Mike Ashley has won a sensational court battle against Dave King’s Sevco board in relation to the sale of the club’s shirts for the coming season.
In a writing finding, published online by Phil last night, the details of a quite extraordinary legal skirmish are laid out and once again Dave King’s efforts to play fast and loose with contracts and the law has led him to a humiliating defeat in the courts, and this is one that will have grave repercussions for the club far into the future.
In a sterling example of “you could not make this up” we now have a clear insight into what the position currently is between Sports Direct and Sevco, and of how Ashley has retained a vice-like grip on their merchandising. It is a staggering glimpse at the total dysfunction of the Sevco board and of King’s weaknesses as a negotiator.
It also reveals him, once again, to be a brazen liar incapable of being honest even with the supporters of his own club.
Let’s start from the beginning, and King’s assertions to the Sevco fans that he had seen off Ashley once and for all, and secured the club’s freedom from the clutches of Sports Direct. When those claims were first made this website and others cautioned against believing a word of it; indeed, we were adamant that King could not be taken seriously. We did not believe Ashley would have simply walked away. When Sevco’s last published accounts came out we found out that the Sports Direct supremo had secured a multi-million-pound payment from King which had nothing to do with ending the contract, but was all about keeping Sevco out of legal peril.
It was, in point of fact, an out of court settlement. King had not won a victory; he had paid Ashley off to avoid a beating in front of a judge.
But as an adjunct to that settlement, the “seven-year contract” between Sports Direct and the club had been torn up. That, said Sevco fans and their media lackeys, was the real victory. Yet even that was somewhat vague and ambiguous. Once again it was the Internet Bampots who cautioned Sevco fans to be wary. The devil, as they say, is in the details.
And now those details have emerged; Ashley and his retail arm retained one particular right. They had an iron clad contractual agreement that when the terms of the deal ended – 31 July this year – that they would have the rights to rebid for the Sevco retail contract. In fact, they would have first refusal on it. There was just one caveat; if a third party wanted to take over the contract – say a company like JD Sports – Sports Direct would need to match the terms they were offering.
And they have that agreement on a rolling basis.
In other words, Sports Direct could probably keep the retail business at Ibrox indefinitely, as long as they match any competing offer the club gets.
But in order to be able to do that, Sports Direct’s contract with the club entitles them to a detailed breakdown on exactly what the terms on offer are. They are entitled to full disclosure on that, so that they can then tailor their own offer to suit. Because a retail agreement has many elements and not all of them are of interest to Sports Direct, whose contract with the club enables them to opt in and out of certain parts of it as they see fit.
In other words, if Sports Direct only wants the strips and is content for someone else to have the rights to the porcelain mugs and keyrings they are well within their rights to take only that part of the merchandising deal whilst letting the club do what it wants with the rest. This is a sweet, sweet deal they have here; they can basically skim the fat off and take only the most lucrative bits of the contract, throwing the rest away as rubbish.
And this is where Sevco and King have tried to pull a flanker.
Late last month, they informed Sports Direct that a “third party” had made them an offer. Sports Direct’s lawyers asked for the details of that offer. Sevco’s legal team was instructed to give SD only the broad outlines of the agreement; in other words, they gave Ashley’s people only the top-line numbers, what the contract was worth in full.
Ashley’s people wanted the detailed breakdown, as they have no interest in bidding on stuff like Sevco bedspreads and posters of Bruno Alves. Sevco refused to give them that, and told them they were not entitled to ask for it under the agreement.
Sports Direct was told, further, that the new contract was set to start running from 1 August, and that they could either match that contract or leg it.
Ashley is no longer playing games with King though, and because Sevco said they were going to sign the contract and announce the details of it on Thursday past, Sports Direct’s legal team went to court to seek an interim interdict to prevent that from happening.
Their argument was that their contract does entitle them to the full details of Sevco’s “third party” offer.
They pointed out that the club was reneging on a written agreement and because it was impossible to quantify potential losses that suing the club after the fact was not going to do it for them. They wanted the blockers put on the deal.
And the judge reviewed their material and agreed with them. Because both parties – Sports Direct and Sevco – are aware that time is creeping on, another hearing, one where the issue will be explored in more detail, has been set for Tuesday.
But Sevco’s defeat in the first skirmish does not auger well for that battle. It looks almost certain that they will have to declare the details of the “third party” offer in full, and that Sports Direct will have the chance to match that bid. Which they almost certainly will, but only the parts of it that they think can make the biggest profit for them.
And that puts King and the Sevco support in one Hell of a bad spot.
Ashley will probably have the rights to the strips, possibly even with exclusivity. King will have been revealed as a brazen liar and worse, as someone who is weak and unable to keep the wolf from the door. Sevco fans will be forced to choose between not buying strips and placing their future sponsorship and kit deals – and thereby the club itself – in serious jeopardy, or forking more money out to Uncle Mike on terms which remain unknown but will only benefit one man.
This is a developing story, but I’m sure you’ll agree it’s a stormer of a way to start the weekend. The gift that keeps on giving has delivered again … big time.
Congrats to Phil and the Bampots for finding this.
Once again, the bloggers are way out in front of the mainstream media in bringing you the truth about what’s really going on behind the scenes at British football’s most scandalised, and dysfunctional, club.
Remember, there’s a heatwave on, so jelly and ice cream stocks are already low.
Get them in whilst you can.
Tuesday now promises to be a big, big day in more ways than one.