If the shareholders who took control of Rangers in March thought that getting rid of Mike Ashley would be as easy as a simple vote, they were mistaken. In a letter obtained by Scotland’s Daily Record, the Sports Direct tycoon gave the club formal notice to call yet another emergency general meeting.
Instead of attacking Dave King and the current board, however, Ashley is apparently offering to walk away from the club. You know what they say about things that seem too good to be true…
The official purpose of the general meeting, which Ashley has a right to call as a major shareholder (he has an 8.9% stake) is to get answers about how the club came to be delisted from the AIM exchange in April.
That occurred because Rangers’ nominated advisor (or Nomad to its friends) WH Ireland resigned and Rangers failed to convince another Nomad to take its place, which the club blames on ‘well documented failings in corporate governance and management’ of the previous, pro-Ashley board.
Getting answers isn’t the only item on the agenda, however. Ashley is giving shareholders the chance to end Rangers’ association with Sports Direct. He will return the asset securities and the 26% stake in merchandising joint venture Rangers Retail that Sports Direct temporarily holds on top of its own 49% stake - in exchange for the club paying back in full the £5m he leant it in January. Within ten days. Gulp.
Could that be the point of this little letter? It would seem a clear message to Dave King and the board to, as a source close to Ashley is quoted as saying in the Daily Record, ‘put up or shut up’.
The club does not have £5m in cash. It’s losing money fast (£2.6m in the six months to the end of December, from £13.1m revenues) and doesn’t even have the ability to raise further secured debt – Ashley put a clause in their loan agreement that Rangers couldn't use the Ibrox stadium as security without his consent, and has security himself on all their other major assets.
Rangers has 28 days to reply to the letter, which was dated April 29th, and either set a time and place for a meeting or find a valid procedural reason why not to hold it. Presuming it does not find such a reason, it will either need to accept Sports Direct’s ongoing control of Rangers Retail, which brings in a third of the club’s revenue despite a fan boycott, or find the money from somewhere else.
There are some potential sources. The ‘Three Bears’, a consortium of wealthy supporters, gave the club an unsecured loan of £1.5m in March, and chairman Paul Murray said the board was looking for funding ‘provided by existing and new investors who now want to invest in the Club’. Whether the Three Bears or anyone else can be persuaded to part with more of their money remains to be seen, but not everyone has pockets as deep as Ashley’s.
Maybe that’s what Ashley actually wants. Yes, the letter does serve to remind his enemies at Rangers of the power he still has over them, but it could also be what it seems to be - a way out. The project has caused the billionaire plenty of hassle, after all, for seemingly little reward.