Bloodied Sports Direct refuses to throw in the towel


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The Independent Online

OUTLOOK:  Seconds out, round four, or should that be three? PR advisers to Sports Direct, the owner of famed boxing brand Lonsdale, are insistent it’s the latter. Others beg to differ.

Regardless, it should be remembered at this point that this a company that has taken a fair few punches from investors not named Mike Ashley. The dust-ups have been over attempts by the company to hand the aforementioned, its founder and executive deputy chairman, a bumper purse.

Those attempts, up until now, have floundered with the middleweight company losing each bout by a knockout to its hard-punching shareholders.

The company has been left looking eerily like the City’s version of George Groves facing off against the institutional investors’ Carl Froch (who wears Lonsdale in and out of the ring by the way).

This is all the more remarkable, given that institutions generally haven’t looked anything like contenders when judged on their performances in fights of this type: They usually like to throw in the towel after a round or two.

Bloodied it may be after all this, but give the Sports Direct board its due. The directors are nothing if not persistent. While Groves will be very lucky to get a third tilt at Froch, Sports Direct is squaring up for yet another re-match with its shareholders.

Yesterday it kicked off the pre-fight build-up by announcing a new bonus scheme that will hand Mr Ashley, his fellow executives, and those lucky employees not on zero hours contracts as much as £200m if the company meets “stretching” targets.

What it is not saying is how much of that will go to Mr Ashley to reward him for what chairman Keith Hellawell describes as his “substantial contribution”.

It’s at this that point people such as the PR advisers like to point to Sports Direct’s performance, which has indeed been stellar. The company’s market value has more than doubled since its flotation in 2007.

What goes unsaid is that, as the biggest investor, Mr Ashley has already been rewarded handsomely as a result of this. Indeed he made £200m this year through selling a substantial tranche of shares.

Which does raise the question of why shareholders should hand a chunk of them back to him for free. And why the Sports Direct board – which has, boxer-style, snarled and spat at its investors after their past victories – should be so coy about the size of that chunk this time around.

Time for the institutions to get down to the gym again.