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Sports Direct's Ashley says serious deals not done while drunk

July 5, 2017

Mike Ashley, the billionaire owner of Sports Direct International—which owns a major stake in Indianapolis-based retailer The Finish Line Inc.—said he doesn’t make serious business decisions while drunk and that a former employee’s claim that the retail tycoon made a $19 million bonus deal while in a London pub was “nonsense.”

Jeffrey Blue, an ex-Merrill Lynch investment banker who worked for Ashley, is alleging in a London lawsuit that his boss reneged on a pledge made in a bar in early 2013 that he would get the bonus payment if he doubled the retailer’s share price to eight pounds. Ashley said while testifying Wednesday that it was "very unfair" for Blue to claim he regularly made deals while drinking.

“If you’re trying to portray that I make massive business decisions in pubs and bars, then that is total crap,” Ashley said. “It is not the norm, otherwise I’d have to live in a pub because I make business decisions all day, every day.”

The court case, littered with allegation’s of Ashley’s heavy drinking, is an unwelcome distraction for the billionaire who built Sports Direct from one shop into the United Kingdom'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 share price has dropped about 60 percent.

In April, Sports Direct started buying shares in Finish Line, eventually acquiring a 19.9 percent stake worth about $107 million, IBJ reported June 23.

Ashley said in court documents made public Wednesday that Blue’s suggestion he made a binding agreement was “incredible” and made no commercial sense.

“The value of a share is determined by a range of factors, not least the underlying performance of a company’s business, and it would be impossible for Mr. Blue to influence the value beyond the sum of all other relevant factors,” Ashley said in his statement. “It is ridiculous to think that I would agree to give Mr. Blue millions of pounds if the share price got to 8 pounds per share without him directly being able to cause this to happen.”

The pub meeting in question was set up to discuss the role of corporate broker with Banco Espirito Santo SA, which was represented by two executives. Ashley, who also owns Newcastle United soccer team, attended the meeting alongside Blue, and a third member of the Sports Direct management team.

Banter and bravado

The group starting drinking heavily when they arrived and had “four or five” drinks during the first hour, Ashley said in his statement.

“I can’t remember the details of the conversations that we had in the pub as it was a heavy night of drinking,” said Ashley. “I do recall that there was a lot of banter and bravado, which was a mixture of the drinking and me trying to build a rapport with the brokers.”

Blue’s witness statement, made public Monday, included a plethora of embarrassing allegations for Ashley. Blue says that one management meeting he attended in a pub involved Ashley challenging a young analyst on Blue’s team to a drinking game that ended after each man downed about a dozen pints of beer followed by vodka chasers. The analyst quit the contest, and Ashley vomited into the pub fireplace, Blue said.

Some of the allegations are unfounded and were included to tempt Ashley into an out-of-court settlement, Ashley’s lawyers said in court filings.

“The claim appears to have been issued on the basis that the threat of negative press alone would compel Mr. Ashley to settle,” the filings said. Blue has made “unsubstantiated allegations that are irrelevant and inflammatory, many of which would be defamatory if made out of court.”

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