Confirmation of the further tightening of Mike Ashley’s grip on commercial affairs at Rangers has arrived with the agreement of a £10m loan from Sports Direct to assist the club’s “perilous” financial position.
Ashley’s core business will hand over £5m straightaway, with £3m of that being used to clear earlier loans provided by the Newcastle United owner to Rangers towards the end of last year. He has already appointed two of his well-known allies, Barry Leach and Derek Llambias, to positions of power at Ibrox.
This Sports Direct tactic is noteworthy because of the charges issued to Ashley himself, not his business, by the Scottish FA in respect of dual club influence rules: Ashley owns 8.92% of Rangers. Ashley’s legal team now have an obvious route via which to challenge the association.
“The facility is structured in two separate interest-free tranches,” Rangers explained of their latest borrowing move. “£5m will be available immediately for working capital purposes and for the repayment of the credit facilities with MASH Holdings Limited which was entered into on 27 October 2014. All rights and security associated with the MASH facility will be cancelled.”
In return, Sports Direct will take control of 26% of Rangers’ retail operation and will benefit from shirt sponsorship income from the 2017-18 season until the debt is repaid and have the power to appoint two directors. Security has been provided in the form of virtually all of the club’s assets apart from Ibrox Stadium itself, after supporters reacted with fury to that proposal being mooted.
In a statement to the Stock Exchange, Rangers said: “The company’s financial condition has been perilous for a number of months, exacerbated by lower than expected match attendances. The directors have implemented a cost-cutting program with which they have made significant progress. There is, however, an immediate need for a substantial injection of capital.”
The Rangers chairman, David Somers, said: “The board has sought for some time to establish a long-term funding solution for the company in order to create a platform of stability to build for the future. This facility begins this process and we very much hope that it will be augmented with further permanent capital in due course.”
There is a wider game in play, however. The Rangers shareholder Dave King has called for an extraordinary general meeting to remove current directors, including Leach and Llambias. Even if that is successful, Ashley has firmed up his position as the major beneficiary from the club’s off-field operation, a scenario that it looks near impossible to change in the medium term.
Rangers’ statement even included an admission of paying Sports Direct for the earlier closing of club shops. It added: “RRL [Rangers Retail Limited] will declare a dividend of a total of GBP £1,610,000 prior to the [share] transfer. The club will use the proceeds of its share of this dividend, inter alia, to repay sums owing to SD in respect of the cessation of onerous leases on unprofitable stores entered into by a previous Rangers management team.”
