Rangers chiefs lose latest round of court battle with Sports Direct and Mike Ashley over merchandise

[JFK-1 1,693]

Sports Direct v Rangers - the truth behind the media lies

 

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.

 

https://www.ibroxnoise.co.uk/2019/07/sports-direct-v-rangers-truth-behind.html

[Bill 13,717]

What I’ve never understood is how you give SD the chance to match the terms of a third party offer without breaching contractual confidence with the third party. Who would make an offer to Rangers, knowing it will be disclosed to a competitor like SD?

Edited July 24, 2019 by Bill

[rbr 1,256]

The entire 28 page document , well worth reading .

 

https://www.docdroid.net/4Gv6gru/sdir-v-rangers-april-2019-trial-final-judgment.pdf#page=11

[Gaffer 1,665]

11 hours ago, rbr said:

The entire 28 page document , well worth reading .

 

https://www.docdroid.net/4Gv6gru/sdir-v-rangers-april-2019-trial-final-judgment.pdf#page=11

Thank you, and I decided just to bite the bullet and read it.  It does look like the judge saw right through Blair's attempt to pull a fast one over a previous judgement, but I'm so glad I've read this.  There's actually nothing in this that is out of the norm of one of these types of disputes.  I can also see why SD are likely to win these, and probably keep winning them.  The issue then is why would Rangers continue to go into these sessions knowing that we are likely to lose?  To me the answer is simple, and it's the same reason almost all of these instances occur.  Even while we go through these with compensation payouts, it's probably financially better (and I suspect gives greater satisfaction) rather than to give SD what they want.  Also, each time you go through such a case, there's a good chance we will win relatively small victories which then eat away at the interpretation of the current contract.  I hope we keep going with this.  One thing to note however is that there are a couple of areas where SD's lawyers have played a blinder and it just shows the advantage they have in the money they are paying for their side.  We can't ever compete with that so it will be death by a thousand cuts until eventually the value of this contract to SD is diluted to the point where we will propose another but final payout to SD.  SD's lawyers have all the experience so they will just be trying to secure the best possible outcome when that inevitable time comes.  It could be as soon as 18 months at this rate.

 

I'm going to look at the previous contract too now because I was astonished at us paying £3m to renegotiate.  I am intrigued to see why it was so bad that we were willing to pay such a fee.  In comparison with our income that seems hugely disproportionate and that makes me curious.

 

I should add that as far as I can tell, the judge stepped out of line when he suggested that this had cost 'SD millions'.  There was nothing presented that would give him enough evidence to suggest that so I'm really surprised he said that.  Also, there is one particular clause that Rangers are relying upon to limit the compensation to £1m, and despite the official statement from the club this judge has ruled that this limit may not necessarily be applied.  I do agree that SD may be hard pushed to prove losses more than this, but in my opinion that statement form Rangers is misleading on that one point.  They could have acknowledged what the judgement said but then assert their view that losses are unlikely to breach that amount, but instead they chose to word it in a way that contradicts what the court papers say.  That's the one point that will make me now check the source facts from now on, rather than rely on the club's interpretation of what happened, and I'm disappointed that this is the case.  Thanks to @rbr for encouraging me to read what I could have a few days ago.

Edited July 25, 2019 by Gaffer

[the gunslinger 3,366]

I think you will find the previous deal was unbelievable. Written by Ashley for Ashley. 

[Frankie 8,562]

5 minutes ago, the gunslinger said:

I think you will find the previous deal was unbelievable. Written by Ashley for Ashley. 

Correct.

 

Like I said yesterday, in many ways, I very much doubt Rangers felt they could win most of these court cases but, in the longer term, then they may be seen as acceptable (though costly) losses.

 

 

[Gaffer 1,665]

I committed to look at the details around the previous deal, and if ever there was a need for a @Rousseau gif, it's now (feel free to insert as appropriate).  Bloody hell, it's actually unbelievable and I'll be honest that I thought I had found a fake version at first.  I recognise the current board's desire to make quick progress commercially, and therefore why they paid a fee to renegotiate, however I suspect that they were tempted to go down the criminal actions route.  If that was me, I'd have been confident of a strong case against those that approved of that deal.  I have never experienced any organisation with the audacity to even propose those terms, never mind someone then stupid/corrupt enough to accept them.  I've not looked into the governance during this period, but how could this possibly have been reviewed and approved?  Any director would be breaching their fiduciary duties by accepting this.  There is absolutely zero chance of defending this as being in any way of interest to our football club.

 

I don't know how much time it would have taken to reach a conclusion through criminal proceedings, but perhaps that was the main reason for choosing to cut losses and renegotiate instead.  I'm furious that people have escaped appropriate punishment for this, but I do understand our board's rationale.  I suppose that's just one we have to accept and move on from.

 

If I then put myself in the position of SD, and if was holding on to a legally binding contract like that original one, I wouldn't have agreed to dilute it to the current contract for just £3m.  I'd have felt confident in getting way more than that, so I suppose in one way it shows good negotiating tactics/skill from our club.  However that just makes me further suspicious and probably reinforces my belief that SD knew that the board could have tackled the original contract in a more damaging route for those involved.  I suspect there were lots of verbal threats/suggestions which we will obviously have to avoid speculating on.

 

Ultimately, we were screwed in that original contract.  We then paid a reasonable sum to renegotiate to a point where we feel we can dilute it down further.  It's going to take time though, and we should all expect to be in this fight for at least 18 months more.  I am so glad I took the time to read the source materials.  I knew it was bad previously but didn't appreciate how bad.  I am so grateful to those who have come in and rescued the club we all love, but this is a serious lesson to us all not to just blindly trust those in power at Rangers again.  I can't forget what I've just read regarding those contractual terms and it concerns me that this was allowed to happen right under our noses.  It must never happen again.

[pete 2,499]

5 hours ago, Gaffer said:

I committed to look at the details around the previous deal, and if ever there was a need for a @Rousseau gif, it's now (feel free to insert as appropriate).  Bloody hell, it's actually unbelievable and I'll be honest that I thought I had found a fake version at first.  I recognise the current board's desire to make quick progress commercially, and therefore why they paid a fee to renegotiate, however I suspect that they were tempted to go down the criminal actions route.  If that was me, I'd have been confident of a strong case against those that approved of that deal.  I have never experienced any organisation with the audacity to even propose those terms, never mind someone then stupid/corrupt enough to accept them.  I've not looked into the governance during this period, but how could this possibly have been reviewed and approved?  Any director would be breaching their fiduciary duties by accepting this.  There is absolutely zero chance of defending this as being in any way of interest to our football club.

 

I don't know how much time it would have taken to reach a conclusion through criminal proceedings, but perhaps that was the main reason for choosing to cut losses and renegotiate instead.  I'm furious that people have escaped appropriate punishment for this, but I do understand our board's rationale.  I suppose that's just one we have to accept and move on from.

 

If I then put myself in the position of SD, and if was holding on to a legally binding contract like that original one, I wouldn't have agreed to dilute it to the current contract for just £3m.  I'd have felt confident in getting way more than that, so I suppose in one way it shows good negotiating tactics/skill from our club.  However that just makes me further suspicious and probably reinforces my belief that SD knew that the board could have tackled the original contract in a more damaging route for those involved.  I suspect there were lots of verbal threats/suggestions which we will obviously have to avoid speculating on.

 

Ultimately, we were screwed in that original contract.  We then paid a reasonable sum to renegotiate to a point where we feel we can dilute it down further.  It's going to take time though, and we should all expect to be in this fight for at least 18 months more.  I am so glad I took the time to read the source materials.  I knew it was bad previously but didn't appreciate how bad.  I am so grateful to those who have come in and rescued the club we all love, but this is a serious lesson to us all not to just blindly trust those in power at Rangers again.  I can't forget what I've just read regarding those contractual terms and it concerns me that this was allowed to happen right under our noses.  It must never happen again.

We never trusted them that is why their tops were boycotted.

[Uilleam 5,940]

5 hours ago, Gaffer said:

I committed to look at the details around the previous deal, and if ever there was a need for a @Rousseau gif, it's now (feel free to insert as appropriate).  Bloody hell, it's actually unbelievable and I'll be honest that I thought I had found a fake version at first.  I recognise the current board's desire to make quick progress commercially, and therefore why they paid a fee to renegotiate, however I suspect that they were tempted to go down the criminal actions route.  If that was me, I'd have been confident of a strong case against those that approved of that deal.  I have never experienced any organisation with the audacity to even propose those terms, never mind someone then stupid/corrupt enough to accept them.  I've not looked into the governance during this period, but how could this possibly have been reviewed and approved?  Any director would be breaching their fiduciary duties by accepting this.  There is absolutely zero chance of defending this as being in any way of interest to our football club.

 

I don't know how much time it would have taken to reach a conclusion through criminal proceedings, but perhaps that was the main reason for choosing to cut losses and renegotiate instead.  I'm furious that people have escaped appropriate punishment for this, but I do understand our board's rationale.  I suppose that's just one we have to accept and move on from.

 

If I then put myself in the position of SD, and if was holding on to a legally binding contract like that original one, I wouldn't have agreed to dilute it to the current contract for just £3m.  I'd have felt confident in getting way more than that, so I suppose in one way it shows good negotiating tactics/skill from our club.  However that just makes me further suspicious and probably reinforces my belief that SD knew that the board could have tackled the original contract in a more damaging route for those involved.  I suspect there were lots of verbal threats/suggestions which we will obviously have to avoid speculating on.

 

Ultimately, we were screwed in that original contract.  We then paid a reasonable sum to renegotiate to a point where we feel we can dilute it down further.  It's going to take time though, and we should all expect to be in this fight for at least 18 months more.  I am so glad I took the time to read the source materials.  I knew it was bad previously but didn't appreciate how bad.  I am so grateful to those who have come in and rescued the club we all love, but this is a serious lesson to us all not to just blindly trust those in power at Rangers again.  I can't forget what I've just read regarding those contractual terms and it concerns me that this was allowed to happen right under our noses.  It must never happen again.

The fact that the Club renegotiated the original contract -was compelled to do so- surely does not negate, obviate, or in any way prevent legal action action those who accepted its terms and conditions, in clear breach of their fiduciary responsibilities. 

Would there be a time bar, perhaps? 

 

Taking action on the old contract might, however, have stymied any renegotiation with the fat bastard. 

Edited July 25, 2019 by Uilleam

[the gunslinger 3,366]

59 minutes ago, pete said:

We never trusted them that is why their tops were boycotted.

As recently as yesterday rangers fans were still on Ashley's side.