Sports Direct owner Mike Ashley wins £15m pub deal case
The court case has been an unwelcome distraction for Mr Ashley
During the trial, Mr Ashley claimed that he couldn’t “remember the details of the conversations” in the pub as he had consumed “four or five drinks in the first hour” and that any discussion over a bonus was merely “banter” on a “drink-fueled, fun night.”
Mike Ashley, the billionaire owner of Sports Direct, won a court ruling denying a former employee’s claim that the retail tycoon made a legally binding £15 million (€16.7 million) bonus deal in a London pub.
Jeffrey Blue, an ex-Merrill Lynch investment banker who worked for Mr Ashley, alleged in a London lawsuit that his boss reneged on a pledge made in a bar in early 2013 that he would get the payment if he doubled the retailer’s share price to £8.
“No reasonable person present would have thought that the offer to pay Mr. Blue was serious,” Judge George Leggatt said in a ruling Wednesday. The case “shows only that the human capacity for wishful thinking knows few bounds.”
The court case, littered with references to heavy drinking, has been an unwelcome distraction for Mr Ashley, who built Sports Direct from one shop into the UK’s biggest sportswear retailer. He’s trying to resurrect growth at the company after a dismal 18 months. Since a December 2015 undercover newspaper investigation exposed management issues at its warehouse, Sports Direct’s shares have lost more than half their value.
Mr Ashley reacted to the verdict by calling the investment banker a “Blue faced liar.”
“The only reason the Sports Direct share price exceeded £8 and will hopefully do so again, is because of the sterling efforts of all the people who work at Sports Direct,” Mr Ashley said in an emailed statement.
Sports Direct shares rose 1.8 pence, or 0.5 per cent, to 362.30p at 11 am in London. They traded at 365.8p a year ago.
Mr Blue told the court that Mr Ashley had made the pledge over drinks at the Horse and Groom pub in London in January 2013. As Mr Ashley is the majority shareholder of Sports Direct, the shares’ rise personally increased his wealth by £1.6 billion .
During the trial, Mr Ashley claimed that he couldn’t “remember the details of the conversations” in the pub as he had consumed “four or five drinks in the first hour” and that any discussion over a bonus was merely “banter” on a “drink-fueled, fun night.” He also claimed that increasing the share price made “no commercial sense” since he was not going to sell any of his shares.
The pub meeting in question was set up to discuss the role of corporate broker with Banco Espirito Santo, which was represented by three executives. Mr Ashley, who also owns Newcastle United soccer team, joined the meeting alongside Mr Blue.
Peter Tracey, who attended the meeting in his role as head of corporate broking at Espirito Santo, said that “at no point” did the deal seem serious and that it was “no more than banter over drinks in a pub.”
The trial exposed allegations of Mr Ashley’s informal business techniques such as drinking competitions in the midst of management sessions and napping during client meetings.
These revelations don’t help Sports Direct, which has had a difficult 18 months. Since a December 2015 undercover newspaper investigation exposed management issues at its warehouse, the shares have lost about half their value.