Mike Ashley attacks Rangers in £1m wrangle over club's merchandise

Sports Direct, the firm owned by the billionaire, has claimed Rangers chairman Dave King encouraged a supporter boycott which was used as a reason to support the termination of an intellectual property rights deal with the Ashley-controlled Rangers Retail in May.

And it accuses the club of breach of contract by refusing to withdraw the “wrongful purported termination notice” and seeking to prevent kit manufacturers Puma from producing this season’s merchandise.

The row over intellectual property rights is part of Mike Ashley's bid to regain control of the trademarks in an action lodged at the Chancery Division of the High Court of Justice where the Sports Direct boss Mr Ashley, who has a near nine per cent share in the club, aims to sue Rangers for up to £1 million.

An application to continue with the claim was due to take place on Thursday, but the case has been adjourned and is not expected to be listed until March next year.

Rangers say they are defending the claim and they intend to dispute Sports Direct’s move to bring “derivative proceedings” on Rangers Retail’s behalf.

Rangers Retail was unveiled in 2012 as a merchandising joint venture between Rangers FC and Sports Direct by then chief executive Charles Green.

But the Ibrox board, which is believed to receive just 4p in every pound spent on Rangers merchandise from the deal, withdrew its exclusive licence to exploit club-related trademarks and logos including the club name, Ibrox, The Gers, the famous RFC Scroll crest and the Ready logo.

It was believed that meant kit which contained the protected logos could not be sold.

The court hearing would determine whether the Mike Ashley-controlled Rangers Retail should be allowed to continue such proceedings.

The club, which wrote to Rangers Retail and Sports Direct asking them to “cease and desist” over subsequent sales of kit, says that it will resist any financial claim.

Mr Ashley, who also owns Newcastle United, is seeking to force the club to confirm that the intellectual property agreement remains in effect.

It was revealed that Rangers, in wanting to terminate the agreement, had claimed that there had been contract breaches including a failure to tackle and resolve a supporter boycott which had been in place since at least January, 2015. This resulted in a failure to produce annual profits of £4 to £5 million.

The Sports Direct claim said: “In particular, Mr King, on behalf of The Rangers Football Club Ltd, has repeatedly encouraged the supporters boycott - set up as a protest over the raw deal they felt the club was getting out of Rangers Retail.”

Sports Direct supported its allegation by quoting Mr King's update to supporters published on the official Rangers website in February, which alleged that Ashley-controlled firm had made "threats", had attempted to "bully the club and me" and had put in place "poor commercial and business practices that the club has been forced to endure".

The Mike Ashley firm also insisted that the IP agreement imposes "no express obligation... to communicate with potential customers" and that there was no obligation to make any particular profits.

In a statement, Sports Direct said: “The allegations of breaches were spurious and were apparently made for the collateral purpose of forcing a commercial renegotiation of the IP agreement and the constitutional arrangements of the company.”

It claims that Rangers Retail has “suffered loss and damage and will continued to suffer loss and damage” if TRFCL “continues to publicise the purported termination and communicate it to suppliers”.

And the claim alleges that Mr King and/or Paul Murray are in a position of "actual conflict" between their duties as directors of Rangers Retail and their interests as club directors.

"They are conflcted by seeking to uphold the validity of the purported termination whereas the interest of Rangers Retail is to preserve its business by challenging the validity of the purported termination," Sports Direct claimed.

Puma, after taking legal advice, began distributing and selling the 2016/17 Rangers kit insisting they had a legal right to sell and market the kit under the terms of their five-year kit deal agreed in 2013.

When the kit deal was announced, Rangers said it made the sportswear giant "the official supplier and licensee of replica merchandise for the club" in a deal that complimented Rangers Retail, which was set up under a previous Ibrox management.

Rangers, upset at the millions it believes it should gain from its merchandising,  has previously threatened to ditch the controversial Puma strip, it says was released without their consent and replace it with a new kit midway through the season.

In August, after withdrawing the intellectual property rights, Rangers announced they were to make their own damages claim worth £1 million amid claims Rangers Retail had breached an agreement over the use of its trademarks.