A new legal judgement has found that the Newcastle owner's sportswear company should have been allowed to equal an offer from current kit maker Elite/Hummel to produce replica strips and other items.
Judge Lionel Persey QC found that Ibrox chiefs had signed off on the new deal, understood to be a three-year contract worth £10 million, without affording Sports Direct a chance to match the bid. Sports Direct's retail deal with the Gers was coming to an end as the club sought a new merchandise deal.
Sports Direct claimed the terms of the contract stipulated that Rangers had to offer the firm the opportunity to compete with any new deal.
Judge Persey also threw out Rangers' attempts to limit any payment to Sports Direct to £1 million, meaning the Ibrox club could potentially face a huge payout.
Ashley's deal with a previous Gers board saw the firm take 93p for every £1 of club merchandising sold in Sports Direct shops, resulting in Light Blues fans boycotting the stores.
Judge Persey yesterday said he had ruled in favour of Sports Direct, stating that, in his opinion, the "terms of the connected commercial arrangement offered to Elite/Hummel" should have been offered to Ashley's firm.
The judge added: "I am satisfied that Sports Direct would have matched those arrangements had it been given the opportunity to do so.”
He went on to state that Sports Direct's losses are "likely to be in the order of many millions of pounds", adding: "Rangers has pleaded that it will rely upon the Non-Exclusive Rights Agreement to limit its damages to £1 million.
"I accept Sport Direct's submission that it would be unjust to deprive Sports Direct of the benefit of its matching right provisions."
Judge Persey's decision paves the way for Sports Direct to seek a substantial amount in damages, although reports suggest the firm could settle for £1 million and the termination of the current deal, which would return the reins of Rangers' retail operation to Ashley.
Part of Judge Persey's ruling stated that Rangers company secretary James Blair had "untruthfully" communicated to Sports Direct that Elite/Hummel had not been granted the retail rights, and had failed to provide the sportswear firm with a copy of the contract with Elite/Hummel.
This, the ruling stated, prevented Sports Direct from retail sales it could have had over the 2018/19 and 2019/20 seasons, thus entitling them to damages.
The ruling read: “I am satisfied that Sports Direct was not only entitled to match the rights offered to Hummel/Elite but would have done so.
"Those rights were not only not offered to them but Rangers, through Mr Blair, untruthfully asserted that Hummel had not been granted any Offered Rights and did not provide Sports Direct with a copy of the Elite/Hummel Agreement."
The judge concluded that the Ibrox club had breached their agreement by entering into a new deal and neglecting to offer Sports Direct the chance to match the offer.
A decision on the amount of damages to which Sports Direct are entitled is expected to be made at a later date.