The Strongest Hand?

mike-ashleyIf you play cards – poker I mean, as opposed to Snap or Hearts, or some other such game – the chances are good that you’ll have seen the film Rounders. It’s a particular favourite of mine, and there’s an interesting quote at the beginning of the movie.

“If you can’t spot the sucker in your first hour at the table … then you are the sucker.”

There’s a particularly interesting poker tournament going on at Ibrox right now, and it’s clear that there are many thousands of suckers. At times I wonder that I don’t feel more sorry for the ordinary Sevco Rangers fans, except they did this to themselves, with their barmy insistence on the Survival Myth and their failure to learn a single lesson from what came before.

None of that matters to the main players. They eye their cards, and the pot of money in the middle of the table – that, after all, is why you play the game in the first place. The flounders have contributed their share. Now the sharks are circling to see who gets to feed.

I would be hard pressed to tell you who’s going to win this game.

It’s also hard to know what exactly the winner would be getting.

Oh I know what our intrepid media thinks they would be getting. “One of the biggest brands in world football” according to a couple of them. The idea makes me want to laugh. A discredited NewCo clawing its way up from the gutter, with a fractured, divided support, permanently mired in scandal and controversy … skint, trying to survive in a football backwater …

Yeah, it’s hard to know what all the fuss is about.

There does seem to be someone ahead in the chip count at the minute; Mike Ashley.

There was a curious thing happened just last month, something little reported on by the Scottish media. Ashley turned up at the Sports Direct AGM, for the first time in many, many, many years. He wore a polo top and jeans, and he sat at the table, and he ignored nearly every single question that was put to him except the first.

The question he was asked was this:

“I wonder if he could explain the benefits to Sports Direct in its relationship with Newcastle United and Rangers.”

Ashley waited 27 seconds to answer it, with the following:

“Other than to say that it’s been beneficial to Sports Direct and therefore its shareholders, I don’t think it’s appropriate to comment,” he replied.

He was asked why advertising boards around the Newcastle pitch are given to Sports Direct but don’t generate any income at all for the football club. He was asked how much those boards are worth, and what the club could get if they were sold to another company. He referred the journalists to his previous answer, and refused to go further.

He was asked about Rangers, and whether some kind of link with Newcastle was being considered. He would not answer that either. He was asked about the naming rights to Ibrox Stadium. No reply was given except, again, that enigmatic directing to the answer he’d given before.

What did emerge from the AGM is that he pockets every penny generated by the Newcastle United merchandising wing. We know that he had a major stake in the Rangers retail outlets, but we’re not quite sure if he owns them outright. What we do know is that Phil Nash and Graham Wallace sit on the board of the company called Rangers Retail Limited, along with Ashley and two of his cronies from down south.

But there’s a sting in that particular tail … because neither Nash nor Wallace is on the board of another company, a more recent company, set up on 9 September this year. This company operates under the name Rangers Retail Rights Ltd. It’s run by Ashley and two other guys, one of whom is with him on the Rangers Retail Limited board.

Who owns what? Does Ashley have the casting vote on the RRL board? What’s the relationship between the new company and the one Wallace and Nash are on? Who’s really running the show?

The refusal of Ashley to get directly involved in the recent share issue is even more interesting when viewed in light of his decision to buy more shares in the last few days.

It seems clear that he was keen that the money not go to the club. He was equally keen that the shares he bought have full “voting rights” and were not diluted in any way. He is clearly manoeuvring for something … and if we’re to assume the only thing he really cares about is the benefit of Sports Direct, what is it he’s after?

There’s no money to be made in pouring millions down the drain of Ibrox. We know this because it’s been confirmed time and time again. Sevco Rangers is a black hole. There is no benefit to be had in continuing to feed the voracious appetites of fans who, for too long, didn’t recognise reality as we know it, and whose previous club spent money like tomorrow would never come.

Ashley knows all this,  but he knows that if you’re looking in the right places there is still a lot of commercial benefit to be realised if someone has a little imagination. He’s shown plenty of it up until now.

He has the merchandising wing sorted. He has the naming rights to the stadium in his hands. It’s rumoured he owns the trademarks, including the badge. This gives him numerous sources of income, and may make him the central player in the “onerous contracts” stories.

The corporate structure of Sevco Rangers is what is going to be most interesting here. You see, as I’ve long argued, there is one dire, horrible consequence of this support clinging to the fantasy that the football club and the business exist separate to one another.

They may find, when the music stops here, that in an administration the various bits of what they call Rangers are all already in the hands of the vultures. They may find everything of real value – to them, the supporters – like the badge, the jersey, the stadium, the training ground, all already securely tied up with the spivs, hived off in a hundred directions beforehand, and thereby out of the administrators hands.

They might find that whoever comes in to “save them” buys a name, a reputation, a history … and nothing else. Those things have a certain value, because without them the rest of the bits don’t matter at all. But without the rest of the bits, they don’t matter much either.

It might well be that Ashley and others are the only people who can put together a deal when the hammer comes down, and if that happens it’ll be on their terms, and the alternative on offer to a support which, more than anything, will just want to see some version of them survive, will be to flush the whole thing down the toilet.

Right now, Ashley personally owns 10% of the shareholding. If he can secure another 15% of the shares, either through proxies or with allies, that will give he and his block of voters the power to oppose any special resolution the board wants to make – i.e. one that falls outside the remit of an ordinary resolution, requiring 50% plus 1.

Everyone knows the club is planning a fresh share issue before the turn of the year. A special resolution is required to get one. Ashley is probably in a good position to block that move, and if he’s got 25% of the votes he can do it. Indeed it’s well within his interests to if his 10% shareholding would be diluted as a result, and that’s exactly what the most direct consequence of another share issue would be.

At 5% he had enough authority to call a General Meeting. With 10% he already has enough power within Ibrox to order an independent audit of the club’s annual accounts – and it may well be that he wants the authority to do that before the AGM.

But if he’s got enough to hit 25%, he and whoever is on his side can pretty much do as they like. In a company in good financial health, this would be a matter of politicking and little more … the kind of jockeying for influence that goes on in every boardroom.

This is a company in dire straits, where everyone has to be on the same page, or risk them running out of money …

Here, that 25% is much more significant.

The most direct consequence of Ashley and his allies being able to block a new share issue is that he will literally have the power to decide whether the club gets through the season or not. If he offers them a loan, on the most shocking terms imaginable, they would have to accept it. If he demanded further concessions – probably including the dismissal of directors and even senior staff – it is hard to see how they could refuse him.

Certainly, Dave King will never get near the doors of Ibrox now. Ashley and he will never be on the same side.

Ashley is a take-no-prisoners kind of guy. When he bought Newcastle and immediately gave them an interest free loan in nine figures their supporters must have thought they’d died and gone to Heaven, but it was the last of his own money he spent, and if he doesn’t have it all back already, and then some, it’s because he doesn’t worry that he can’t recoup it quickly.

Besides, the loan is nothing compared to the benefits he’s been able to reap for Sports Direct in the process.

The merchandising deal at Newcastle nets Sports Direct £3.5 million a year. The club doesn’t get a bean. The identical deal he has cooked up at Ibrox is said to be even more lucrative. That’s chump change though. It’s the exposure he gets every time there’s a live game played at home. It’s the deals he’s made in boardrooms all over the country, the profile he got for the firm when the stadium carried their name, and all the other ancillary advertising he gets for free, on the back of the Newcastle fans and the club.

Mike Ashley has done very well out of Newcastle, and he could double down again if he finds a buyer.

From what we are aware, his total input to Sevco Rangers has been less than £2 million. The doubling of his shareholding in this case cost him no more than £800,000. In exchange for those sums he has acquired power over the whole club and enriched himself and his other company on the back of supporters who thought they were strengthening their shattered brand.

In a previous article, I pondered who exactly was funding Sevco during the end of last season, and through the start of this one. We’re no closer to an answer to that than we were before, but things become even murkier if Ashley was one of the guys who were lending them the money to see them through.

Whoever was writing those cheques is the preferred creditor in any future administration.

If it was Ashley, his hand is even stronger than we knew.

If it’s not Ashley … well, Sevco Rangers will be pulled apart like an animal carcass, and Ashley will still have a big piece.

It’s clear to everyone who’s following this thing carefully that Mike Ashley was only looking out for his own interests over the last few months.

He has positioned himself perfectly, but what exactly is he positioning himself for?

Right now, he’s got 10% of the club, he owns its merchandising arm, he has already secured naming rights and God knows what else … all for a nominal sum, which he’s already recouped several times over … at the club’s expense.

There’s talk that he’s preparing a “takeover”, but this guy is already running things, in all but name. He now holds the strongest hand around the table. If the whole thing comes crashing down, he might just be the last man standing, the guy who gets his hands on it all.

If anyone thinks that’s good news, I have a bridge to sell them. This is the guy who thinks the fans are no more than ungrateful wretches. This is the guy who tried to charge the media for interviewing players. The guy who has banned lists for all the hacks he doesn’t like, or whose questions annoy him. The guy who runs things like a dictator … for the good of the sports company he owns, and not necessarily the football club he’s in charge of.

There is one little fly in the ointment here, one way he can be stopped if, indeed, his plan is to one day get his hands on the whole shebang.

The SFA has the statutory authority to deny him all his ambitions … if they dare.

The less said about that just now the better. Barring something big, they’re the subject of the next piece.

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20 comments on “The Strongest Hand?
  1. James
    “They might find that whoever comes in to “save them” buys a name,a reputation,a HISTORY.
    Indeed James,who wouldn’t want that wonderful,glorious 2 year history.That’s the history you were referring to,right? 🙂
    Good work again sir.While all eyes were on the glib and shameless one,Mike inveigles his way up the Marble Staircase into the hallowed halls of Ranjurzess. Oh the irony.I love it.HH

  2. Hi James another good article, I have been wondering what mike assboy is up to quite a bit. What if and this is just that a ‘what if’ scenario, but what if he was planning a merger of the 2 clubs?? Just going to leave it at that for now and see what you think about this. HH

  3. Why not wtite about Celtic, our split support ?
    Our fans failure to accept the financial mire we are in . Let them struggle through the season , Celtic is my only concern, atleast till we are in the same league

  4. Ashley is still officially owed £129M according to club accounts.
    He took £11M in 2012 and was due to take £18M in 2013, but that did not take place.
    Ashley has a surplus on transfer deals since the day he walked into the club, not one penny of his own money (apart from the initial investment and loan you mentioned) has been spent on Newcastle United.
    The transfer fees of the 9 players (yes nine) we bought in the summer was all paid for by the money generated from the sales of Yohan Cabaye and Matthieu Debuchy, no money from Premier League prize money, English cup (FA and League) prize money, gate receipts, proceeds from the sale of outsourcing contracts for catering within the stadium (pies, beer etc) and the TV money (guaranteed at least £60M from the latest Sky/ BT Sport deal) has been spent.
    Speculate for yourselves where that money has gone, probably the same way as the Rangers money that Murray, Whyte, Green et al seem to have been gifted with

  5. just an idea. 1. ma said he will not sell nu fc until end of next season. 2. does he know sevco will go into admin this season therefore 15 pts deduction ,no promotion until next. 3 he picks up the carcass for pennies in admin. 4.as owner of sevco he invests a bit to get them into europe , calls ipox sports direct arena and gets european exposure for s.d.a .as i said just an idea to his end game.

  6. James,

    There is one little fly in the ointment here, one way he can be stopped if, indeed, his plan is to one day get his hands on the whole shebang.

    The SFA has the statutory authority to deny him all his ambitions … if they dare.

    From Richard Wilson on the BBC website yesterday re Mike Ashley:

    “But he is limited to no more than 10% by an agreement with the Scottish FA.
    The governing body has a rule that no individual holds stakes in two clubs, but compromised, while applying limitations, when Ashley was brought into RIFC as a shareholder by previous chief executive Charles Green.”

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