Newcastle: Ashley Wins Whether Rangers Survive Or Not

Liquidation wouldn't hurt, as long as he controls the key assets.

Mike Ashley has a track record of rescuing "stuttering" brands: he swoops in, brings once proud companies on their knees under his Sports Direct banner and injects some life into them before reaping the financial benefits. His latest endeavour is on a whole other scale to Lonsdale and Slazenger, as he's been cast as the most unlikely (and in the fans' eyes unwelcome) rescue party leader at Rangers, seemingly saving them from impending financial doom just as they're hours away from running out of money. The PR behind that move will say that Ashley wants to put the club back on their feet: that his £2m loan is a statement of intent to do good for the club and the team, when in all honesty, it's a piffling amount for a billionaire, and won't save Rangers from anything other than their latest round of bills. Something bigger will have to come further down the line, and it could either be significant investment, or financial ruin. Either way, Ashley will profit, provided he can get his feet a little further under the table, which would start with the appointment of Llambias as CEO. As this excellent post by Celtic Quick News points out - Ashley doesn't even need to own any more of Rangers, his power play right now has put him in a position to own all of the key assets without having to invest any further in Rangers International. When Derek Llambias was asked by the Scottish Record if Rangers fans should trust Mike Ashley (should, not could, as the precedent at Newcastle suggests that other question has already been answered), he said that the Sports Direct supremo has a track record, and indeed should be trusted. But it's not Ashley's track record that matters so much here, as it is Sir David Murray's - though not his massive (silly) spending and quest to crush Celtic. Murray's financial control of the old Rangers was so heavy that his companies used to take £4m out of the club a year, thanks to owning stadium advertising, catering, IT provisions and every other asset, which is where the real value to Ashley lies. Newcastle fans have been proclaiming it an outrage that our club and Rangers could theoretically be in the same competitions, and that Ashley's ownership of Rangers is a contradiction of the rules of football ownership, but as CQN points out, that's really not the point. Ashley will cash in whether or not the club ultimately fails: he has now entered a business that requires some serious debts repaid, and creditors to be appeased. The fact that Ashley cannot invest more and wipe out those debts as he did with Newcastle suggest that something else is the answer, and there are two possibilities - he could either loan the club the necessary money and become the only creditor, in return for further assets, like the stadium and anything else of value, or he could go for liquidation again and start afresh without those creditors. The ideal solution for a businessman like Ashley would be for both of those things to happen. He might not actively be gambling on the failure of the club, but if it happens, he won't suffer if he spends the early days of his involvement with the club making sure he is in control of those assets. As CQN said:
Similarly, those who suggest Ashley€™s loan is a sign that he will not allow the club to fail are missing the point. If he owns or controls the stadium, IP, client databases, coaches or whatever else, he controls what happens AFTER a liquidation.
Obviously, if Ashley invests too heavily in exchange for those assets, he will lose out from liquidation to the cost of whatever the debt amounts to, but then, he only paid £1 for the stadium's naming rights and the assets are only really worth what he is willing to pay for them since he has all the power. Either way, if the company claws its way back through financial frugality, and takes a slower approach to getting back to the Premier League rather than throwing money at growth, or is liquidated, you have to suspect that Ashley will be in control of the right assets to benefit. After all, Ashley's "track record" does speak volumes: look at what he's done with Tesco, where he invested in the face of a potential financial disaster for the company. By the terms of that investment, if the Tesco share price dropped below a certain point, Ashley would have to buy them for an agreed higher price (or pay the difference), but any loss would be mitigated by a premium payable when the option is exercised anyway. As with Rangers, he wouldn't lose out, despite a threat of a financial debt because his concerns are protected by the premium and ultimately by the assets (the Tesco shares) - and if the share price happens to increase, he wins with a profit. There's an image of Ashley as a gambler, and while it's probably unfair to suggest he's permanently at a roulette table, he has made his fortune not just by growing Sports Direct, but by gambling on the financial prospects of companies like Tesco, and Newcastle and now Rangers. Unfortunately for Rangers fans looking to get back to the Premier League sooner rather than later, there might be another liquidation bump in the road coming up soon, and the worryingly, the man essentially in charge wouldn't lose out enough to make sure that it doesn't happen at any cost.
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Executive Editor, chief Gunter and the most read writer on WhatCulture. Like ever.