Judgement from the High Court in London in the case between SDI Retail Services Ltd, part of Mike Ashley’s Sports Direct group, and The Rangers Football Club Ltd (Newco) was published yesterday. It was a scolding humiliation for the Ibrox club and its directors.
The case centred on rights Newco granted to SDI in a Retail Operations Distribution and IP Licence Agreement, concluded in June 2017. This Agreement was heralded at the time in the Scottish media as a great victory for Newco, and chairman Dave King in particular. The Daily Record proclaimed, “Rangers fans celebrate Dave King’s victory over Mike Ashley and Sports Direct”.
Dave King told The Evening Times: “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.”
What King did not reveal at the time, was that Newco agreed to pay Sports Direct £3m to terminate the old agreement early, while granting them rights (now asserted) to pick up subsequent deals at competitive rates.
The June 2017 agreement allowed Newco to seek retail, distribution and kit manufacturing agreements independent of SDI from June 2018, but obliged the club to disclose bids and agreements to SDI, and permit them to conclude an agreement on the same terms.
The judgement found Newco breached those terms. Instead, it entered into an agreement with an SDI competitor, Elite Group. It was also found that SDI were entitled to rights Newco concluded with their new kit manufacturer, Hummel.
SDI were granted damages and relief in relation to sales not achieved for exclusive distribution rights of Newco merchandise for seasons 2018-19 and 2019-20. The judge noted SDI’s losses “are likely to be in the order of many millions of pounds”, denying Newco’s attempt to set a £1m limit on damages.
The ruling affirmed an earlier finding from October 2018 that Newco “will be exposed to a claim by Elite (who will now lose their merchandise deal), but that is because of the action taken by Rangers with its eyes open to the risk as the indemnity provisions of the Elite Agreement make clear.” So as well as paying SDI, Newco will have to pay Elite Group for being unable to fulfil their current agreement.
SDI were also granted an injunction, instructing that “Rangers shall not perform the Elite/Hummel Agreement, with various sub-clauses. On top of all the financial consequences, this adds the indignity of giving Mike Ashley control over what happens now.
Newco attempted to avert the worst consequences of the ruling by claiming that if the judge upheld SDIs’ requests, “Rangers’ ability to function as a football club will be impaired.” I am sceptical of this claim, which sounds a bit like earlier claims made in similar circumstances in court on Dave King’s behalf that he was “penniless”.
James Blair, Newco company secretary and until late 2018, a partner at Anderson Strathern LLP, Newco’s lawyer (for whom he is still a consultant) came in for the most scathing treatment.
The judge noted, “He was closely involved with the disputes between the parties, with the drafting of the Agreement and the other contracts to which I will refer and with dealing with Elite.
“It appears that Rangers’ legal team obtained their instructions from him. Much of the correspondence between [SDI’s lawyers] and Rangers involved Mr Blair.”
It was noted that SDI’s lawyers “asked Rangers to confirm that Hummel had not been granted rights of distribution, marketing, advertising, promoting, offering for sale and/or selling the Official or Replica kit.
“On 18 May Mr Blair gave that confirmation, stating that “Hummel has not been granted any of the rights set out in your email”. This was untrue. He later acknowledged in his Seventh Witness Statement that “ … Of course Hummel did have rights to distribute, market, advertise, promote, offer for sale and/or sell the Official Kit and/or Replica Kit …”
Newco were obliged to provide SDI with replica kit, but the judgement found, “Mr Blair’s assertion on 3 September 2018 that Rangers’ supplier could not make units of kit available to SDIR until such time as the Further Agreement was in place.
“It has now been held……… correspondence between Mr Blair and Elite in late August shows that Mr Blair’s strategy was, in his own words, to lead SDIR a dance.”
In evidence, Blair managed to tie himself in knots over the fan boycott in the years before the June 2017 agreement. In addition to his role as Newco company secretary, Blair was also a director of Club 1872 Ltd, a supporters’ group which issued statements supporting the boycott.
Blair “sought to distance himself in evidence by saying that the statements were, in fact, issued by another supporters’ group, called Supporters Voice Ltd.” However, the judge noted that Blair was also a director of Supporters Voice Ltd.
The judge noted, “I found Mr Blair’s evidence to be unconvincing”, a significant reprimand for a solicitor.
The entire escapade could have been avoided if, as the judge found, Blair had not “untruthfully asserted that Hummel had not been granted any Offered Rights and did not provide SDIR with a copy of the Elite/Hummel Agreement.
“The upshot of all this is that Rangers, Elite and Hummel have until now performed and enjoyed the benefit of the Elite/Hummel agreement. The 2018/2019 season has been completed and, as the evidence before me showed, preparations for the 2019/2020 season were well underway by the time of the hearing.
“Had the rights been offered to SDIR then SDIR would have found itself in the shoes of Elite and would have been in a position to make the sales and profits that Elite has made.”
Newco managing director and SPFL board member, Stewart Robertson, gave evidence of little weight, the judge branded him a “mouthpiece”. More appropriate parts of the anatomy are seldom referred to in written judgements.
This is a shambles. An unmitigated, embarrassing, shambles, but you may be tempted to ask why?
Why did Newco pay £3m to enter into an agreement that granted SDI so many rights?
Why did they try to subvert those rights shortly after the agreement was struck and why did they think Mike Ashley would not notice?
Why, when Ashley asserted his contractual claims, did Newco not back down, instead of dragging everyone through this publicly humiliating spectacle?
You and I would not behave like this. You would not publicly self-congratulate a truly dreadful deal while not disclosing you paid £3m for the privilege.
You would not sign a contract with a rich and litigious man, then sell someone else the properties he is legally entitled to buy.
You would not be so contemptuous of the supporters you profess to care for, that you would make their club a laughing stock. This behaviour is exploitative of others, indicates a poor sense of reality, is grandiose and entitled. It is disordered.
All that was needed to gain initial control was to assert enough of an absurd fantasy and invest others with enough incentive to look away.
I know others want Fit & Proper tests applied to these people but I will regret the day any of them leave. They can stay for as long as they are prepared to peddle their nonsense to the unsuspecting masses – who are mostly prepared to look away, as the alternative is to contemplate the unpalatable reality, that 10-in-a-row is only just the beginning.
The big question is, how long can this phoenix fly? Newco lost £14m in the year to June 2018 and remain reliant on support from directors. When the figures for the year to June 2019 are released, they will show an increase in income as well as operational costs, reflecting the recruitment of 22 players since that time.
This judgement introduces a powerful new creditor to a financially fragile operation. Money will need to be found to compensate him, as well as for operational costs. If not – and I do not see where it is coming from – the phoenix will fall.
You and I have known how this story will end since it began with King and Co. undermining Newco at its inception in 2012. The writing has been on the wall ever since, it is only a question of when?
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Beyonce
Hoops a daisy
Come on , Boris
Thank you .
Contemplating CL qualifiers into the second round, with an experimental back three ten days before the first league game, is less than ideal.
The pursuit of a right back seems to have gone on for longer than Jason’s search for the golden fleece, and even if the right one, was to sign before the deadline for X million, will he be fit, and settled for selection, for the opening league games?
Hatem Abd Elhamed being pilloried before he’s even a Hoop, is downright ignorance of the worst kind, newspaper rebranding the Israeli as Neil Lennon’s ‘new first choice full back’, is malevolent, Michael taking, and nothing more than manna for the Celtic transfer ‘we want brigade’.
Whatever the price of mince in Govan the curtain hasn’t even begun to fall on this window, where having shifted most of Brendan Rodgers’ flotsam, we’ll more likely than not, sign three or four including a right back more, taking our spend closer to the Dembele equivalent.
Boris PM FFS !!!!
Celebrate.
Trump Putin & Johnson, how scary is that?
I think it’s fair to say given the political titans in charge now that we’re all Donald Duck*d
So to lighten the mood and news of another portent of doom for a club on the Southside
Can we not just sign a RB that’s all
Sevco’s going bust,
Sevco’s going bust.
woo-hoo
Still would like a RB of repute please…..
And a steely central mid
And a Moussa Dembele clone….
Spend the money Celtic…
No matter what you print about Sevco demise,right from day one they were liquidated,that’s that there finished,well they are still here,they are getting money from somebody ,probably rich Sevco supporters,one thing for sure they will never go out of the game,anyway Celtic supporters should more concerned about new players coming to the club,Lennons been telling usfor last 3 weeks that he is hoping for 2 or 3 players,coming ,well we’re are they,it’s all spin,lennons going by what the board say,that’s why he was offered the coach job,which in my mind was a absaloute disgrace,he walked when he knew the funds that were made to himregarding new players coming to the club,well we know we’re he ended up,Bolton,Hibs
”Bo Bo super Bo”
:)
Shambles of a club.
Thank goodness we don’t compare ourselves with them or see them as some kind of “big rival”.
How embarrassing would that be!
Paul67
Whilst I appreciate the sentiment of keeping a fool in charge of Rangers I cannot reconcile that with keeping fools and liars in positions to cause widespread damage to society.
These are the people ok, People of the Lie (read M Scott Pecks book of that title).
Plausible physcopaths who live in an unreal world that they think they can make real.
At a Res12 meeting two Christmas’s back I said Celtic were dealing with a criminal organisation and if that reality hasn’t dawned on Celtic by now (and other clubs who have turned a blind eye) then the game, like the wider UK society under Boris and his gang, are heading for hell in the same hand cart as Trump.
Where is domestic fair play? Where are the stiffer rules on independent licence policing? Res12 was intended to provide leverage to make that happen. A Dougie , Dougie moment writ large. Why wasnt the lever pulled?
What if Rangers Ltd go bust again? Will it be rinse and repeat and will those responsible for protecting the name of Scottish football repeat the insanity of the 5 Way Agreement in the hope doing the same thing will produce a different result?
Get a life
🎵 There’s only one Boli Mbombo…
He hits the ball with aplomb-o…
He plays out left…
His touch is deft..
Walking in a Boli Wonderland. 🎶 😃
🍀⚽️
.?..Bojo…ffs
False No2???
Is that what you call a ghostie…:)
Or is a false No2 someone who is better known for playing CB….)
RB should be the priority position to fill imo.
HH
Wonderful analysis Paul. So many questions regarding the Ibrox Club can be answered with one word : Hubris.
As you said, long may this culture continue. They will never learn because they cannot learn……………
So King’s deal has cost the Huns the best part of £6 Million and they still think he is the saviour ? Yet we want our board sacked when our half-time pies are cold ? Is this some sort of parallel universe ?
Boris Johnson Prime Minister ffs,Independence here we come….
TIMBHOY 2,
Every day,the same narrative from you.We ARE looking for a RB.We have bid for some,been knocked back,some dont want to come.The hunt goes on,in the real world.We could sign O’Donnell tomorrow.Would you want him?I have said before,if we were to announce we were signing a RB from Dortmund tomorrow,for £7 million,you would be delighted,never having seen him.Would you have been happy with Toljan,a month into the season?.If signing players was easy,every team would be doing it.Look at Arsenal.Even with their EPL status.They have a loan player in so far.The level of player you want would cost £10 million,and £50 grand a week.Otherwise you end up with the likes of Barisic of the Huns,or God forbid,a Toljan.
Plenty of time to come on here when the window closes and rail every day about how crap this window was.Is it too muchbto be a bit patient.
Does anyone sense a teensy weensy increase of pressure on Stevie G to make the Europa League Group Stage?
Remember when we all shook our heads in astonishment,when the voters of America voted in Trump.The joke figure of American politics for years.Well Englandshire have just “Trumped”that with the election of the total buffoon,Johnston.Voted in,not by the electorate,but by a cartel of ex Hooray Henry public schoolboys,and assorted ass kissers.
So much for”Better Together”.
I see the “mouthpiece” has been elected to the SPFL board. Following on from move-on Petrie’s promotion at the Strong Rangers Association, it’s good to see these much spoken about reforms in our game……
” More appropriate parts of the anatomy are seldom referred to in written judgements.”
;O
:)))))))))))))))))))))))))))))
Kwality.
HJ,
YES.
PHILBHOY
Have a good trip to the Med.
Στην υγειά σας 😃
🍀⚽️
Why isn’t wee Chick “wiportin’ wive” from oooootside the krisis -struck, kash-strapped, dilapidated Victorian Toilet Block?
Why no worried “interviews” with kash-strapped former stars, keen on a free lunch.
Wonder what Walter thinks of this sorry mess?
Hey Sir Bumptious….penny for yer thoughts????
Anyone…..Anyhun……….Anywhere???????????????????????????
Only guid news for the huns in scoddland.
Shameful.
HHH.
When?
Tomorrow never comes.
Your average cat is insanely jealous of Newco’s number of lives. Oldco; Newco; newerco; newestco; etc.
FreebeertomorrowCSC
AULDHEID @ 12:37 PM,
Yes, the a-moral society that we live in allows and accepts and even admires these sort of actions.
Just a some celebrate the dysfuntionality of Rangers.
I’m sure some Scottish Independents will be rubbing their hands in glee at Boris’s appointment.
For me, there is little go celebrate.
Aff Oot
Hail Hail
Forgot to say……..
Paul 67, thanks for a straightforward analysis of the “currant” hunned-up snafu……..
Cheers!
Anyone, everyone especially if you’re a bank.
Great blog, Paul, a thoroughly enjoyable analysis.
If I was in James Blair’s brown brogues I’d be seriously worried about getting hauled up by the Law Society beaks on a charge of professional misconduct.
How many is many?
Huns now outside Ibrox chanting ‘ Hey baby let the phoenix fly ‘
HH
Whilst the fans outside are growing ever restless. King and co are bunkered down concocting a cunning plan…)
https://www.youtube.com/watch?v=G2DCExerOsA&list=PLiN9EIqsQCZv363IX__kq2Txy5Vu2qmKQ
HH
The only way the newco will go bust is if they can’t pay their bills – which will only happen if the cash sources run dry.
Even then it will be administration.