Mike Ashley has lent Rangers a further £1million after their financial crisis was exacerbated by falling attendances - but has given up the naming rights to Ibrox.
Rangers shareholder Ashley recently strengthened his influence on Ibrox by lending the club £2million, a deal which saw chief executive Graham Wallace and director Philip Nash resign and two of the Newcastle owner’s close associates arrive in Glasgow.
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The club announced to the stock exchange on Wednesday morning that the loan had been extended to £3million while simultaneously revealing they have entered into a marketing agreement with Ashley’s Sports Direct firm.
However, that agreement sees Sports Direct give up its right to re-name Ibrox Stadium, which Ashley secured for just £1 following a previous agreement with former chief executive Charles Green.
A statement revealed that Ashley’s Mash Holdings would “make available” an additional £1million on November 26, when wages are due to be paid.
The statement continued: “During the autumn, the club has suffered from lower than expected match attendance which has exacerbated the financial condition of the business.
“The directors have begun a cost-cutting exercise, but further working capital in addition to the facility will be needed before the end of the year.”
The second statement added: “The board of Rangers is pleased to announce that Rangers Football Club Limited has entered into a partnership marketing agreement with SportsDirect.com Retail Limited (“Sports Direct”) in which Sports Direct has given up its naming rights to the Ibrox Stadium.
“The agreement consolidates existing marketing arrangements between the parties and results in a more normalised retail joint venture marketing arrangement in which Sports Direct will continue to have certain advertising rights.”
Rangers plc chairman David Somers added: “This agreement has been concluded to demonstrate the importance both parties place on our relationship.
“The Rangers board welcomes this visible demonstration of the Sports Direct support and long-term commitment to Rangers.”
Rangers also defended their relationship and agreements with Ashley, a move which came a day after the Rangers Supporters Trust wrote to stock exchange bosses seeking an investigation into the recent deal.
Ashley’s initial loan was soon followed by the appointment of Sports Direct executive Barry Leach and former Newcastle managing director Derek Llambias as “consultants”, with the latter subsequently being named a director.
Ashley had previously submitted an official requisition to hold a special general meeting proposing the removal of Wallace and Nash.
The fans’ letter questioned why Rangers had entered into a commercial agreement that gave Sports Direct almost half of the profit from replica shirt sales and naming rights to Ibrox; how Ashley, who has a stake of less than 9 per cent, had been allowed to place representatives on the board when he is forbidden from having major influence by an agreement with the Scottish Football Association; and why Rangers had declined a larger loan offer when accepting Ashley’s.
Former oldco Rangers director Dave King had made a £16million offer of investment in return for shares while Sale Sharks owner Brian Kennedy submitted a late £3million loan offer before Ashley’s assistance was taken up on October 27.
The club statement responded: “The board discussed offers of finance in detail with two different potential funders over a period of time and also had discussions with an additional potential funder who expressed interest at the end of the period of the board’s discussions with the two original potential funders.
“Following such discussions, the independent directors comprising David Somers, Norman Crighton and James Easdale narrowed down the immediately available funding options to two proposals, being those which were able to provide proof of immediately available and uncommitted funds and proof of the identity of the funders.
“As such the independent directors identified the two proposals that were, in their opinion, capable of immediate delivery.
“Having assessed these two proposals, the independent directors also consulted with major shareholders holding a majority of the voting rights in the company.
“Following such shareholder consultations and with the support of such shareholders, the board resolved to enter into the facility.
“The independent directors, consider, having consulted with Daniel Stewart its nominated adviser, that the terms of the facility are fair and reasonable insofar as shareholders of the company are concerned.”
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