Sports Direct v Rangers

A few weeks ago the High Court in London issued its latest judgment in the case of Sports Direct International v The Rangers Football Club Limited. On the surface it’s a standard commercial case over the interpretation of a contract, the sort of issue that is aired at the court’s modern, high-rise Rolls Building a dozen times a day. However as this relates to Scottish football tens of thousands of people are reading about it and talking it over, so a quick explainer.

The dispute goes back many years, as the judge, Lionel Persey QC said in his opening, “The parties in this dispute are well-known, not only in the sporting world-but to this court,” The current action relates to a merchandising contract, agreed in June 2017 which, amongst other things, gave Sports Direct a “matching right,” to any other merchandising agreement Rangers may look to sign. In simple terms if Rangers are about to agree a deal with someone else, Sports Direct have to be given the opportunity to offer the same terms and keep the business.

Yet, despite the contract, in March 2018, Rangers signed an “exclusive” agreement with kit manufacturer Hummel to provide first team and replica strips for the subsequent three years. In court they had to admit they had never given Sports Direct the chance to match the deal. The court slammed Rangers over this, being particularly scathing about the “evidence” (their quotation marks) of company secretary James Blair, ruling that what he had said in court was neither “attractive nor relevant or admissible.”

To cut a long story short, Rangers lost on every point, and we awaited what action the court would order, this week we got the answer.

The one piece of good news for the Rangers board is that their team will still have a kit to play in this year, Sports Direct have agreed to allow this year’s arrangements to continue until the end of the current season. Other than that it’s very bad news indeed. Under the threat of contempt of court, Rangers must scrap the agreement with Hummel, and not “assist” them in any way. From next year They cannot propose, agree or register any new kit from Hummel, or even wear their products on the pitch. Judge Persey also ordered Rangers to pay £444,000 of legal costs, “on account,” which means the final bill is bound to be higher, much higher.

There is a school of thought on some parts of social media that this is all part of a cunning plan by Dave King to get out of an onerous contract. If that’s true, it must be very cunning indeed. While the financial damages due to Sports Direct have not yet been agreed, the judge described their losses as adding up to “many millions of pounds.” In addition there is also the fact that Rangers are now under court orders to break their contract with Hummel, which could mean another large financial settlement or another legal battle.

There is also the issue of lost merchandising revenue, and the poisoned relationship between the club, it’s support and its main retail partner. Despite the expressions of support the Rangers board have received from supporters organisations. There are questions to be asked about how they got into this mess, despite the warnings.

This is of course not the end, there are many things that could happen, appeals, debates, more court actions, more costs. As another Judge who has dealt with the case once concluded “The parties in this action are keen on litigation, it’s doubtful if their appetite for it will be satisfied by this decision.

Comments (34)

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  1. Richard says:

    James you may want to explain to those who choose not to understand that this current agreement was indeed agreed by the current board and not Charles Green or anyone else. There are plenty on the Rangers side of social media who seem to think that this agreement is a legacy of past administrations…..

  2. Andy Anderson says:

    This example of how ‘business-people’ will latch on to any activity required or enjoyed by lots of people to see how they can make a few pennies out of it, is terrible for the ordinary Rangers supporters who will have to find the money for all these activities; but it is of course typical of the dog-eat-dog capitalist environment. We know of course that it is not just Rangers who are ‘infected’ by such leaches, other sports activities are also prime targets.
    It is at times like this when we must be grateful for our NHS which a State run business and is not generally subject to the ‘investments’ of such leaches.

    This is perhaps a very good reason to ensure that we do not let Johnson and his Brexiters get their dirty hands on our NHS in their efforts to do profitable dewals with the USA

    1. Quinton Mckay says:

      Couldn’t agree more

    2. A. Atkinson says:

      The leaches you speak of are already working in the NHS. Employees taking parental leave (full pay and no impact on annual leave) to potty train children, transferring annual leave to parental leave, arriving for work late, leaving early…..Yes you’ve guessed it….. parental leave. Work 2 hrs on Sat, 2 hrs on Sun (if you’re lucky) but take a full day off. Take annual leave when supposed to work weekends and guess what? Full enhanced pay. The last thing the NHS requires is money. 4 of my family work at various levels in the NHS so this is no fairy tale.

      1. David Allan says:

        Please do this country a service .

        Forward your evidence to the Scottish Health Secretary – Jeane Freeman .

      2. Me Bungo Pony says:

        Bitter, irrelevant and inaccurate. Parental Leave is a right for all workers throughout the country; private and public sector.

  3. Charles says:

    “there are many things that could happen, appeals, …” Sure I read in the Judgement that any request for an appeal would be dismissed?
    You would also think it unlikely that King would chance additional costs to what are already likely to be prohibitive? Maybe not.
    Sorry state of affairs, and as one ex-Rangers board member opined, “Heads should have rolled”. Kings imo.

  4. Iain MacEchern says:

    What’s the point of this article? It’s hardly a major news story, it just seems to be a marketing dispute, who cares.

    1. Iain Hayes says:

      As a summary of something that has been floating around on the periphery of my consciousness, I found it very useful.

      1. Ian S says:

        I agree Iain, the article is a very concise summation of something I’ve been aware of but not found sufficiently pressing to investigate further.

        The issue is relevant to Scottish society so I don’t see the problem.

        1. Jim says:

          Strangely he misses out the fact there is a £1million cap on damages

          1. Prad Bitt says:

            Where?

    2. Prad Bitt says:

      Rangers fans? Other fans of Scottish football. Rangers do not make profit and this has the potential to significant increase losses. The club is reliant on wealthy benefactors contributions. If they are not forthcoming then history may repeat. Also it demonstrates a poorly run company and an attitude regarding the law of the land which is at best delusional. Again history repeating itself?

      1. Joe says:

        Not too sure I agree on the “history might repeat” part. This is a brand new club, their history goes back all of seven years. I suspect you refer to the demise of the other now extinct organization who went under, oddly enough, also due to being corrupt and despite the best efforts of the SFA to hide it all, they were caught, exposed and erradicated.

    3. Alastair Fleck says:

      I share your view, Iain. I just don’t see what relevance a legal decision impacting a sports team has to a (normally very fine) website such as Bella Caledonia.

  5. Julian Smith says:

    Driving through Hill of Beath the other day and seeing the statue of Jim Baxter prompted me to watch video of the 1967 game at Wembley. Slim Jim doing “keepy uppy” down the touchline is how I think of fitba. Skill and panache. Not the sordid quibbling over who supplies what items of kit or smoke bombs and flares or verbal abuse and missile throwing. How has it all come to such a sorry state? I could weep!

  6. Ted says:

    Are you sure you’ve got the facts right on this?

    From reading the judgment, it appears to me that it’s the deal with elite that’s dead, not necessarily the one with Hummel. Rangers also appear to be free to seek a new deal with Elite and yes, SDI do have the right to match that deal, however, that would mean paying Rangers around £1.6m (this is what the existing deal was worth). Would SDI consider this?

    The old deal (the one Rangers paid to get out of) was worth £30k per year, so virtually worthless for the club, so, in the long run, they are still in a better position, a £10m+ better position when you take into account the old SDI contract was a 7 year rolling one.

    1. Stephane Grappelli says:

      My understanding was that next season’s deal is dead so there will be no requirement to offer the same as Elite/Hummel. Therefore, Hummel may look to be compensated for next season, SD will look to be compensated for this season and last. The board paid £3m to get out of the 7 year rolling deal and have signed up to offer SD matching rights in perpetuity. Add in £xmillion of legal costs and rangers look to be significantly down compared to just serving the 7 years and starting afresh. What am I missing?

      1. Jim says:

        You’ve missed the fact that SDI do have to match the elite/Hummel deal and you’ve missed the £1million damages cap

        1. Stephane Grappelli says:

          Do they have to match a deal that Hummel have been forbidden from carrying out? Even then thats just for one season, what about the seasons after? Bearing in mind the current board, instead of serving 7 years on the old contract, agreed SDI matching rights in perpituity? Who is offering anything at all knowing the details will be shared and potentially matched by SDI. Rangers will need further money to buy out these rights. SDI will look for the damages cap to be lifted.

          1. jim says:

            Yes they do have to match the Elite/Hummel deal. And those financial terms will remain for subsequent contracts.

            They may well try to have the cap lifted, but it’s a term of the contract which they signed up to so it is very unlikely it will be. All of the rullings over the kast year have been on cold hard reading of the terms of the contract, not on opinions or arguments but on what is black and white in the contract. It’s hard to imagine the court suddenly deciding it will amend terms that two sides agreed to, courts rarely do.

  7. S Kennedy says:

    When are rangers fans going to take their heads out their back sides and wise up. Dave king is bad for the club. It’s as if rangers fans don’t want to admit they got it wrong. It’s ok to change your mind. Instead if you tell them, they start shouting about child abuse.
    Their own club is in a mess, it’s been in it before and look what happened. There is a real chance this could happen again. They really need to wise up and get shot of Dave king and co

    1. Rabbhoy says:

      Hopefully they wont take their heads out . Its great fun for the rest of us

  8. Hetty says:

    Is this about something more than sport? makes u wonder, no?

    1. Yes its about governance of major public institutions and public bodies, in the same way as we analyse banking or finance bodies or local authorities for incompetence and corruption.

      1. Derek Thomson says:

        Oh ma aching sides. Nothing to do with an obsession with Rangers, oh no.

        1. We have an obsession with dysfunctional failing public institutions, rampant cronyism, dodgy dealings and unreconstructed bigotry. If your club ticks all those boxes I’m sorry they will continue to be of interest.

  9. Scottish jouno says:

    I cam see Rangers winning this, been awarded ownership of SD and Hummel. Rangers will also counter sue Memorial Walls and win that. This will elevate the Bears to a new financial stratosphere, out of Celtics reach possibly forever.

  10. Jim says:

    How remiss of James not to mention the £1 million damages cap when talking of sdis losses

    1. Me Bungo Pony says:

      Could you point to the evidence of this “damages cap”? Genuine question. I am aware of companies being forced to pay out far larger sums than that. Perhaps it’s under different circumstances but it would be nice to have clarification.

      1. jim says:

        Read the rulings.

        1. Bill Morrison says:

          Let’s see, paragraph 92,

          “Rangers has pleaded in §42A AmPoDCC that it will rely upon clause 16.3 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.”

          Judge is basically saying, “Cap? Aye, right!”

          1. jim says:

            He certainly did not.
            That paragraph is in the section on injunctive relief.
            One of the tests of whether an injuction is granted is whether damages if awarded would be sufficient. The judge confirms they would not be, capped as they arhe and awards the injunction.

            You should as someone who understands contract law to talk you through it. I’d avoid Sevco bloggers

  11. Douglas says:

    Here is the footage of the most recent Rangers fiasco at Kilmarnock…

    … and as can be seen and heard, the Rangers fans – the vast majority of them – are singing “The Billy Boys”, a song which pays homage to Billy Fullerton, the notorious ultra protestant Glasgow gang leader of the 1930’s, and British fascist who was a leading member of Oswald Mosely’s British Union of Fascists, with Fullerton and his thuggish fellow fascists beating up striking workers in Glasgow during the General Strike of 1929….

    And then the Scottish establishment tell us, a) Scotland has no Fascist past??? and b) Scotland doesn’t have a sectarian problem? Well, clearly Scotland’s fascist past and its sectarian past have a direct relationship.

    If Rangers were a London team, and we translated the words of that song to a London environment, purely to demonstrate how unacceptable a song it is and for that purpose only – and please, no offence intended to anybody – then this is how “The Billy Boys” would go, with the Scottish fascist Fullerton being replaced by the English fascist Mosely, and some minority ethnic group instead of Scots of Irish Catholic descent :

    “Hello, hello, we are the Mosley boys!
    Hello, hello, you’ll know us by our noise!
    We’re up to our knees in Jewish / Pakistani blood
    Surrender or you’ll die /
    Etc, etc, etc”

    What has the Rangers board said about the Kilmanock incident as per the BBC? Not a word about the singing anyway but….

    “Rangers does not condone the behaviour of those fans who invaded the pitch and who caused the damage to the facility housing disabled supporters. The appropriate action will be taken to deal with those who can be identified but it should be pointed out that Rangers had made Kilmarnock aware of concerns over facilities for the disabled.”…

    It’s good to know, I am sure we can all agree, that Rangers don’t condone their fans invading the pitch and damaging the disabled supporters area….

    But then again, nor do they condemn it…. which tells you all you need to know about the board of Rangers FC…

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