Mike Ashley summoned before MPs as Rangers vote looms

As Ashley's allies launch a counteroffensive in the battle for Rangers FC, a committee of MPs causes problems on the home front.

by Adam Gale
Last Updated: 13 May 2015

Mike Ashley's going to have a busy March. On the 6th, Rangers shareholders will vote on removing the current board of Ashley's allies and associates. Then, at a point in the month as yet undetermined, he will have to face MPs for a grilling about his business practices. Let's hope they don't call it on the same day and deprive Ashley of his chance to mingle with fans at the Ibrox stadium, eh?

The UK parliament's Scottish Affairs Committee said it's 'inviting' Ashley and other Sports Direct executives to discuss its use of zero hour contracts and the administration of the firm's USC subsidiary. USC filed its intention to call in the administrators in January, only for Republic, another wholly-owned subsidiary, to save the day and buy it.

In the process, 200 Ayrshire warehouse workers lost their jobs, which prompted the inquiry. Committee chair Ian Davidson said they were also 'looking for evidence on USC's use of zero hour contracts... and we would invite people to come forward and tell us their experiences in this area'. Somehow it seems unlikely they'll hear glowing testimony on that one.

All this means the reclusive Ashley is probably going to have to make a rare public appearance, though at least that might serve to distract him from the looming EGM at Rangers FC, where he is locked in a power struggle with South Africa-based businessman Dave King and an alliance of wealthy fans known as the Three Bears.

Former club director King called the EGM to vote on removing the board and replacing it with a new one that includes himself. After several aborted attempts to get a London venue far away from disgruntled fans, the club finally relented and announced it would hold the meeting at the Ibrox stadium, on March 6th.

King has a strong chance of ousting Ashley's associates from the board, should the meeting go ahead in the face of possible disruption. Faced with losing their jobs, the board is now trying to convince the more phlegmatic stockholders that King would be an even worse choice than Ashley.

In a veiled reference to the fact that Rangers currently depends on Ashley's loans to survive, the board asked King 'to provide further information regarding what his business plans are in regards to the future running of the club and, in particular, how he intends to finance the club going forwards'.

It also raised the question of King's eligibility to sit on an AIM-listed board, due to his settlement in a South African tax case, asking 'what action he intends to take to avoid the suspension of the Company from trading on the London Stock Exchange'.

While this will do little to sway fan-investors like Gordon Ramsay, it might weigh heavily on the minds of the institutional investors whose votes will likely determine the outcome. If King can't answer those questions adequately, they might have to choose the rock over the hard place.

Tags:
Strategy

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today