Sports Direct’s Ashley Wins Court Battle Over Drunk Bonus DealBy and
Ashley says he didn’t promise 15 million-pound bonus payment
Judge says no reasonable person would think offer was serious
Mike Ashley, the billionaire owner of Sports Direct, won a court ruling denying a former employee’s claim that the retail tycoon made a legally binding 15 million-pound ($19.5 million) bonus deal in a London pub.
Jeffrey Blue, an ex-Merrill Lynch investment banker who worked for Ashley, alleged in a London lawsuit that his boss reneged on a pledge made in a bar in early 2013 that he would get the payment if he doubled the retailer’s share price to 8 pounds.
"No reasonable person present would have thought that the offer to pay Mr. Blue was serious,” Judge George Leggatt said in a ruling Wednesday. The case "shows only that the human capacity for wishful thinking knows few bounds."
The court case, littered with references to heavy drinking, has been an unwelcome distraction for Ashley, who built Sports Direct from one shop into the U.K.’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 shares have lost more than half their value.
Ashley reacted to the verdict by calling the investment banker a “Blue-faced liar.”
“The only reason the Sports Direct share price exceeded 8 pounds and will hopefully do so again, is because of the sterling efforts of all the people who work at Sports Direct,” Ashley said in an emailed statement.
Sports Direct shares rose 1.4 pence, or 0.4 percent, to 361.90p at 12:20 p.m. in London.
The company has had a difficult 18 months. Since a December 2015 undercover newspaper investigation exposed management issues at its warehouse, the shares have lost about half their value.
A lawyer for Blue didn’t immediately return a call seeking comment.
Blue told the court that Ashley had made the pledge over drinks at the Horse and Groom pub in London in January 2013. As Ashley is the majority shareholder of Sports Direct, the shares’ rise personally increased his wealth by 1.6 billion pounds.
During the trial, Ashley claimed that he couldn’t “remember the details of the conversations” in the pub as he had consumed “four or five drinks in the first hour” and that any discussion over a bonus was merely “banter” on a “drink-fueled, fun night.” He also claimed that increasing the share price made “no commercial sense” since he wasn’t going to sell any shares.
The pub meeting was set up to discuss the role of corporate broker with Banco Espirito Santo SA, which was represented by three executives. Ashley, who also owns Newcastle United soccer team, joined the meeting alongside Blue.
Peter Tracey, who attended the meeting in his role as head of corporate broking at Espirito Santo, said that “at no point” did the deal seem serious and that it was “no more than banter over drinks in a pub.”
In his ruling, Judge Leggatt, who ordered Blue to pay 600,000 pounds of Ashley’s 1.5 million pounds in legal fees, agreed.
"Everyone was laughing throughout," he said. "It is unrealistic to suppose that anyone with business experience -- let alone someone with the business acumen of Mr. Ashley -- would seriously entertain" such a deal.
The trial exposed allegations of Ashley’s informal business techniques such as drinking competitions in the midst of management sessions and napping during client meetings.