02 October 2014

Just Why Did Ashley Increase His Stake in RFC?

by Garry Carmody | Contributor

When Mike Ashley's name was first mentioned as an investor in RIFC, it took many by surprise.

From the bright lights of the Premiership and Newcastle United, what coaxed him to participate in Rangers' IPO back in December 2012? Where was the interest coming from to involve himself with Charles Green and co?

However, with the use of hindsight, it has become very clear as to what Mike Ashley had his eyes set on, and it is now evident that he has possibly been the smartest player in this game of Monopoly: Rangers Edition.
Rangers fans were given a crude reminder of Ashley's involvement a few weeks ago. A story from the Daily Record revealed that Ashley had taken hold of the naming rights for Ibrox for £1 was quickly followed by the news that all Rangers Stores had been transferred into the control of Sports Direct. 

Both pieces of news were treated with disgust by the Rangers support and could not simply be dismissed as part of the hangover from Charles Green's reign, as both deals remain in place, and Mike Ashley remains very much involved.

Today has seen Ashley's involvement at Ibrox take another bizarre turn. It was confirmed via the Stock Exchange that Ashley had increased his shareholding in RIFC to 8.92% after buying out Hargreave Hale a couple of days ago. This news was followed from the Stock Exchange announcement on 12 September that Ashley would not be participating in the Open Issue. 

This, coupled with the announcement from Newcastle that Ashley had no plans to sell the club until "the end of next season", left a casual observer believing that Ashley was quite happy to sit back and simply reap the rewards from the "most one-sided commercial contract ever seen", as described by a former Rangers board.

So why has this changed? The shares haven't been bought at a different price, so from the outside he wouldn't appear to have made a saving. If Ashley had invested in the Open Issue instead, his £850,000 would have went straight towards keeping the club afloat, rather than his purchase today which lead to the money simply going to Hargreave Hale.

Three options come to mind that possibly explain why Ashley has deprived the club of much-needed funds:

1) Ashley simply changed his mind. A couple of weeks have passed since the Open Issue, perhaps Ashley has since realised that he needs to strengthen his position, in spite of the fact that he can increase his stake in RIFC any further as long as he is in charge of Newcastle.

2) If one journeys back, they will remember that Hargreave Hale were one of the main backers of the requisitioners last year before the AGM. Paul Murray and co argued back then that the institutional investors would soon walk away if they were not given fair representation on the board. That still hasn't happened, and it is obvious their discontent continued. 

After investing £3.5 million, they were bought out at £850,000, which doesn't particularly sound like good business, but was it easier for Ashley to simply buy out a disinterested investor rather plunge into new shares? It is also rumoured that this is part of a move to get rid of "boardroom rebels", Graham Wallace and Phillip Nash - is it simply more straightforward to remove 5% of the company that may disagree with that?

3) The last, and perhaps the most cynical theory. RIFC scraped over the £3 million mark at the Open Issue which allowed it to go ahead. It was not until 11am on the morning of the Open Issue that Mike Ashley announced he would not be participating. Did Ashley know this to be the case, and therefore did not see the use of his money being used to simply keep the club afloat? Ashley is the main money-man involved at Ibrox at the moment. He is the one that could bail the club out with another loan at the drop of a hat. Does it make more sense for Ashley to keep Rangers teetering over the brink so that he has the option to bail us out against any assets?

Some may say the last option is too cynical, but it really is difficult to rule anything out with the most cut-throat of businessmen. A man as shrewd as Ashley doesn't spend £850k without there being good reason, and he's had a couple of those at Rangers. By all accounts, he has masterminded his position in Rangers for almost two years, and he is now in the position where the incumbents (James and Sandy Easdale) are crying out for his investment.

If Mike Ashley wants to, Mike Ashley calls every shot in this game. It is easy to argue he is a step away from simply venture capitalists, but his every move so far has been to his advantage and to the club's detriment. There is no indication he has any intentions of doing anything for the good of Rangers Football Club.

Ashley remains indicative of a regime in it for the cold hard cash at any expense. And that looks nowhere near the end at the present moment. The long game with Ashley may not be especially clear at the moment, but if history teaches us one thing, it is unlikely to be good news for the fans.