Ashley in shirts dispute with Newcastle

Mike Ashley’s crusade against what he sees as a cosy establishment in the football-kit market is now into its third decade. His latest target is Newcastle United, the club he owned for 14 tumultuous years.

In a claim filed at the Competition Appeal Tribunal (CAT) in March, Sports Direct argued that Newcastle’s decision to prevent it from selling the club’s kit for next season was “transparently designed” to reduce price competition to the benefit of the club’s own shops and to the detriment of consumers.

The new arrangements are coming into effect after Newcastle signed a new £30 million-a-year kit contract with Adidas. Sports Direct argues that the club is abusing its dominant position by opting to sell the kits exclusively through its own retail operations and through JD Sports, Sports Direct’s arch-rival.

Now the battle is heating up. Ashley’s first broadside was knocked back last month when the CAT rejected Sports Direct’s request for an injunction to force Newcastle to supply its kit for the 2024-25 season. The tribunal ruled that the club was not guilty of abusing its dominant position by failure to supply, and then denied Sports Direct the right to appeal.

Undeterred, the retailer is now taking the case to a higher court, the Court of Appeal, with a hearing expected in the next fortnight. And there was a further twist last week when, at Newcastle’s request, the CAT added JD Sports as a co-defendant. JD Sports said it disagreed with the decision and was seeking to have it reversed.

Ashley, 59, got wind that Newcastle was planning to freeze Sports Direct out of shirt sales last October, when Adidas representatives let the news slip during an informal chat at the bar with the retailer’s head of football.

Ashley subsequently discussed the issue with Amanda Staveley, the financier who brokered the controversial £300 million Saudi-led takeover of Newcastle in 2021. Staveley, according to Sports Direct, said Newcastle was reluctant to supply it with kits out of concern it would discount them and compromise the club’s ability to maintain higher prices.

Newcastle has enormous financial resources at its disposal following the takeover, yet to afford the top players it desires the club must boost its commercial income to ensure it complies with the Premier League’s financial fair play regulations.

Sports Direct has marched to the top of the sports industry by ruthlessly undercutting rivals on everything from tennis rackets to tracksuits. Yet Ashley has long believed that retailers shy away from discounting football shirts, which can retail for as much as £125, out of fear that the big manufacturers will stop supplying them.

Sources close to Ashley insist the legal action against Newcastle is not motivated by an animus towards the club or Staveley herself and that he would have brought the case against any big club seeking to withhold shirts from Sports Direct. Yet the tycoon’s turbulent relationship with the club lends the dispute added spice.

“The reputation of Sports Direct with the Newcastle fans is, for want of a better word, toxic,” the club’s lawyers argued to the tribunal. “The unpopularity of Mr Ashley and Sports Direct with fans was so bad that it led to boycotts, not just of Sports Direct but of Newcastle season tickets. There were protests, all manner of problems.”

Regardless of the outcome of its injunction application for next season, Sports Direct intends to sue for damages arising from market abuse and obtain an injunction securing future supply of Newcastle kits.

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The Political Economy of Football V2

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