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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Thanks for the analysis Paul – good work. They were doomed the day Dave King took over their club. Whether they fold or not, things will never change for them with him in charge. Sometimes I actually feel sorry for their supporters.
MNCELT on 23RD JULY 2019 1:55 PM
Sometimes I actually feel sorry for their supporters.
========
Reminds me of the OAE sketch of Ivan Golac talking about Jim McLean. ‘I still have a soft spot for Jim McLean… its a piece of quicksand out in Croatia’
HH
Hatem Abd Elhamed: Neil Lennon says Celtic set to sign Israel defender
https://www.bbc.com/sport/football/49084338
Celtic are poised to complete the signing of defender Hatem Abd Elhamed, manager Neil Lennon has confirmed.
a deal had been agreed pending a medical, with work permit and visa applications also outstanding.
lots of ifs and buts.
Reading Beram Kayals assessment of Elhamed makes very good reading.He states,as does Lenny,he is very quick,excellent footballer,can play CH,or RB,very well.Personally,I dont have a problem with him playing RB,if he is quick as they say,and can obviously tackle,and read a game,why not.
Now get Cifuentes signed up.
Where’s ra Bommur when ye need him……….!?
( probably under house arrest…or is that Big Hooose arrest?)
I’m getting flack from a man city supporter – that must mean Elhamed has signed!
How can anything ever change for newco when they are done incapable of looking at themselves , admitting they screwed up as oldco and now newco and start again.
I would take what the media publish with a pinch of salt, a very large one, when it involves anything to do with Celtic, they will make up quotes and lie to suit their agenda, I remember the media quoting Henrik that Mo Bangura was a quality striker, lies of course.
The Israeli may be a decent player, we will just have to wait and see.
On the Newco merchandising deal…
As a new start up, Charles Green’s Newco didn’t have the resources or wherewithal to launch a retail operation, so they partnered with Sports Direct who had both. Sports Direct negotiated a deal with Newco that reflected the risks inherent in working with a new start business, a deal Newco was happy to sign.
By 2014, the retail operation was coming along nicely with revenue of £7.6M, and after SD took their (larger) slice of the profit, Newco got around £500K of dividend. Not bad for a high risk venture. SD were so keen to ensure the retail operation continued that they provided interest-free loans of £10M to Newco to cover trading losses in the football business.
Things went sour when Dave King started to agitate for control of Newco. Boycotts were called on the retail operation, and revenue slumped to £3.5M, providing a dividend of only £100K to Newco.
Matters deteriorated thereafter, Newco under King obstructing at every turn in order to manufacture a way out of the deal, and the following year Newco actually lost around £400,000 from its participation in the retail venture.
Finally, a new deal was struck between Newco and SD, with Newco paying SD £3M to exit the old deal, while SD had first dibs on any new deals subsequent to the 2017 one year contract.
In the years from 2014 to 2017, Newco had turned a £500,000 annual income into a £4M loss, a cash swing of minus £5.5M. Clever.
In 2018 Newco got wide and struck a 3 year retail deal with Elite Group, ignoring SD’s first dibs contractual rights. So confident was the new wide-o Newco, that it indemnified Elite in the event that the contract was undermined by the pre-existing obligations to SD.
SD weren’t best pleased when they found out, and rocked up to the High Court. Over three separate but related cases, Newco got clamped.
The court found that the contract with Elite breached SD’s first dibs rights, and that Newco were het for SD’s losses.
The court also noted that, since the Elite contract was voidable, Elite would likely need to be compensated under the indemnity Newco had given them.
In short, Newco needs to pay damages to SD for shafting them, and damages to Elite for being shafted.
Given the retail operation turned over £7.6M in 2014 (Newco’s football team coming third in the second division) it’s likely that a better managed retail operation for a better football team in the top division will be bigger. Given that retail margins are 50%, with around 20-30% dropping to the bottom line, there’s certainly more than £2M per year of profit to share, probably +£3M in a well managed operation.
Newco has a three year deal with Elite. The first year (last year) Newco need to compensate SD for the profit Elite generated in its place.
The second year they need to compensate SD for the same sum, and then compensate Elite for the profit they cannot make because the court has clamped their retail contract.
The third year SD gets back the retail operation, and Newco needs to compensate Elite for being excluded.
Far from having trouble finding a retail partner, Newco is paying for two of them.
By the time the next deal comes up for negotiation – 2021 – Newco will have missed out on 7 years of retail dividends of (minimum) £500,000 uder the original deal, while paying out £3M to SD in 2017 to escape it, plus “many millions” more to both SD and Elite in the coming years to sort out the mess they created in 2018.
Fag packet figure? I’d reckon between the two retail partners, north of £10M damages, plus the hefty costs to date.
There you have it; “Dave King’s victory over Mike Ashley and Sports Direct” is a triumph of belligerent stupidity.
Reading Auldheid’s response to Paul67’s article was sobering. I have no time whatever for Trump, Putin or Johnson but I DO hope that sevco do die once and for all and the sooner the better. They and the people who control them are a blight on Scotland.
Let’s not prolong their agony by turning a blind eye to the machinations of the likes of King.
Reading the Battered Bunnets post on the SD agreement,have a read at the Rangers News take on it.Ashley getting it in the neck.If he wants Tavernier for Newcastle,instead of the £8 million,charge him double,in fact,tell him to GTF,and have no dealings with him.
The Banter Years,series 8.
they have Huns in plaCE IN sfa. yOU CAN GUARUNTEE THAT WHATEVER HAPPENS THEY WILL BE FINE…MeaNWHILE WE SIT ON OUR HANDS …. on and off the park.. The Window is closed for this round of Europe that is the window we were looking at.. if we get kicked out will PL then say .”Just as well we never spent money on a good player, we wont have CL money. Oh well lets just sell our best player and make sure these £2 for my Xmas bonus!”
Even The Scotsman is getting in on the act:
“If Kieran Tierney is worth £25 million, how much is James Tavernier worth to Rangers?”
PS why haven’t we even tried to buy a Centre forward? Only got OE.. Maybe have LG back at some level..No idea about Bayo… Basically relying on one player. Who could be sold at anytime.
Dave King. The man who sold the jerseys.
“!!BADA BING!! on 23RD JULY 2019 12:49 PM
Boris Johnson Prime Minister ffs,Independence here we come….”
Nationalism (English) got us into this shit position, why do you want more of the same?
Less borders, not more.
P67 hat tip; hung by their own hubristic petards, it seems. Phoenix FC/Dodo FC/Norwegian BlueFC.
Hatem (or lovem); welcome to CP; Al-salam alaikum or shalom, big fella. HH (Hail Hatem).
If KT is worth £25 M then Tavernier is around £0.5. Apart from an occasional FK he is utter mince. Like Alan Hutton or Anto Rogan a defender who can’t tackle
That is as concise a summation of this omnishambles as I have read on any forum Paul,when I visit Newco websites the complete and utter disregard for the truth is staggering,it beggars belief that they can be so blind as to current affairs with regard to Dave Kings folly,please believe me when I assure you I’m not complaining,this is gold as far as I’m concerned,one of the best days of my life was their demise,almost too good to be true that we could enjoy the same for the new entity.
MARADOMINIC,
No idea why you support Celtic.Not being facetious.If something gave me so much angst,I would avoid it.
Supporting Celtic just gives me joy.Fans like yourself amaze me.You are in the school of,”We have £40 million in the bank,why dont we spend it”.That would have been £10 million short of Bissakas price.
Anyway,Hail hail.
Not sure I see the same hilarity unfolding as 2012 or if liquidation is even a remote possibility but this cripples them and if they are eventually forced to live within their means they’ll be near the rest of the chasing pack.
HH
PADDY MCCOURT on 23RD JULY 2019 1:42 PM
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.
………………………………….
Sorry PADDY, but you are SO WRONG !
Ive had many dealings with The LSS ( Law Society of Scotland ) since 2010, and James Blair will be FULLY AWARE that The LSS of how The LSS ” Look after their Own” !
In Scotland, every Solicitor and Advocate etc MUST be a Member of The LSS, and therefore they are the most corrupt organisation that I have ever came across.
Due to their BIASED views and determination to cover the backs of THEIR own Members they will use every stroke in the book, to ensure that THEIR Member gets OFF as lightly as possible….Trust Me !
I had my own “Solicitor”, Bang To Rights….in so much Documented evidence, including letters/Emails by his own Hand that were Full of Lies and Contradictions. He provided Me and the Complaints Commission ( The SLCC) and The LSS with endless statements of Lies, Contradictions…and more importantly…He also “Described” a scenario that was HUMANLY IMPOSSIBLE to have ever taken place…it was a Non existent meeting with Him and I, and not only could this Meeting have NEVER taken place…therefore the So Called Discussion that He claimed had taken place between Him and I could NOT have ever occurred either !….SIMPLES…or so You would think ?
No, The LSS completely IGNORED this Documented Evidence when it came to their so called Investigation of this Serial Liar and Crook, despite My submitting that SAME Documented evidence to The LSS on numerous occasions for over THREE Years !
They only “censured” this so called Solicitor with a Warning. I was to be later slightly successful in Suing The Law Society itself in relation to another matter, that was also in relation to this Serial liar and Crook and I received a small sum in compensation.
In effect, after over THREE Long years of fighting The LSS and their Corrupt Investigation , when they allowed this so called Glasgow Soilcitor “Off the Hook”….fast forward less that One Year later….This very same Solicitor was at it again, this time he was Caught red Handed attempting to steal £91,000 from an OAP Couple in Glasgow.
He ADMITTED the Charge to his Peers…The Law Society…and they again “Censured” Him…and instructed him to pay The OAP Couple £1,000 in Compensation……Yes, I have Typed that Correctly…A Scottish Solicitor ADMITTED trying to steal £91,000…and yet is only Fined £1,000…and was free to carry on working ?
This Liar, Crook and Thief also STOLE Money from Me in 2010..although no where near £91,000 admittedly…and because The LSS left him Off with that THEFT….He was then free to try and steal £91,000 around 2014. It was on the front page of The Sunday Mail with Pics of this Crook in July that year.
I had to wait nearly One Year to get MY Money that he had stolen from Me…WITHOUT any help from The Law Society of Scotland …I should add !
Imagine if You or I or any other Ordinary Joe ADMITTING to trying to steal the sum of £91,000 from anyone….We would be locked up in the Big Hoose for Years ! That £91,00 had lain in HIS bank Account for nearly Two Years if I remember correctly…gathering Interest.
I have spoken to numerous other Solicitors over the Years, and they ALL agree with Me about how CORRUPT The Law Society of Scotland is. I spoke to all these Law Firms in the hope that just ONE of them would represent Me when i was trying to sue The Law Society……As much as they agreed with Me about The Law Society being Corrupt etc….they refused to help me, simply because they did NOT wish to go up against THEIR MASTERS ….Simples !
So with respect my Friend…Mr James Blair ( Solicitor) for The Ragers…will NOT be shaking in his shoes…believe me !
HH Mate.
Just looked at a thread on gd regarding the genius who is Carlos Pena,one guy says,and I quote,” when it comes to players being a waste of money I place him at the very top,OR MAYBE EVEN FIRST”, it’s the schools to blame.
BAWSMAN,
This is a world divided by borders.There will be no end to that.Does not mean we have to suffer an unelected buffoon,who actually has no time for the inhabitants of Scotland.But,each to his own.
Bayo, Schved, Johnston all back in training
HH
Now that PL,the money grabbing,heated driveway CEO of Celtic has told Arsenal where to shove their money,whatever is to become of him?Rebates on his Council Tax,crisis loans.
Elhamed looks string and quick and can read a game
Looks more of a centre half tho so another right back please
🙂
TBB @ 2.57
Lovely read on a sunny afternoon 👍
*strong lol
BAWSMAN on 23RD JULY 2019 3:09 PM
“!!BADA BING!! on 23RD JULY 2019 12:49 PM
Boris Johnson Prime Minister ffs,Independence here we come….”
Nationalism (English) got us into this shit position, why do you want more of the same?
Less borders, not more.
That’s why i avoid politics on here…..
BHOYLO83 on 23RD JULY 2019 3:40 PM
Elhamed looks string and quick and can read a game
You are the big polis from Allo Allo,and i claim my £5….😆
Yip 50 p is maybe a bit low! £0.5M
I never said £40m. ut enough to buy a RB and CF. Insane to enter qualifiers every year without strengthing team. From end of season we have lost 3/4 of first choice defence the other 1/4 is long term injury. Lost Weah and Burke from up front. lost loan RB too and let another RB go.We haven’t replaced Dembele with a player who can go straight into team…hopefully we can get through this round and strengthen. Oh and we don’t appear to have a scout either.. or planned for the new manager. HH
TURKEYBHOY,well at least I can open a debate regarding Celtic,not like you ,all talk about Sevco,you mentioned the German full back,first time I seen him ,I said he is a dud,and I was right,personally I think O ,Donnell.is ok,and that’s my opinion,just as you and others have on here,
Given the numbers (and anticipated numbers… I dont see the zomibes getting 20 million from player sales), It seems like the zombies’ game plan is european revenue and/or loans to keep them going…. I would think that, if either fails to materialize, administration looms …
so, while it is fun to laugh at their plight ….. what is Celtic’s plan? Forget the zombies … what is CELTIC’s plan?
last time, it did not seem like Celtic wanted to end them, but wanted to keep them going…. and to keep family skeletons in the closet (for the good of the game, and hence Celtic.. I’m presuming, was the rationale)…
but Each time the zombies drag the integrity of the leauge through the mud, it makes everyone involved a bit dirtier by association (that is, if we aren’t complicit, which is a different matter)….
another administration (or liquidation) has to eventually have an impact on the game generally …. and Celtic specifically ….
so, what is Celtic’s objective this time?
what does Celtic hope to achieve? How do they intend to achieve it?
And it does no good to say ‘keep our powder dry ‘…. we did that for the last 7 years, and that is partly why the problem has happened again.
anoither admiinstration is not a pie in the sky idea …. it is a very real possiblity… for which our club needs to plan ..
in strictly business terms, as shareholders, the club should tell us what the plans are to protect our investment, in the event of another administration.
MIT
I assume you have shares and quite brightly want to know what their plan is to protect you.
HH
Adi
I do. Not a lot.
But, one of the responses that I sometimes get to my criticisms is that ‘I dont live there, so my perspective is not the same ….’
but, as a shareholder, it doesn’t matter where I live …. so, I have tried to approach it from this angle…
Celtic Prop up Sevco,with hireing a bus for first team players and other personnel,from none other than Parks of Hamilton,who between him and his son prop up Sevco,