Media-phobic British billionaire Mike Ashley may have lost his power over the board at Glasgow Rangers at the beginning of March, but that won’t stop his companies from getting a sizable chunk of cash if the troubled football club gets promoted in the league.
Ashley will receive around half a million pounds if the club becomes more successful on the pitch, regardless of the financial health of the football club.
According to Rangers’ interim results for the six month period to December 31, 2014, Ashley engineered the deal through the other football club he owns, Newcastle United. During the January 2015 transfer window, Newcastle loaned five players to Rangers, Gael Bigirimana, Haris Vuckic, Kevin Mbabu, Remie Streete and Shane Ferguson.
“As part of those contracts, should the Club gain promotion in season 2014/15, either directly or via the play-off method, the Club will be liable to pay a total of £500,000 ($US741,256) to Newcastle United Football Company Limited,” said Rangers in regulatory statement.
Rangers was demoted down three leagues in 2012 for going bankrupt, which is against the Scottish Football League rules. The team has worked its way back up to the Scottish Championship, one league below the Scottish Premier League.
Rangers’ current financial health is pretty terrible even before it gets to the Ashley payment:
- Losses after tax: £2.89 million.
- Revenue dropped by £100,000 to £13.1 million.
- Sponsorship revenue also fell by £300,000 to £400,000.
Rangers’ accountancy firm, Deloitte, said it had resigned from the club following the June 2014 audit. Paul Murray, Interim Chairman of Rangers, blamed the group’s results on the board members appointed by Ashley (emphasis ours):
“These results are historical and relate to a period before the new Board took office. I wish to draw shareholders’ attention to the fact that these interim results have been reviewed by Jeffreys Henry LLP. I have been informed by Deloitte, the existing auditor, that they informed the previous Board of their intention to resign following the June 2014 audit.”
“The previous Board chose not to announce this nor did they find a replacement for Deloitte. With limited time to have these results reviewed the Board asked Jeffreys Henry to perform the exercise as Independent Reporting Accountants, not auditors. They have previously carried out work for the Club and therefore know the finance functions well. The Board will make a further announcement on this subject once we have found a replacement firm for Deloitte.
“The new Board’s focus is on the future. We are in the process of developing a business and funding plan which will help us rebuild the Club and ensure it enjoys football and commercial success in the future. We will work closely with our shareholders, supporters and other stakeholders to achieve our vision of building a modern football Club founded on our traditional values and standards. The recovery process will take time but if we work closely together we are confident of success.”
Ashley’s legacy at Rangers
Fans and directors have consistently voiced their disdain for Ashley, who still owns 9% of Rangers (4% personally and 5% through his MASH holdings company), making him the second-largest shareholder in the group.
He was stopped from increasing his stake to 30% in December last year by the Scottish Football Association, citing a “conflict of interest.” His loans to the club, however, still gave him control over Rangers.
Out of £10 million he loaned the club in January this year, £5 million was used to pay back his own companies from an earlier £3 million loan.
He also installed several trusted business partners to the board: Derek Llambias, Paul Murray, John Gilligan and Barry Leach
, the Easdale brothers and Derek Somners. (That crew was ousted last month by David King, who has the largest stake in Rangers, at 14.5%.)
Ashley controlled merchandising and, according to Park, allegedly received “advantageous deals.” He also managed to buy the naming rights to Rangers’ Ibrox stadium for only £1.
The SFA even fined Ashley £7,500 for his meddling. Considering Ashley is the world’s 306th richest man, with personal wealth estimated at £3.3 billion, that fine is unlikely to make a dent in his pocket.