Mar 3, 2014
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Mike Ashley, the maverick who changed face of UK sports retail

Mar 3, 2014

LONDON, England - Mike Ashley's Sports Direct empire began in 1982 on a quiet high street in southeast England, with the help of a 10,000 pound loan from his parents.

Thirty-two years on, the company dominates Britain's sports retail market and Ashley is a billionaire whose unconventional image and management style, and penchant for a quick deal, have earned him admirers, as well as critics, along the way.

Ashley is most recognisable to many Britons as the owner of Newcastle United, a football team in northern England he bought in 2007 and has had a strained relationship with ever since.

Fans have marched through the city in protest against him, underlining how divisive his management style can be.

Ironically for someone who generates more interest than almost any other British businessman, Ashley remains intensely private, earning loyalty from the close colleagues and friends he confides in and letting the media come up with their own, not always flattering, interpretations.

Ashley declined to speak to Reuters for this article, and has not given a full media interview for around seven years.

The rise of his business has been fast and at times brutal.

From the single shop in the town of Maidenhead, there are now some 400 Sports Direct UK stores and another 260 outlets in 19 markets across Europe.

Eschewing the trimmings of many retailers, the shops are more like warehouses, crammed with cut-price goods from football boots to golf clubs and from running tops to trainers.

They have sounded the death knell for many independent sports outlets up and down the country, one of the criticisms levelled at Sports Direct and its aggressive business model.

Yet the expansion, aided by opportunistic acquisitions, has won Ashley plenty of friends in the investment community, where the Buckinghamshire grammar schoolboy stands out in a world traditionally dominated by the privately educated.

"Mike is strategically brilliant," said one banker who has worked with Ashley in the past.

"He just didn't go to Eton like everyone is used to in the City," he added, referring to the elite school attended by many of Britain's top business and political figures.

Liberum Capital's retail analyst Sanjay Vidyarthi believes Ashley's strength has been to keep rivals on the back foot.

"He's been a tremendous disruptive influence. The competition really just hasn't known how to deal with him."


The success of Sports Direct has come from selling low margin, must-have Nike and Adidas products alongside a stable of higher-margin revived own-brands like Slazenger and Lonsdale, bought along with other businesses.

These have enabled it to offer shoppers popular, cheap deals, and wrestle market share from rivals, putting some out of business altogether.

The firm is also growing abroad and online and has expanded into fashion, buying chains like high street outfit USC and upmarket Flannels, popular with the likes of England and Liverpool football captain Steven Gerrard.

Group sales stand at 2.2 billion pounds and core earnings have more than doubled in six years to a guided 310 million pounds for 2013-14.

Ashley's ruthless streak is a key ingredient to his company's growth, as is a team of top managers who provide checks and balances to his forthright approach.

He has attacked Adidas for withholding products from the group, and in 2011 said of two rival retailers: "I'll finish off JJB first, then I'll move on to JD."

In 2012 JJB buckled and went bust, with Sports Direct buying up some of its stock, brands and stores.

JD Sports Fashion, with most of its 850 stores in the UK, has fared better, but recent trade has been hurt by a costly acquisition and a weak performance in fashion, where, despite owning 12 percent of JD, Ashley's firm is upping competition.

Those who know Ashley, whose 62 percent stake in Sports Direct is worth 3 billion pounds, put his success down to a mind for logistics, an eye for deals and sharp negotiating skills.

"He's come across very friendly, but he knows what he wants, he knows how to get it and he usually does," one licensee says.

Sources say his acquisitive nature is built on a personal mantra that every market holds a rival capable of Sports Direct's growth, and so it must buy and grow to protect itself.


People's perceptions of Ashley are as much shaped by what is on the surface as what lies beneath.

Shunning the sharp suits of many wealthy executives, the portly 49-year-old instead wears jeans and a white shirt.

Frank comments, a love of casinos, stories of settling banker fees by playing bar games and clips on YouTube showing him sinking a pint of beer in a few seconds further feed the image of a maverick far removed from most FTSE 100 executives.

His dealmaking can be unusual. Recently, he made a complex bet on Debenhams alongside an intention to strike a partnership with the British department store, which made him a quick 4.6 million pounds.

"He thinks unconventionally," said one person who has worked with Ashley. "His complete disregard for convention could be his best and worst attribute."

It is certainly a trait that can rile investors, with one shareholder telling Reuters: "The one thing I would say is there seems to be a slight blurring between what he thinks is his own personal wealth and the company," referring to the trade on Debenhams shares in January.


A lesser known factor in Sports Direct's growth is a loyal, tight-knit management team, with whom Ashley spends Tuesday nights at a pub local to its HQ in Shirebrook, central England, pouring over the firm's next steps before sometimes sleeping at one of the homes the company owns in a nearby street.

In keeping with Ashley's nose for a profit, anyone who does stay, management included, must pay for the room.

Ashley's right hand-man and daily taskmaster is CEO Dave Forsey, who joined the firm in 1984 as a Saturday boy and never left. Finance chief Bob Mellors was with them since the start until recently retiring, while head of retail Karen Byers and Ashley's brother John, head of IT, are among other mainstays.

Ashley's inner sanctum provide a balance to his forthright nature, with no deal sanctioned without the approval of his management team, according to sources.

Those who have worked with Ashley describe a funny and generous operator, passionate about staff rewards and not always adverse to those in the City. One senior banker recalled how, at the time of Sports Direct's IPO in 2007, Ashley flew potential investors by helicopter to see him.

Ashley's standing among his staff members, however, is likely to be split between full-time Sports Direct staff who have enjoyed potentially life-changing chunks of multi-million share bonuses, and a more substantial 20,000 staff reported to be on zero-hour contracts, which offer no certain work or pay.

Ashley, who takes no salary from Sports Direct and gives the firm free advertising at Newcastle, recently told analysts his focus would soon turn to Europe, a market 8 times the size of the UK's 5-6 billion pound industry, as he aims to build on two big deals last May that doubled the size of its overseas arm.

Plans to open 8-12 new stores and enter 2-3 new territories a year are a long way from its Maidenhead beginnings, not to mention a rocky start to life on the stock market that involved a profit warning and shares falling from 300p to nearly 30p.

Today, with shares at 800p and the firm in the FTSE 100, many city figures say Ashley's unusual ways are vindicated.

"He's a brilliant tactician," one banker said. "Think about a chess game ... Mike's opening moves are brilliant, and it takes the audience a very long time to actually work out what he's done."

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