The writing seems to be on the wall for Mike Ashley as the power behind Rangers football club. As the EGM that threatens to wrest control of the board from him looms, Ashley’s key allies are falling on their swords. Chairman David Somers resigned this morning with immediate effect, only five days after fellow board member James Easdale.
Shareholders will vote on Friday on whether to replace the current board (of which now only two remain) with South African businessman Dave King and two of his associates. Judging by Somers’ and Easdale’s resignations, it looks like the vote will succeed.
That’s hardly surprising. Many fans and shareholders are furious with the club’s deals with Ashley, whose £10m loan to the club was followed by the appointment of his associates Derek Llambias and Barry Leach as chief executive and finance director respectively. Sports Direct also got access to 75% of the merchandising profits from its joint venture with the club, while Ashley gained security over a number of its assets.
Somers’ resignation may simply be a case of jumping before being pushed, but his parting words were more concerned with what it’s actually like to be the object of ire for tens of thousands of angry Glaswegian football fans.
‘I have worked in the City of London, the world's greatest financial centre for decades and enjoyed considerable success,’ he said. ‘When I was approached about the Chairmanship of Rangers, friends warned me that the world of football has different rules and codes of behaviour. I now know that is a gross understatement.’
After pining for the civility of the City, Somers turned his attention to his detractors. ‘At the risk of antagonising my army of critics I would point out that Rangers managed to pay its bills and avoid going under during my tenure. These critics might not agree with how we achieved this. I look forward to alternative solutions from whoever is running the club in the future,’ he said.
As indeed will Ashley. Even if his associates Llambias and Leach are removed from the board, there is the small matter of the £10m loan, which is currently all that’s keeping the beleaguered club alive. Ashley might not get his own way entirely, but he will retain significant influence over Rangers until it finds a way of paying him back.
Criticism at home
This isn’t all Ashley has to worry about. While he’s off campaigning in Scotland (figuratively speaking – he’s about as unlikely to be seen in the Ibrox rafters as the Celtic Fan Alliance Cheerleading Squad), he is having some problems at home.
Crispin Odey, Sports Direct’s largest institutional investor and usually a supporter of Ashley’s unorthodox business style, has criticised the firm’s lack of a finance director – 14 months after its last one left.
‘This puts too much power into one person’s hands,’ Odey told The Sunday Telegraph. ‘They have got to move quickly on this.’
Unsurprisingly, Odey isn’t the only investor to have pulled Sports Direct up on this. In its annual governance and stewardship review, 1.8% stakeholder Standard Life said concern over governance had been ‘a persistent theme’ among minority investors.
‘These issues have included board appointments, inappropriate remuneration arrangements, share lock-up agreements and Sports Direct’s practice of buying minority stakes in other companies,’ it said.
In this respect, of course, there’s not an awful lot smaller investors can do. Ashley may only own 8.9% of Rangers, but he has a majority stake in Sports Direct, and hasn’t exactly shown himself to bend under pressure.