Why has Sports Direct taken a stake in Game?

Mike Ashley has a penchant for dramatic - if esoteric - investments.

by Adam Gale
Last Updated: 13 Jul 2017

Mike Ashley is notoriously media-shy. He doesn’t do interviews, he doesn’t court attention, yet somehow it has a funny way of finding him. One wonders how different his story would have been had someone only explained to him that golden rule, that if you want to be ignored you need to be a) available and b) boring.

Ashley is of course neither. Indeed, he’s both mysterious and dramatic – pure media gold. If he’s not playing the part of pantomime villain at Newcastle or Rangers football clubs, or offering to give MPs helicopter rides to his factory, he’s defending himself in civil suits that involve reports of him vomiting in pub fireplaces during combined business meeting/‘power drinking’ sessions. You couldn’t make it up.  

You’d think he’d want to lie low for a while and recover, but alas not. Sports Direct, the high street giant Ashley majority owns, just made the remarkable decision to take a 26% stake in struggling retailer Game Digital for around £10m. On its own, that might seem like a headscratcher. What possible strategic connection could there be between a sporting goods store and a computer game store?

Actually, there’s some logic. The age of the CD-Rom has long since passed, so Game has repositioned itself around e-sports. Some of its stores even have dedicated e-sports areas, where gamers can come and compete or cheer on their favourite teams in League of Legends and the like (and maybe buy some merchandise while they’re at it).

Sports... e-sports... the difference is surprisingly slim, at least demographically speaking. It’s possible Ashley intends there to be a partnership of sorts, much in the same way as Sports Direct has with Debenhams, in which it also has a stake. You could see something like a Game concession in a Sports Direct store, for example.

The alternative is that Ashley is less interested in strategic partnerships and more interested in the fact that Game stock was going cheap, having lost two thirds of its value in a year.

In either case – using a share purchase to create leverage for a busienss deal (he could have just asked...) or simply making a big bet on another retailer's stock – it just confirms what we already know about him. Ashley is a maverick, and mavericks (especially maverick billionaires) made good news. Anyone would think he actually liked the attention after all.

Image credit: Editor5807/Wikipedia

Tags:

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