In an astonishing move by Sports Direct, they have made a move to distance themselves from the Mike Ashley ‘brand’.
Even more bizarre, is the fact that it will have obviously been Mike Ashley himself who had the final say in the decision.
The conduct of the Newcastle United owner and how he runs his business empire has come under ever increasing pressure. TV exposes with reporters on the inside of his business showing the world just how bad it is for the vast majority who work for Ashley/Sports Direct.
Attempts to ride out the campaign led by MPs, the Guardian and minority shareholders in Sports Direct, have massively failed.
The share price has collapsed to less then half its value only months ago, whilst January saw a profits warning issued by the company due to a slump in business.
Friday morning though has shown just how far Mike Ashley and Sports Direct are prepared to go, to distance the company from its majority shareholder and person who pulls all the strings.
Sports Direct’s day to day loan arrangements allowed them to borrow up to £263m at a certain interest rate but then anything over that was subject to a higher rate. So what had been in place was a £250m loan pot provided by Mike Ashley via his Mash Holdings, so anything that they wanted to borrow over the £263m mark at any one time, could be loaned from Ashley’s £250m at around half the interest rate that would otherwise be charged.
However, today Sports Direct’s statement said that while they will need to borrow these larger sums in the coming months, they will no longer use the loan facility previously provided by Mike Ashley to save the company and both he & the other shareholders money.
The SD statement reading:
“The (Sports Direct) group… has been subject to unjustified criticism over related party transactions, including incorrect press coverage of the benefits of the (loan arrangement with Mike Ashley/Mash Holdings)….it has been decided that it is in the best interests of the group and its shareholders to avoid further criticism at this time.”
Newcastle fans will look at this and wonder if this could well hasten the departure of Mike Ashley from Newcastle United.
Up to now, the massive free promotion generated by the advertising at Newcastle United for Sports Direct and related brands has been seen as a massive plus for both SD and its shareholders, will they now reconsider and think they are better off cutting that very visibile/publicised link with Mike Ashley as well?