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Doomsday arrives for King as problems pile up over bill for ‘many millions of pounds’

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Dave King’s doomsday may finally be about to arrive with an announcement expected tomorrow on the costs owed to Sports Direct over breach of the retail and merchandising contract.

In June 2017 a new retail deal was agreed with the Sportswear giant with the club paying out £3m to get out of the contract agreed by the original Ibrox regime in 2012.

Predictably King declared himself as the victor in the dispute but that was thrown into doubt when last season’s Hummell kit distribution was halted as Sports Direct took to the English courts after being denied matching rights with Hummell and the Elite Group taking their place.

Towards the end of July 2019 the full ruling was published with costs due to be released on September 23.

Page 26, point 92 noted:

If relevant, I am satisfied that damages are not an adequate remedy for Rangers’ breaches. SDIR’s losses are likely to be in the order of many millions of pounds. Rangers has pleaded that it will rely upon clause16.3 of the Non-Exclusive Rights Agreement to limit its damages to £1,000,000. I accept SDIR’s submission that it would be unjust to deprive SDIR of the benefit of its matching right provisions.

Running alongside the announcement is the emergency loan taken out from Close Brothers earlier this year which kept the lights on until season ticket money started to come in.

Overlooking these issues is the matter of the audited accounts until 30 June 2019. Despite reaching the group stage of the Europa League the wage bill is expected to have soared with pay offs required to Bruno Alves, Carlos Pena and Fabio Cardoso.

In the year to June 2018 income totaled £32,679,000 with costs of £46,272,000. A loss of over £13m with the 2019 figure expected to be similar.

Campbell Dallas have issued going concern warnings for the years to 2017 and 2018. In 2017 King promised to underwrite the shortfall before turning to Close Brothers for another bail out.

With the prospect of a payout to Sports Direct, plus costs, reaching towards £10m Campbell Dallas will be obliged to report on this issue to shareholders. With their loan secured, Close Brothers will be watching closely to ensure that they aren’t left exposed by a pay out to Sports Direct.

King has pulled off a number of unexpected moves since taking control in March 2015 but the Three Bears haven’t put any money in for two years while King’s toxic reputation is body swerved by serious investors.

The prize money and three more gates from the Europa League are welcome but after travel costs, paying out bonuses to players and management and inconveniences like VAT it’s highly doubtful if there are still ‘many millions of pounds’ swilling around in the Metro Bank account.

Had Mark Allen managed to sell Alfredo Morelos or James Tavernier there may have been some wriggle room, as it stands the Sports Direct bill could well force the hand of other creditors triggering a repeat of the events of 2012 unless some exceptionally wealthy blue-noses are keeping their powder dry and ready to pick up the tab for the gross mismanagement of King’s tenure.

CLICK HERE for the full Sports Direct ruling.

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