In a manoeuvre that wouldn’t have been out of place in the backrooms of a Byzantine palace, Mike Ashley has wrested control of Rangers Football Club over the weekend. The beleaguered club accepted Ashley’s offer of a £2m, interest-free loan to help pay its bills until the New Year, but the deal came at a price.
The club’s chief executive Graham Wallace, Ashley’s long-time boardroom opponent, was eliminated (in a purely business fashion, of course) while on holiday with his family in Greece. That was just a day after Philip Nash, Wallace’s principal ally and chief financial officer, fell on his sword. Under the terms of the loan, Ashley will now nominate their replacements on the board.
The writing had long been on the wall for Wallace and Nash. The club has been struggling financially for some time, and failed to raise sufficient equity in a share offering in September. It needed to get the money from somewhere, and Mike Ashley has an awful lot of it.
Of course, he’s not the only one. Former Rangers director Dave King and allies put in a £16m offer combining equity and loans, while Sale Sharks rugby club owner Brian Kennedy offered £3m and only wanted one board nomination.
Both offers were defeated, and not just because it takes a brave business leader to accept a loan from someone with ‘Shark’ in their name. Ashley’s victory came as a result of an alliance with the two major factions on the board – chairman Sandy Easdale, who controls 26% of the voting rights, and the hedge fund Laxey Partners, who control 16%. When Ashley’s own 9% stake is taken into account, this triumvirate commands just over 51% of shareholder votes.
Why Easdale and Laxey have cast their lots with Ashley is unclear, but Ashley’s gains are obvious. The Sports Direct owner can now guarantee his firm’s lucrative merchandising deals with Rangers, and might be able to secure a transfer of trademark rights, which he had sought earlier before being blocked by – you guessed it – Wallace and Nash.
If Ashley wants to buy up a majority stake in the Rangers, he’ll need to sell Newcastle United first, under the terms of his deal with the Scottish Football Association. Following this loan, though, that may no longer be necessary, as Ashley can get most of what he wants from Rangers without having to risk his money. Caesar would have been proud.
