Sports Direct v Rangers – the truth behind the media lies

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Alastair McKeown
One could write a book on this subject between the fat man’s company and
our proud and mighty Rangers. Search and Sports direct are probably in court
every week in Litigation with one company or another.
I would like to start by saying that anyone can do this. I just searched
till I found what I was looking for, which was the court documents giving the facts and not the sensationalism that
the press are whipping up on the conclusion of the case between SDIR v Rangers.
I fully support Dave King and what he has done for the club and is
continuing to do yes, mistakes have been made, none of us are perfect but apart
from this nasty thorn in our side the club is moving forward and will continue
to do so, so please take heart fellow Bears.
BACKGROUND TO THE AGREEMENT
The Retail Agreement arose out of the settlement of a previous dispute
between the parties concerning a joint venture company, Rangers Retail Limited
(“RRL”) which they formed in January 2015. Pursuant to an IP Licence
and Rights Agreement dated 27 January 2015, Rangers granted RRL the exclusive
right to sell Rangers branded merchandise and replica football kits. It was
intended at that time that the joint venture would last many years; the 2015
Agreement was only terminable on 7 years’ notice.
Such co-operation was not to be. In May 2016, the parties fell out, and
Rangers purported to terminate the 2015 Agreement for an alleged repudiatory
breach. Sports Direct then brought a derivative action on behalf of RRL against
Rangers and certain of its nominated directors of RRL. That claim, along with
other related litigation, was settled in June 2017. As part of that settlement,
it was agreed that RRL’s trading activities would cease, and a new agreement
was reached between the parties concerning the manufacture, sale and
distribution of Rangers branded merchandise
.
The Sticky bit 5.2 and 5.8
5.1 From the date falling 6 months prior to the expiry of the Initial Term,
Rangers may approach, solicit, tender for or enter into negotiations with a
third party in relation to that third party providing any of the Offered Rights
or all or any combination of the Offered Rights.
5.2 In the event that Rangers receives an offer from such
a third party (Third Party Offer) to enter into an agreement with Rangers for
any of the Offered Rights or all or any combination of the Offered Rights,
Rangers shall provide SDIR with written notice (Notice of Offer) of the terms
of the Third Party Offer […]
5.3 The Notice of Offer shall include whether the Third Party Offer is made
for any of the Offered Rights or all or any combination of the Offered Rights
(identifying which Offered Rights as applicable), in each case together with
any connected commercial arrangements, and full details of:
5.3.1 any payments to be made by the third party to Rangers;
5.3.2 any revenue share or royalties to be paid between Rangers and the
third party;
5.3.3 the duration of the agreement between Rangers and the third party,
(together, the Material Terms). […]
5.6 Within 10 Business Days of SDIR’s receipt of the Notice of Offer (or
further information / clarification from Rangers, if requested), SDIR shall
provide written notice to Rangers as to whether it is willing to match the
Material Terms of the Third Party Offer in all material respects in relation to
any of the Offered Rights or in relation to all or any combination of the
Offered Rights (and, in each case, any connected commercial arrangements if
applicable).
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 applicable.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 [sic.] 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 [sic.]. Should SDIR not exercise its 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.
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 [sic.] 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 [sic.]. Should SDIR not exercise its
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
5.9 Subject to paragraph 5.8, any new or amended offer or indication of
interest from a third party in respect of any of the Offered Rights shall be a
separate Third Party Offer and the terms of this paragraph 5 shall apply.
5.10 In the event that Rangers does not receive a Third Party Offer to
enter into an agreement with Rangers for any or all of the Offered Rights
within 30 days prior to expiry of the Initial Term, Rangers shall immediately
notify SDIR in writing, and SDIR shall have the right to renew this Agreement
on the same terms for the element(s) on which no offer has been received, save
only that the Agreement will be renewed for 2 years from the expiry of the Term
and:
5.10.1 the same terms would apply in respect of the operation and
maintenance of the Retail Operations and the performance of the Permitted
Activities; and
5.10.2 to the extent relevant, terms which are at least as favourable to
SDIR as the terms that currently apply under the Puma Agreement would apply in
relation to the supply by Rangers (or on its behalf) to SDIR of the Official
Kit and/or Replica Kit[;]
and SDIR shall notify Rangers in writing if it chooses to exercise its
right to renew this Agreement within 21 days of receiving Rangers’ notification
that a Third Party Offer was not received for any or all of the Offered Rights.
5.11 Save as expressly permitted in this paragraph, Rangers shall not
approach, solicit, tender for or enter into negotiations or any agreement with
any third party in relation to any of the Offered Rights.
[…]
5.14 Notwithstanding any provision to the contrary this paragraph 5 shall
continue in full force and effect for a period of 2 years from the expiry of
the Term but that shall not prevent Rangers from the date falling 6 months
prior to the expiry of that period approaching, soliciting, tendering for or
entering into negotiations with any third party in relation to that third party
providing any of the Offered Rights or all or any combination of the Offered
Rights.
5.15 Nothing in this paragraph 5 shall prevent SDIR from approaching,
tendering for, entering into negotiations with and/or making any offers to
Rangers in respect of the Offered Rights, separately to the process set out in
this paragraph 5 or independently of any Third Party Offer.
THIS IS REALLY WHAT THE LITIGATION IS ABOUT:
THE ELITE AGREEMENT
On 4 June 2018, Rangers informed Sports Direct that it had received an
offer from a third party, now known to be the Elite Group (“Elite”),
and offered Sports Direct the opportunity to match that right. There was then a
dispute between the parties concerning the information required to serve a
‘Notice of Offer’ within paragraph 5.2 of Schedule 3 to the Retail Agreement.
Litigation ensued; injunctive relief was granted to Sports Direct by this
court, preventing Rangers from accepting the Third Party Offer whilst this
dispute was on foot.
On 12 July 2018, Rangers served a new Notice of Offer. Sports Direct
exercised its matching right in respect of this offer on 25 July 2018.
Following Sports Direct’s exercise of its matching right, Rangers’
then-solicitors sent a letter to Sports Direct, dated 26 July 2018, stating
that “our client accepts that it may not enter into any contract in
respect of any of the Offered Rights with any other party.” The letter
continued: “For the avoidance of doubt this means that Rangers shall not
now enter into an agreement with the third party that made the Third Party
Offer in respect of the arrangements set out in the Third Party Offer notified
to you on 12 July 2018.”
On 30 July 2018, before Phillips J, Sports Direct decided not to pursue the
continuation of its injunction and certain issues of construction of the Retail
Agreement were resolved by consent.
The parties have, since that time, sought to reach an agreement in respect
of the matched offer, in accordance with paragraph 5.7. Such agreement has not
been forthcoming, and is the subject of further dispute; before me, each party
sought to characterise the other’s behaviour during these negotiations as
unreasonable.
On 11 September 2018, Rangers entered into a new agreement with Elite (the
“Elite Agreement”). Rangers did not, before entering into that
agreement, first notify Sports Direct of Elite’s offer in accordance with the
matching right provisions. Sports Direct only learned of the Elite Agreement on
25 September, after having seen a statement on Rangers’ website, describing
Elite as “our new non-exclusive partners”, and providing a link to
buy the new kit from a website run by Elite. That announcement on Rangers’
website in fact went live at 17:30 on 21 September, just 15 minutes after a
letter was sent by Rangers’ solicitors to Sports Direct, which set out Rangers’
view that it “retains the right to grant non-exclusive rights on same or
similar terms to those which will be granted pursuant to the Further Agreement
with SDIR” (in respect of the matched July 2018 offer), but made no
mention of the Elite Agreement which had been signed ten days earlier.
The full terms of the Elite Agreement were not before me, but I am told
that it grants Elite a set of non-exclusive rights which duplicate, and do not
exceed, the non-exclusive rights matched by Sports Direct in July 2018. I was
told that there were 9 principal differences between it and the offer of Elite
which Sports Direct had matched in July. The Elite Agreement made no mention of
the exclusive rights which were included in the matched offer. The payment
mechanism was different, the governing law was different, the reporting obligations
were different and the payment dates were different. Significantly, the Elite
Agreement contained a warranty by Rangers that it has “all necessary
rights to grant [Elite] the rights in this Agreement”, and granted Elite
an indemnity against suit by SDIR (which is specifically named) in relation to
the agreement.
The next section is really again lawyer speak but
basically boils down to SDIR nit picking over the contract awarded to
Elite/Hummel:
CONCLUSION
In summary:
i) The two questions posed by paragraph 2 of the Order for Directions dated
3 October should be answered in the affirmative. The prohibition imposed on
Rangers by paragraph 5.8 and the obligation imposed on Rangers by paragraph 5.2
apply where Sports Direct has already exercised its matching right.
ii) Accordingly, Rangers was in breach of the Retail Agreement by entering
into the Elite Agreement and by failing to offer Sports Direct the opportunity
to exercise its matching right in respect of Elite’s offer.
iii) Sports Direct is entitled to the first and second Injunctions sought
in the terms set out in the Particulars of Claim. Sports Direct is entitled to
a third injunction in the terms set out above.
So what now you might ask? Well I guess it is all down to the lawyers and
without a doubt a cash settlement to rid this tyrant from our midst. I can see
and understand what Rangers have done and why they have done it.
In a nutshell no revenue coming in
and no merchandise for supporters.

1 COMMENT

  1. Wow. PowerPoint please. My eyes feel like boiled eggs now.
    Some amount of research guys, Excellent

  2. i.e what is the prediction and when will it end Guys?

    dementia sufferer on Morphine (truly)

  3. This is an omni fn shambles, and one completely of our own making. Rocket science it ain't … a can't bring masel to say that fkrs name, but his lot weren't given the opportunity to match any offer put on the table to our club … why the fk not !! ? Person or persons are utterly and completely responsible for this and have cost the club a fn fortune … so who the fk is responsible for this, he or they need naming and booted asap. Those mhanky fkrs who can't even wash themselves are wettin' themselves over this, and no fn wonder. Rant over.

    • I guess you should blame the club's legal counsel for failing to study the contract and spot the booby traps it contained, before giving the board the ok to sign it. Heads should roll for this, but it won't change the fact that Ashley has the club bent over and is aiming for penetration!

  4. Fuck the lot of them, we are going to win this league, club has come on leaps and bounds and no bastard is going to stop us. It's this year it's our time WATP

  5. I cannot understand why somebody cannot create a trading company and offer Rangers a deal whereby they agree a price for supply and a RRP for each product. This would be structured so that Rangers retain 90% of the profit or x% of the RRP determined by a retail expert to give the trading company only a very small %age of the profit but obliges the company to make a minimum level of sales. Sales targets would be applied by best estimates of supporter demand.
    SDIR and the Fat Bastard could match this offer, but would be obliged to work virtually for nothing and in the knowledge that with minimum contract levels, the fans could rob Ashley blind by not buying.
    If SDIR choose not to match the offer, we have our FREEDOM!!
    A lawyer may be able to pick a hole in this. If they can, please let me know as the plan may be adaptable.

    If nobody can find a flaw, I would be happy to work on such a proposal with Union Bears, Glasgow Rangers or any other fan group in order to ensure that fans can buy product in the knowledge that the profits will go to the club

    • No surrender … he's bleeding us fn dry … and it's of our own making !! … un fn believable.

  6. The litigation from them is about stifling Rangers, had we not proceeded to get a kit deal done MA would simply have frustrated the business to the point of collapse. The board knew exactly what the likely outcome would be. The consequences are less damaging than being in business with MA

  7. If we have to pay compensation so be it, with the SD deal we where making penny's and we boycotted big fat Mike's Kits. The fat fk is just fuming as we sell the new merchandise and have the fans backing the club again and not him, we pay the bill and move on with him and his no good deal gone forever and we can get on with growing as a club again and us fans will no doubt buy every piece of merchandise to help the club out again and again to pay this bill off in the long run even if the board do a soft loan to cover the costs we are the people and we won't see our club struggle again No Surrender

  8. Lawyers are on this planet to make money not solve problems. And judges are of course wealthy lawyers supporting system. Whole thing a disgrace.

  9. I say we protest and protest with marches hopefully make Ashley think different he should leave rangers alone he doesn't care about rangers if we've got it try pay him off

    • Are you serious? Do you think Fat Bastard gives a shit about people marching? This is a guy who pays people buttons for working on zero hours contracts then fines them for going to the toilet. He is a multi billionaire and it's still not enough money for him. He is a greedy fat bastard and belongs in the same camp as the likes of Philip Green and Robert Maxwell. Every Rangers fan, if they haven't already done so (shame on you), should boycott Sports Direct and every other store, he has an interest in. This includes the store at the stadium!!! And encourage everyone you know to do likewise. It's not much but it's something.

  10. IN, you conclude by saying you understand why Rangers did this. Forgive me if I'm being thick, but weren't we in a position to "force" SD to either match Elite's terms (presumably favourable to the club) or choose to withdraw from the arrangement ? This would presumably have provided merchandise for the fans, the same revenue for the club as Elite contract would have generated and no fines or compensation to SD for loss of income ? On the face of it a big fuck up by Rangers legal team.

  11. This contract has been deemed by the judge " it must be taken at face value" When this is the case the judge has ruled that the contract is legally sound but for some arguments over the wording interpretation within it…So the judge as said that the contract is good and must stand then this has to be the case for the 1 million damages limitation! If the judge changes this damages limit that was signed by both parties and was clearly agreeable to both Rangers and Sports direct then he would beyond his remit as he has stated the contract in its entirety is sound…If he changes this limit then that can render the contract void as then a fundamental part of the contract has been deemed wrong! Rangers will argue why is it that all other things in the contract must be enforced but the legally binding limit placed by the contract is not? the 1 million cap must stand!

  12. I don't think anyone on here realize the gravity of the situation.
    Sports direct now don't only have the rights to the retail side of things but also the manufacturing and distribution.
    So damages will be award for the amount Hummel and elite have earned for making and distributing the kit as well as the money they have lost for selling the merchandise.
    In para 94 rangers board admit that they will be left open to litigation from elite. So not only will we have to pay fat Mike Ashley we will also end up having to pay elite for loss of earnings too.
    King and Blair have f**ked up massively here. It could get a hell of a lot worse before it gets better.
    If we don't get to the group stages of the Europa we will be in a really bad place.
    Now you can understand why they have ripped up lafs contract and why the candy man was off-load so cheaply, the club are obviously trying to trim the wage bill down

  13. I don't believe King is that naive. A £10 million deal with Hummel over 3 years that may cost a few million to get rid of Ashley and the contract cannot be undone this season? Do the same again next season and SD are gone for good, the last year SD have an opportunity to match the contract. If it costs the whole £10 million Ashley has gone and has no say in our club. Money well spent in my opinion.

    • Jim , read the judgement. Next year doesn't matter. The new deal king signed with Ashley gives him the matching rights until he doesn't match it.
      Not just retail but manufacturing and distribution.
      King had sold us down the river.

  14. Absolutely Sick to Death of MA and The SD Connection

    Wish he wouldn't Just F**** Off

    No one at Rangers likes Him
    No one at Newcastle likes Him