All is fair in retail and football. Or not, it seems, if you are old sparring partners Dave Whelan and Mike Ashley in their battle for control over JJB Sports.
The respective owners of Wigan Athletic and Newcastle United have been squaring up to each other over the beleaguered retailer.
The news that Whelan, who founded the sports retailer in 1971, has snapped up the retailer’s 55 fitness clubs is good news for JJB. Bolstered with£83.4m -£40m now and the rest once lease considerations have been completed within the next six months - JJB Sports can pay down some of its circa£60m debt pile and provide working capital going forward.
It is now in negotiations with landlords and wants to enter a company voluntary arrangement (CVA) to negotiate terms with its landlords, who will be asked to accept monthly rents on its 250 stores. Those who are getting rents on the 140 stores closed by JJB will be asked to consider new terms.
If successful, JJB will secure a£50m banking facility, essential to securing its future. If these talks are not successful, the banks will withdraw their support from JJB, which has been granted its fourth stay of execution over the past few months.
One-nil to Whelan in the first half, then. However, Ashley is still intent on putting a spanner in the works. He has written to landlords saying that he would be a “stronger credit” to lease the sites than Whelan, when the outspoken Northerner comes to reassigning leases. If Ashley is successful, Whelan says he could derail the entire process for JJB, which is primed to turn itself around.
Setting JJB apart from its rivals
JJB is set to revamp itself as a “traditional English sports shop”, leaving its rivals to the fashion sportswear arena. The move is a smart one for JJB, and will position it away from rival JD Sports. The positioning may encroach on Blacks Leisure’s Millets, but Blacks has its own worries.
Yesterday it was revealed that talks about a potential sale of Blacks had been terminated, in another blow for Ashley. Ashley has a 29 per cent stake in the business and it was a takeover target for the reclusive entrepreneur.
However, there is one retail guru in this whole debacle who must see light at the end of the tunnel. Sir David Jones, drafted in to iron out the wrinkles at JJB, is one step closer to achieving his aims.
It is timely that Next saviour Jones also saw his former fashion retailer notch up robust full-year results today, which were well-received by the City. Unencumbered by covenant and rent issues and free of investigations into directors - former chief executive Chris Ronnie has been ousted - Jones is free to take up the reins and reposition JJB.
However, the long-term future of the retailer ultimately lies in the hands of the landlords and whether they will accept revised terms.
As swathes of retailers negotiate with landlords as they grapple with the toughest quarterly rent day for 18 years, never before has it been more important for retailers and landlords to be flexible and come to an arrangement that is a win-win for both parties. In this case, it could safeguard the future of 12,000 staff.