Whelan drags JJB into extra time

JJB Sports' founder Dave Whelan has saved his old firm by buying its gyms - in the nick of time.

by
Last Updated: 06 Nov 2012

The ailing group, struggling under the weight of £60m of debt, was at risk of collapsing altogether before Whelan's timely intervention. It had breached its banking covenants and a standstill agreement with its lenders expired this week - then he stepped in with a last-minute £83.4m bid for JJB's 55 fitness clubs.

Whelan's move will generate some crucial capital, and has enabled JJB to renegotiate its rent payments - it will pay them monthly rather than three months in advance. This will keep the banks off its back for a while. They've now extended JJB's standstill agreement thanks to Whelan's punt for the fitness clubs, the sale of which was a pre-requisite of their more lenient lending terms.

It also adds weight to the idea that entrepreneurs never really leave their business behind. Whelan set up the JJB group in 1971, building on the success of his first Wigan-based sports shop to wind up with around 430 stores. After floating the company in 1994, he sold his 29% stake in 2007 to an Icelandic fund.

JJB's 12,000 staff may need a sit-down after all the high drama around Whelan's return to his old playing field. In clinching the fitness chain, Whelan had to see off the challenge of Tom Knight, a man he once employed to be JJB's chief executive.

Most recent chief exec Chris Ronnie was also sacked this week for ‘gross misconduct', after a disciplinary hearing on Monday. That's not an accusation you hear levelled at bosses every day - the parties are usually at pains to say how mutual everything has been, however grizzly the secret truth may be.

But in Ronnie's case it's hard to play down. It's understood he was given the boot for failing to disclose details of loans relating to the ownership of his shares. He'd threatened to resign back in February after an investigation into a controversial share sale, in which a company jointly controlled by Ronnie had offloaded a 27.5% stake in JJB without disclosing the disposal, contravening City rules. 

Whelan also threw a few accusations at Sports Direct entrepreneur Mike Ashley, a talented dealmaker who's not exactly known for his tact. Whelan said Ashley tried to scupper the JJB rescue by trying to prevent the transfer of leases to Whelan's name, and that he even encouraged him to let the retailer he created go bust: ‘He said if I backed off from the deal he'd guarantee I'd get the health clubs at half the price I'd agreed to pay,' said Whelan. Never let anyone tell you Ashley's not a classy player.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today