the times | Wednesday June 8 2022 37Business
price of Rangers kit between 2018 and 2019 — at the expense of the supporters
Run-in with
the regulator is
‘just the tip of
the iceberg’
Behind the story
‘T
here is a club in the
north, son, and you’re
not part of it,” is both a
withering put-down and
the quote that blew up
the market in selling football kits
more than two decades ago (Ashley
Armstrong writes).
The words were said in 2000 by
Dave Whelan, the founder of JJB
Sports, to Mike Ashley, who was
rapidly building his empire, then
called Sports Soccer, but was seen asI
t’s not just Lionel Messi who
can do five-timers. Peter
Cowgill, the former JD Sports
boss, pulled one off, too. The
key difference? He banged in a
quintet of own goals.
The first four? A pay revolt over
his £4.3 million bonus in a year that
the trainers and trackies retailer
took furlough cash; January’s
£21 million share sale, since when
JD’s share price has almost halved; a
delay to the full-year results; and, of
course, Cowgill’s spot of park life.
Remember that? Being caught on
film in a Bury car park with Barry
Bown, his opposite number at
Footasylum — a business the
Competition and Markets Authority
had ordered JD to sell, while
outlawing “commercially sensitive”
chinwags between the pair. That
caper landed JD with a £4.3 million
fine, what with the CMA wonks
always up for watching home videos
of two blokes in a car park.
And now? Own goal No 5: a “draft
penalty notice” from the
competition regulator over alleged
price-fixing of Rangers FC footie
shirts — foul play for which the
board has set aside £2 million. Yes,
Cowgill is no longer around to see it,
having been given an early bath a
fortnight ago by the board — or,
more precisely, the controlling
Rubin family. But you see why he
had to go, despite his success at
building the so-called “King of
Trainers” over an 18-year stint.
Cowgill took a sub-£100 million
retailer and turned it into a FTSE
100 stock, one whose relations with
Nike and adidas kept it ahead of his
rivals and not least Mike Ashley’s
Frasers Group, the outfit that owns
Sports Direct. On shares down 4 per
cent to 118½p, JD is still valued at
£6.1 billion — or almost double
Frasers. Not bad given Ashley’s
claims he would “finish off” JD.
Even so, Cowgill had been
dithering over investor calls for him
to split the role of chairman and
chief executive. And all the time the
governance goofs kept coming. The
board, under stand-in chairwoman
Helen Ashton, also knew it would
be lucky to escape a Rangers red
card — one that now looks pretty
blatant, too. The CMA claims that
JD “colluded” with both the club
and its retail partner Elite Sports to
fix replica shirt prices in 2018. JD
had been selling tops at £55, a fiver
less than Elite. But after an
“understanding” between the trio, it
raised its price to £60. The CMA
also alleges that JD and Elite
carried on price-fixing into 2019
over other Rangers garb.
Who grassed them up is not clear,
though in 2003 Sport Direct’s
Ashley triggered an Office of Fair
Trading inquiry into replica strip
price-fixing that saw JJB Sports,
Umbro, Man United and to a minor
extent JD hit with fines totalling
£18.6 million. Ashley’s gripe? That he
had been shut out of the game by
JJB boss Dave Whelan, who
allegedly told him: “There is a club
in the north, son, and you’re not
part of it.”
Big Mike used to be a Rangers
shareholder, too, involved in a bitter
takeover scrap with ex-chairman
Dave King, one of the few people
“cold-shouldered” by the TakeoverPanel and ostracised from UK
financial markets. But Ashley sold
out of the Scottish club in 2017 and
Frasers is making no comment.
Anyway, JD is now seeking a new
chairman and chief executive. And
Cowgill’s match is still not quite
done. The CMA is also looking into
possible price-fixing on his watch
over Leicester FC shirts. A sixth
own goal would do even less for his
highlights reel.Don’t recycle Biffa
N
o wonder rubbish company
Biffa keeps banging on about
the “circular economy”. It
keeps getting recycled itself, flitting
between the public and private
markets. Roll back to 2008 and it
was taken private for £1.2 billion by
Montagu Private Equity and Global
Infrastructure Partners.
It was a waste of money. By 2012,
Biffa’s lenders had taken control —
before deciding the ideal time to
return it to the markets was after
2016’s Brexit vote. Avenue Capital,
Angelo Gordon and Bain had to lop
£200 million off the asking price to
get Biffa’s float away at 180p per
share, valued at just £450 million.
Life has been happier since for the
group employing 9,000 workers and
emptying the bins for two million
households, while mainly clearing
up after businesses. So it’s a pity it
may be going private again.
The board, chaired by Ken Lever,
is “minded to recommend” a 445p-
a-share bid from US private equity
firm Energy Capital, should it make
it a proper offer, valuing Biffa at
£1.36 billion. It sent the shares up
27 per cent to 413½p. And the bid
would be a record for the shares —
a 37 per cent premium and 123 per
cent above 2020’s 200p placing
price, when Biffa raised £100 million
and at a 22 times earnings multiple.
Yet, as Stifel analysts noted: “It is
only a modest premium over the
416p price seen in September.”
To boot, one motive for any sale is
the board fretting over a potential
HMRC landfill tax bill that could be
anything from £170,000 to
£153 million — a ridiculous range
even by the taxman’s usual
standards. It should not be the
swing factor in agreeing a deal. Biffa
does not have to be recycled again.Cazoo in slow lane
H
ow time flies in the online
car biz. Was it really only last
August that Cazoo boss Alex
Chesterman was ringing the New
York Stock Exchange bell? He’d just
pulled off the most valuable-ever
US listing for a UK company: a Spac
deal that, at a first-day share price of
$9.35, valued Cazoo at $7 billion.
It always looked daft: a business
around since only 2018, apparently
worth more than all other UK-
quoted car dealers combined. The
shares today? About $1.35.
Yes, unlike smaller rival Carzam,
which has just gone bust, Cazoo has
fuel in the tank: £400 million cash.
But the days of stretch-limo
valuations are long gone.[email protected]business commentary Alistair Osborne
Cowgill’s tally of
nothing more than a scrappy own goals rises
southerner by the established names
in the sportswear industry.
When Whelan first met Ashley,
after landing his helicopter at the
Cheshire home of David Hughes,
chairman of the Allsports stores
chain, he initially mistook him for
Hughes’s gardener. It was claimed
that at the hour-long meeting, where
Whelan made his taunt, the retailers
arranged to end a three-month price
war in Manchester United and
England football shirts and it was
agreed to fix the price of the strips.
In a turning of the knife that
forever changed the dynamics of
sportswear retail, Ashley blew the
whistle on the price-fixing cartel. He
told the Office of Fair Trading that
he had been pressured into attending
the meeting by Umbro, a supplier.
Ashley’s business was given lenient
treatment as a result of compliance,
but the investigation led to fines
totalling £18.6 million for ten
businesses. The day after the
regulator’s penalties were imposed in
2003, Asda declared an end to the
“rip-off football shirt” and started
selling Manchester United strips at
£24.86 — £15 cheaper than in the
official club shop. The price of a strip
has since risen to as high as £65,
though JD Sports is now selling them
for £40 — the same price as adidas.
Ashley’s Frasers Group has not
been named as a party in the
Rangers price-fixing case. He has
had a bitter battle with Rangers in
the past and also previously has
threatened to “finish off ” JD Sports.
In the recent inquiry by the
Competition and Markets Authority
into JD’s takeover of Footasylum —
which it blocked, twice — Peter
Cowgill, the recently departed
JD boss, said the CMA had been
“taken in by the self-serving
testimony of one notoriously vocal
competitor”.
Last November, covert photos
taken by a third party — of Cowgill
breaching competition rules with an
off-the-books meeting with his
opposite number at Footasylum in a
car park — were handed to The
Sunday Times and the regulator.
JD’s run-in with the CMA is still
not over as the regulator is halfway
through another inquiry into
suspected anti-competitive
agreements with Leicester City and
replica strips. Industry sources say it
remains the “tip of the iceberg”.Rangers kit prices
Airport lets fly at Wizz over closure
Wizz Air has been accused of being
disingenuous in deciding to all but close
its operations at Doncaster Sheffield
airport amid a deepening aviation in-
dustry blame game over staff shortages
and stranded passengers.
The public have endured a wretched
spring and early summer as the avia-
tion sector prepared for, but failed to
meet, the pent-up demand for overseas
holidays after the pandemic.
After industry rows between airlines,
baggage handlers and airports in the
months since the queues and cancella-
tions that greeted the start of the Easter
holidays, a public spat between Wizz,
the budget airline, and the South
Yorkshire airport has erupted.
Wizz said last week that its UK oper-
ations were suspending operations at
Doncaster Sheffield, its second airport
base in Britain after its main home at
Luton. The pulling of services at shortnotice hit thousands of passengers, who
have had to make alternative holiday
arrangements.
Wizz blamed the decision on the
airport’s failure to fulfil “the terms of its
commercial agreement” — taken as a
coded message that Doncaster
Sheffield had been unable to fully staff
airport operations for outbound and in-
bound Wizz flights.
Yesterday, the airport hit back. A
spokesman said Wizz had sacrificed
routes there to consolidate its other
services, claiming that it had admitted
as much by stating: “This decision stabi-
lises our operations at other UK bases
to help minimise disruption and delay
as much as possible.” The official added
that Doncaster Sheffield “has fulfilled
in whole its obligations within the com-
mercial agreement” between the two
and that “it is regrettable that perform-
ance by Wizz of its own commitments
has not been reciprocated”.
Wizz’s actions had been “particularlydistressing for our passengers... so
many flights and bookings have been
axed at such short notice,” the spokes-
man said.
Of European airlines offering basic
services in the short-haul market, Wizz
is the third largest behind Ryanair and
easyJet. Doncaster Sheffield is the UK’s
20th largest airport, handling about
1.4 million passengers a year pre-Covid.
It is owned by Peel, the privately con-
trolled industrial group.
All parts of the aviation industry
have been hit by staff shortages because
of the tens of thousands made redun-
dant during the pandemic and the 12-
week delay this spring in recruiting new
employees because of the need for
security vetting and training.
At Heathrow, simmering tensions
between the management of the air-
port and British Airways, its biggest
tenant, have led to the dialling down of
service frequencies in an attempt to
avert delays and cancellations.Robert Lea Industrial EditorALAMY