SPORTS DIRECT have gone to court to prevent Sevco from setting up a new retail deal with a rival company.
Last night details emerged online from the High Court of the injunction taken by Sports Direct that will wreck plans to boost Sevco’s turnover by upto £5m a year.
In June 2017 Dave King announced that the company had ripped up the ‘onerous contract’ with Sports Direct negotiated by founding father Charles Green in 2012.
That deal gave the new club instant credibility through a high street presence and access to the lucrative retail market tapping into the High Street expertise of Sports Direct.
When Sevco published their audited accounts in November 2017 it emerged that they had paid £3m to bin that deal, now it appears that the current board signed up to an even more onerous deal that further locks the company in with Sports Direct.
Sports Direct were also paid 27.5p per share for the shares they purchased in 2012 for 1p. Fans group Club 1872 bought half of the shares on request from King!
At Friday’s hearing it was put to Mr Justice Bryan that the ‘termination’ agreement ensured that Sports Direct were given the opportunity to match any future retail deal negotiated by Sevco. If Sports Direct match the deal then Sevco couldn’t then turn to the their new ‘partner’ and get them to increase the deal.
More importantly Sports Direct are entitled to a breakdown of every element in the new contract. This effectively allows them to cherry pick the lucrative elements- home, away and third tops- and ditch the ducks and teddies from their contract!
Any firm tendering for the contract will want it to be exclusive, selling trackies and pictures of Andy Halliday isn’t as lucrative as selling home, away and orange tops to the gullible.
5.7 If SDIR is so willing, Rangers and SDIR shall enter into a further agreement on the same terms as this Agreement, save only as to any variation required to effect the Material Terms and whether such agreement shall relate to any of the Offered Rights or all or any combination of the Offered Rights (and, in each case, any connected commercial arrangements if application).
5.8 Should SDIR exercise its matching right in accordance with this paragraph, Rangers shall not approach, solicit, tender for, negotiate with or enter into any agreement with that third party or any other third party in respect of the Third Party Offer and/or the any of the Offered Rights (and, in each case, any connected commercial arrangements if applicable) in respect of which the matching right is exercised. Should SDIR exercise its matching right in respect of some but not all of the Offered Rights, Rangers may enter into an agreement with that third party on the Material Terms set out in the Notice of Offer only in respect of the Offered Rights over which SDIR has not exercised its matching right only. Should SDIR not exercised is matching right over any of the Offered Rights, Rangers may enter into an agreement with that third party on the Material Terms set out in the Notice of Offer.
When Sevco launched three kits on the day word emerged of a Contempt of Court notice served on Dave King there was no mention of a launch date. Stewart Robertson claimed that every effort would be made to have replica kit available for the start of the SPFL season (August 5).
It wasn’t until April that Sevco announced their new kit deal with Hummel, trumpeted by the usual sources as giving the club £10m up front and £5m clear per year plus bonuses yada yada yada.
If Hummel did any sort of background checks they would be aware of aspects of the Sports Direct ‘termination contract’ that effectively leaves the club and any partner at the mercy of Mike Ashley.
After being subjected to a lengthy campaign of abuse from Paul Murray’s favourite newspaper and selected fan groups it is clear that Ashley intends serving revenge stony cold.
With the ‘termination contract’ hovering over the club it is no surprise that no pictures have emerged of Sevco tops in production. That’s because there are none in production.
Tuesday July 10 will see the injunction back at the High Court, in the highly unlikely case that it is rejected Sports Direct are bound to appeal leading to a long drawn out and expensive saga.
If Sevco successfully defend the action it is likely to take eight weeks before their new kit hits the streets with the summer holiday market entirely lost.
Included in the documentation was the importance in terms of cash flow for the company of generating kit sales.
31.Those undertakings were not given and the defendant made clear in a letter dated 28 June 2018 from its solicitors Anderson Strathern that it was not willing to give any such undertakings, and in that letter it was asserted that the Notice of Offer sent on 4th June was valid and complied with the requirements of the retail agreement. It was also made clear that it was said to be vital to ‘Rangers’ business model for the next and following seasons for it to launch its retail operations from 1st August, four days before its first fixture in the FPFL, and to able to do so it required to conclude a deal with the offeror as soon as practicable after the ten day business period from 20th June expires.
32. It was made clear in that letter that, “unless SDIR timeously exercises its matching right under the [Agreement], [the Defendant’s] intention is to accept the Third Party Offer”. It is against the backdrop of that letter that the urgent application for an interim injunction has been made before me this afternoon.
After King failed to come up with his £6m June Rights Issue it looks like another significant part of Steven Gerrard’s transfer war-chest will be missing.
When this story hits the mainstream it will be accompanied by the usual abuse direct at Ashley.
Any independent observer will probably look at the Sevco board for where the fault lies- and wonder why a campaign was launched to remove the billionaire businessman to replace him with a glib and shameless convict from South Africa.
CLICK HERE for the full High Court injunction.
