An interesting time for Ashley in his adventure with Rangers and Newcastle United. Two key events happened on Tuesday, in all probability closely linked. What has happened and what does it all mean?
The 27th January was pencilled in the diary to face the SFA. In brief, Ashley faced two charges under SFA rules. The first is under rule 19, that of multiple ownership, or influence, of football clubs. The second is whether Ashley is acting in the best interests of Association Football. More of that later.
Following the charge, Ashley sought to propose plans to increase his stake in Rangers from 8.92% to 29.9%, the maximum that can be owned under Stock Exchange rules without making a bid to take over the club completely. The question remains whether, by installing directors Derek Llambias and Barry Leach, Ashley is in breach of his undertaking with the SFA.
I have previously suggested that Ashley holds the trump cards. European Union articles and directives over free movement of capital leave question marks over the lawfulness of the SFA’s own rules. Having the liquidity of Rangers in his hands gives him immense short-term power over the future of the club. The SFA seem to have yielded already on whether Ashley should attend in person, instead, allowing the hearing to take place by conference call between lawyers initially, surely a climb down in all but name?
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A further announcement was released to the Stock Exchange on Tuesday morning. This statement was technical in its nature but is worthy of revisiting. In doing so, it is worth remembering that Ashley himself has his own investment vehicle, MASH Holdings. As an individual, he also owns shares in Sports Direct, recently diluted to 55% ownership having released some cash for other purchases.
Sports Direct is a Public Limited Company. Although the major shareholder, some safeguards were made for investors when the company was floated on the Stock Market. On some issues, institutional shareholders have the power to block certain measures.
The announcement was made, not by Ashley, but by Sports Direct which could be highly significant. Ashley’s role in the company is as Deputy Executive Chairman. The Chairman is Keith Hellawell, a former Chief Constable. Chief Executive is Dave Forsey. As a legal entity, the sports retail company is NOT Mike Ashley.
The announcement has a number of components. A loan, in two tranches, will be made from the retail company (not Mike Ashley). Control of Rangers’ retail joint venture reverts to the retail company (not Mike Ashley). Security for the loan is provided to the retail company (not Mike Ashley). The loan to MASH Holdings (Ashley’s investment vehicle) will be repaid. The retail chain (not Mike Ashley) will be allowed to nominate two members of the board of directors.
At first sight, it would seem that Baldrick has a cunning plan, to divorce ownership of Rangers and Mike Ashley. Instead, a major retail chain in which Ashley has a legitimate interest as a member of the public, owning shares in a public company, has come to the rescue of a Scottish football institution.
Going back to the charges brought by the SFA, the first was of ownership and influence. No doubt there had been some negotiation in the background in the intervening six weeks. Ashley is not in breach of the ownership regulations, even if he does have shares in another investor. However it appears to the public, the temporary loan from Ashley himself no longer exists.
In terms of influence, that is another issue. Without those interventions, Rangers would still possess the same board. Much as it pains a Newcastle United supporter to say so, on paper, Llambias has a claim to have contributed to another football club becoming profitable, from a position of losses. Without that intervention, it can be argued to the right audience that this is what Rangers needed.
Whether this was a willing audience remains to be seen but it is worth revisiting the 2nd charge. Has what has happened been in the interests of Association Football, particularly in Scotland? Should this financial package not have been put in place, the logical conclusion would be that Rangers would not be able to meet its financial obligations for the end of January. The club would have to go into administration as insolvent.
Whose fault would that be? Ashley has put cash up. A retail company in which he has a shareholding has also put cash up. By saying that this is unacceptable, it would be the SFA saying that the funding proposals are unacceptable, that Rangers should go into liquidation, not only jeopardising league fixtures and revenue but also killing the 2nd biggest club in Scottish football. Would the SFA wish to jeopardise a cup match between the two giants of Scottish football?
Is it in the interests of Association Football, particularly in Scotland, that a club which has more league titles than any other Scottish club, more league cup wins than any other club and is second only to Celtic in FA Cup wins, should otherwise go to the wall?
From the point of view of the SFA, an organisation with a mere £0.5m profit, with a turnover of around £30m, would they really want to undertake a long drawn out, expensive legal action against a company and individual with a combined wealth of over £4,000m? There is an expedient solution.
How that might change if not Mike Ashley, but a retail chain, take control of Rangers is open to conjecture.
Certainly, there are more hurdles ahead. Some of those can wait. Rangers cannot qualify for Europe this season unless they win a cup. Newcastle United are highly unlikely to qualify, out of both cup competitions and a top 7, 6 or 5 league placing seems to be a pipe dream. Conflicts in UEFA competitions seem distant and, after all, how diligent have UEFA been in applying other regulations? Where there is money, it seems there is flexibility.
There will be more to come.
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