In a move firmly in the ‘deeply ironic’ column, SD cited Scottish football media and Rangers website reports of King’s view of a supporter-boycott of SD. Presiding Judge Richard Millett QC found them “striking reading” and was persuaded of “at the least, a strongly arguable case” that King “personally endorsed and encouraged” the boycott “in the interests of the Club and at the expense of (RRL).”

In March 2017, Millett found for SD, calling Rangers’ testimony “cynical and disingenuous” and slating King and Murray. From an “early point” it was “obvious” that the duo “were hopelessly conflicted.” They were “involved in the decision” to terminate the IPLA, RRL’s sole business. Their stances were “a posture” and “to put it mildly, a stretch.” And the idea that they “were genuinely…anything other than wholly aligned” against RRL was “not credible.”

Rangers obtained leave to appeal. But on 21st June, they announced “a new commercial arrangement” with SD on “substantially different” terms. RRL ceased to be. Rangers claimed, to derisive snorts from informed observers, that the deal reflected SD’s “confidence in the way Rangers is now being managed.” And fans could stop boycotting SD because there was “certainty that any money they spend on Rangers products will be hugely beneficial for the Club,” which would get “by far the majority of net profits” from in-house sales and “an equal share of net profits from sales through SD.”

Ashley remained. But the deal was hailed as a “victory” for King. Rangers fans lauded him for “playing a blinder,” the Daily Record ‘newspaper’ publishing some priceless tweets, most of which have aged horribly. “Well done to every Rangers fan who declined buying a strip,” tweeted Charlie. “You made (SD) come to its senses.” Great Waldo gave his “well done” to King as Rangers “wrestled out of a headlock.” And Kevin claimed King was “proving” his critics “wrong big time. Brilliant stuff.”

Predictably, King blew his own trumpet, with Glasgow Evening Times ‘journalist’ Chris Jack holding it for him by asking obsequious questions such as “Is this as transformational a deal as you have known since you came into Rangers?” “(is it) on a par with taking control of the club?” “(Do you feel) pride or relief when you consider what the club have achieved?”

King trumpeted the “significant level of time” he’d “had to devote” to the deal. He wasn’t specific on specifics, as “I would be giving away specific figures.” But “historical profits of Rangers’ retail were very, very substantial. If we can get back to a normalised basis it is a significant increase of funds into the club.” Meanwhile, the Herald newspaper’s Stewart Fisher gushed: “Dave King has hailed the landmark merchandising deal…as testimony” to a “refusal to back down” to Ashley’s “bullying tactics.”

One Rangers tweeter noted more cynically that Rangers had merely “ripped up a deal” with SD “and signed a new deal” with SD. And other cynics included Irish-based blogger Phil Mac Giolla Bhain, who took inordinate pride in punning that “the devil” was “in the retail.” That November, Rangers’ accounts revealed that devil: “These arrangements and the termination of existing contracts…incurred a non-recurring cost” of £3m; King’s chairman’s report calling the “overall” cost “substantial.”

On 4th June 2018, Rangers told SD of a third party’s offer to provide the services undertaken by SD under the 2017 agreement. SD was entitled to match any such offer and thereby keep the work. But Rangers disputed the precise definition of “matching offer.” On 2nd July, after four weeks’ ineffective correspondence, SD sought in court to halt Rangers’ plans to work with their new retail pals from 5th July and launch retail operations on 1st August, four days before the new season. These plans seemed suspiciously rushed, almost designed to stop any timeous “matching offer.”

But the court was only concerned with determining if there was “a serious question to be tried.” There was. And Rangers were ordered to park the new offer whilst the dispute was “on foot” (my new favourite legalese). They marked 12th July with a new “notice of offer”, which SD matched 13 days later. On 26th July, Rangers undertook no to “enter into an agreement with the third party.” Five days later, SD accepted that undertaking. And they all lived happily ever after….

Ho-ho. SD and Rangers returned to court on 10th October, presiding Judge Nigel Teare recounting interim events in his 24th October judgment. The sides had failed tetchily to agree on SD’s “matching offer.” And on 11th September, Rangers signed up with the third party, modestly-titled sports merchandisers the “Elite Group,” which SD only discovered on 25th September from “a statement on Rangers’ website, describing Elite as ‘our new partners.’”

SD sought to confirm their right to “match” the “Elite Agreement” (EA). And Rangers agreed not to enact it. But Teare noted that Rangers had “accepted” on 26th July, “that it could not enter into (the EA), yet on 11th September they…er…did. “That unheralded change of mind,” Teare ruled (coining a new phrase for ‘lie’), “makes it just” to order Rangers to “not perform,” or “assist Elite to perform” the EA and to “inform Elite” of this.

SD claimed that potential “damages would not be an adequate remedy” as they “may exceed the £1m cap” in the 2017 agreement and might also exclude “indirect or consequential losses.” Oh…and Rangers “may not be in a financial position to meet a substantial award.” Teare agreed on the damages issues and added “more significantly” that any grant would not “be out of all proportion” or mean “extreme (or any) harshness on Rangers.”

King responded with…well…“cynical disingenuousness.” Of a deal which was a “victory” in 2017, he said: “There is no mention of what benefit (it) might bring to the club and its supporters.” He insisted Rangers would “litigate to secure payments that are long outstanding.” He would “resist all attempts” by Ashley/SD “to take further advantage of our club.” And this court defeat was not “the final word.”

Indeed not. At Rangers’ November AGM, King claimed SD had “drowned the court in papers” to prevent “full ventilation of the facts.” Their “bullying tactics…consistently failed.” He anticipated “a similar outcome to the present litigation.” And Rangers would never give SD “what they want.” His Trumpian revisionism of events went unchallenged. Little more has been heard of the “long outstanding” payments. Whenever facts were fully ventilated, SD “consistently” succeeded. And there WAS a “similar outcome…” Rangers lost.

This was confirmed by the 19th July publication of Judge Lionel Pursey QC’s judgment. He gave SD what they wanted. Damages and other financial remedies were for future court determinations, as SD had not asked Pursey for them. And Pursey gave a chilling indication of Rangers’ potential fate.

He said damages were “not an adequate remedy for (Rangers)’ breaches” as SD’s “losses are likely to be…many millions of pounds” (Rangers said it would “rely” on the agreement they breached to “limit damages to £1m”). And he, like Teare, thought it “noteworthy” that Rangers broke their undertaking “not to perform the (EA).” Because of their “action,” Rangers would be “exposed to a claim by Elite.”

Rangers spun talk of costly court defeat as media sensationalism, as media reaction naturally focused on “many millions of pounds.” Rangers insisted, partly-correctly, that “matters” were “not as reported.” The Herald, for example, said Pursey ruled “that Rangers should now pay the retail giant substantial compensation.” He didn’t. But the ‘nothing to see here’ tone of the club’s official statement jarred with Pursey’s actual, condemnatory, words.

Despite judges citing them for their involvement in boycotting SD, supporters group Club 1872 claimed that Rangers “cannot discuss this issue in detail with (us) or anyone else,” as the club was “restricted by confidentiality provisions, court decisions and the ongoing nature of these proceedings.” This was codswallop, as the very publication of Pursey’s judgment demonstrated.

The ‘Ibrox Noise’ website sensibly published key elements of the legal judgment to compare them with “the sensationalism that the press are whipping up on the conclusion of the case.” Unfortunately, they published key elements of Teare’s 2018 judgement, which rather undermined their headline-based hopes of exposing “the truth behind the media lies.”

And the actual truth? Teare noted disapprovingly that “both parties” were “keen on litigation.” And this keenness will be sated by a one-day “case management and costs budgets” hearing on “the first available date after 23rd September.” Rangers have been refused “permission to appeal” their latest losses and ordered to pay SD £444,846.60 by 16th August, which is just the costs “of and occasioned by” those latest losses.

Hence the re-emergence of stories of multi-million-pound bids for Rangers’ Colombian striker Alfredo Morelos, and other crass PR attempts to attract much-needed finance through player sales. How ‘much-needed’ remains unclear. But Rangers’ appalling business conduct has been demonstrated time-and-again in court judgments, not “media lies.” And “millions of pounds” looks less sensationalist by the judgment.