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Is the Rangers Retail JV with Sports Direct a permanent one with no expiry date?

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Following on from a point raised earlier today by JohnMc, I thought this question and related discussion deserved a new thread, so here goes....


The initial (and official) announcement from the Club regarding the Sports Direct deal and Rangers Retail JV ('joint venture') is here - Sports Direct Deal Confirmed


Wednesday, 22 August 2012 14:32

Sports Direct Deal Confirmed

Written by Rangers Football Club


RANGERS Football Club is delighted to announce today a Joint Venture (JV) with retail giant SportsDirect.com that enables Rangers to once again control its retail operation and gives supporters the chance to buy direct from the Club and in doing so, continue to invest in its future.


Rangers Retail, a subsidiary company of The Rangers Football Club Ltd, has been formed with SportsDirect.com which enables the Club to utilise the huge buying power and resources of SportsDirect.com while maintaining the majority stake-holding in the JV.


Sports Direct employs around 19,000 people in over 470 stores in the UK, Europe and the Middle East.


As part of the JV, Rangers will have greater control over the range, price and design of products while benefitting from wider distribution through SportsDirect.com stores, although the Club will control its own Megastore at Ibrox and the online provision for supporters.


This JV pulls on the strengths of all parties – Rangers’ knowledge of the brand, fan base and ability to research and survey supporter opinion and input, marketing and communication and SportsDirect.com’s retail prowess, buying power, merchandising and distribution reach.


Rangers will also be looking at new retail opportunities including an airport site which fans have been requesting for years.


Fans have been keen for Rangers to bring its retail operation back in-house for a number of years in order to improve product range and have more control over merchandise and one benefit of the events of recent months has been the Club’s ability to renegotiate its commercial contracts. Rangers now has the opportunity to create a new JV retail model and as a result, the more that our fans invest in retail products, the more revenue can be generated and re-invested back into the Club.


The Megastore has already come back under the control of the Club and the transition will happen in stages with a Rangers Megastore website being introduced followed by wider distribution throughout the UK and overseas. Supporters should note that stock will be limited during the initial transition period from JJB to Rangers Retail however a full range of Club products will be available in the coming months with all funds going to Rangers Retail..


Rangers Chief Executive Charles Green commented: “We are delighted to have SportsDirect.com on board as they are one of the world’s top retail brands. This deal will be beneficial to both parties but more importantly the supporters who will be able to buy direct from Rangers once again and support their club.


“This is an exciting opportunity for Rangers to really drive revenues through the sale of merchandise with SportsDirect.com and profits will be reinvested back into the team and the Club.


“Rangers fans are passionate about all aspects of their Club and I know this new deal will improve our retail operation immeasurably and allow fans greater access to Rangers products worldwide.”


A spokesperson for SportsDirect.com commented: “This is a very exciting deal for SportsDirect.com and we are pleased to be forming a retail partnership with one of the UK’s most recognised football clubs. Building on our well established retail and brand experience, we look forward to working with Rangers to offer a wider selection of official apparel and merchandise to their increasingly global fan base.”


All JJB staff contracted as part of the Rangers retail operation will TUPE across to Rangers Retail allowing the Club to maintain continuity with knowledgeable staff.


A slightly more detailed description of the deal can be found in the RFC Prospectus from Dec 2012 which is here - AIM Admission Document


The following is from section XIII 12.1.3 on page 108 of the prospectus PDF document:


Sports Direct joint venture


On 31 July 2012 RFCL entered into a joint venture shareholders’ agreement (the “Rangers Retail SHA”) with SDI Retail Services Limited (“SDI”) relating to terms under which the joint venture vehicle Rangers Retail Limited (“Rangers Retail”) would operate with RFCL holding 51 per cent. of Rangers Retail. Through Rangers Retail the parties agree to run jointly the production, supply and sale of branded products and carry out retail activity at the Club’s superstore at Ibrox and on the Club’s online webstore.


Under the Rangers Retail SHA, each of RFCL and SDI have the right to appoint two directors, SDI is to be responsible for day to day management including the provision of accounting and retail-related services and Sportsdirect.com Retail Limited (an affiliate of SDI) agrees to provide a facility of £1.5 million to Rangers Retail available for drawdown for a period of 5 years at an interest rate of Barclays Bank’s pass through rate from time-to-time and interest is to be capitalised. Any sums drawn down under the facility would be secured by a debenture to be given by Rangers Retail over all its freehold and leasehold property. The loan facility and debenture have not yet been entered into.


The Rangers Retail SHA contains restrictions on share transfers, reserved matters and other provisions common to joint venture agreements. The agreement contains deadlock provisions which require deadlock matters to be referred to senior management of the shareholders and then to mediation. If the deadlock matter has not been resolved then SDI has the right to acquire RFCL’s shareholding at a set price (50 per cent. of the profits of Rangers Retail in the previous twelve months). If this buyout takes place, SDI agrees to procure that a royalty according to a formula is paid by Rangers Retail to RFCL in consideration for rights under

an intellectual property licence agreement relating to the grant of an exclusive worldwide licence of certain intellectual property rights of RFCL to Rangers Retail in return for Rangers Retail producing kit and branded products (at cost price plus 10 per cent.) (the “IP Licence Agreement”). Mandatory share transfer provisions apply at the same transfer price where a shareholder undergoes a change of control or an event of default (including insolvency, material breach or if the IP Licence Agreement is validly terminated). The Rangers Retail SHA is governed by English law.


Under the IP Licence Agreement RFCL agrees to indemnify Rangers Retail against loss arising out of a third-party intellectual property claims in respect of RFCL’s intellectual property rights. In turn, Rangers Retail agrees to indemnify RFCL against loss arising out of similar third-party claims in respect of intellectual property rights other than RFCL’s rights.


So between the initial announcement and the description of the deal in the IPO prospectus, there seems to be absolutely no mention of a time period for the Rangers Retail joint venture with Sports Direct to elapse or expire.


Another very important question for anyone attending next week's AGM perhaps?

Edited by Zappa
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not sure but was told 7 years.


That was my understanding too, but it may well have been altered in their favour since.


Where did you get the 7 year thing from guys because it doesn't appear in any of the official statements or MSM commentary that I've seen?

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Where did you get the 7 year thing from guys because it doesn't appear in any of the official statements or MSM commentary that I've seen?
was told by people in the club back at the time that 7 years was the believed duration but details were hard to come by even for staff in positions that should be in the know.


As FS said could have changed between then and now.

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was told by people in the club back at the time that 7 years was the believed duration but details were hard to come by even for staff in positions that should be in the know.


As FS said could have changed between then and now.


It's very bizarre and unusual that the length of the deal has never been made public right from when the deal was done through to the present day.

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