Rangers challenge after losing latest round of court fight with Mike Ashley

High Court judge Lionel Persey said he had "no hesitation" in rejecting Rangers' approach over changing certain rights in their agreement.

His judgment came as it emerged that the Rangers Megastore at Ibrox, which is run by Sports Direct as part of their agreement was shut down over a week ago.

A small notice on the door informs customers that the shop will be open on match days only, directing them to visit the Rangers Megastore website.

The latest ruling comes in the wake of a legal row over Rangers making a new non-exclusive agreement with another firm, the Hertfordshire-based football merchandising firm Elite Group, without giving Sports Direct managers a proper chance to match that company's offer.

READ MORE: Rangers face £400,000 legal bill as Mike Ashley wins injunction to halt merchandise deal

The court was previously told Sports Direct alleged a breach of its agreement with Rangers when Elite opened a website selling replica kit and Rangers merchandise in September.

Mr Justice Teare granted an 'undoing' injunction that curbed the club's retail partnership with Elite in October.

Rangers argued that the injunction should not have been granted because Sports Direct had allowed the club to grant non-exclusive rights to third parties.

READ MORE: Rangers chairman Dave King warns that court injunctions will not be the final word

The latest ruling from Mr Persey revealed that Rangers and Mr Ashley's SDI Retail Services had subsequently been unable to agree whether the club was correct to remove a right to manufacture its branded products and whether proposed changed to payment terms should be made, among other issues.

Mr Persey said Rangers wished to rewrite or amend some of the payment terms in the agreement but said: "There is no basis for it to do so unless SDIR agrees."

He said the right to manufacture Rangers branded products was a club right which according to the agreement, was granted to Mr Ashley's company for "the Term".

The duration of the contract was two years, commencing August 1, 2018.

The club and SDIR had agreed that the Mike Ashley company does have the right to distribute, market, advertise, promote, offer for sale or sell the official Rangers kit under the further agreement. The ruling stated that Rangers objected to three of Sports Direct's amendments based on that understanding. But Mr Persey said that he considered there was no substance to the objections.

Sir Ross Cranston said in February that he had ruled in favour of SRIR.

He said he had made declarations, on the meaning of parts of agreements, "along the lines sought by SDI".

And Mr Persey agreed with his view.

The club also asked that any further agreement become operative at an alternative date which would be subject to Rangers' pending any appeal application.

Mr Persey said: "The extent to which, if at all, Rangers has been in breach of the further agreement is an issue that remains to be determined (if not agreed) by the court."

Mr Persey ruled that the further agreement between SDIR and Rangers came into existence on July 25, and would be on the basis of what Mr Ashley's firm had provided the court, without any deletions or additions proposed by the club. It took effect on August 11, 2018.

Rangers, who declined to comment on the latest ruling, has sought permission for an appeal to the judgment at the Court of Appeal.

A March judgment by Sir Ross Cranston, referred to by Mr Persey revealed that on July, last year Rangers had enclosed a notice of offer in relation to the Elite deal and inquired whether Mr Ashley's company was willing to match it.

It was to become the basis of the agreement between the club and SDIR and covered the Rangers webstore, the sale, distribution and promotion of Rangers branded products.

READ MORE: Rangers serve notice to cancel licence agreements with Rangers Retail Ltd

The offered rights in relation to the webstore, stated Rangers would get 20% of all receipts from the retail and online sale of kit and other products with a guaranteed minimum payment of £350,000 a year.

The rights involved Rangers retaining all royalties or other payments payable to it from its kit manufacturer.

It would mean Sports Direct would be appointed official retail partner of Rangers, but there would be no free sponsorship or advertising rights provided, although they would be invited to take out paid advertisement in all Rangers matchday programmes, on the club website, trackside at Ibrox, and on interview backrops, among other areas. It would be at normal commercial rates.

Mr Ashley's company would have to meet the £500,000 cost of works on a new shop fit for the Rangers Megastore and the cost of developing an enhanced webstore.

Sports Direct would also assume responsibility for the employment of all staff in the Rangers Megastore.

The recommended retail price of adult retail shirts were to be benchmarked against the Celtic price.

It said that Sports Direct would have to appoint a retail director to operate the Rangers merchandise business.

"The person to be appointed shall have experience in a senior retail role with an English Premiership club or equivalent and shall be dedicated to Rangers," the document said.

"We [Sports Direct] shall work with Rangers, its kit manufacturer and other licensors of Rangers products to maximise sales of those products and to establish Rangers products as a high quality-sporting brand.

"We shall ensure the ethical sourcing of goods and that both we and our suppliers treat our workers well, pay fair wages and work legal working hours.

READ MORE: Rangers finally put new replica kits on sale after legal dispute with Mike Ashley's Sports Direct

"We shall comply with Rangers' brand standards when selling Rangers products with agreed launch dates and other marketing initiatives for the sale of new Rangers replica kit and training clothing.

"We are committed to high standards of corporate governance and to restoring Rangers' status as Scotland's number one football brand."

It said Rangers would have the ability to terminate the appointment forthwith without penalty or compensation if Sports Direct failed to comply with their contractual obligations.

The court previously heard that litigation between Rangers and SDIR, had resulted in a retail agreement in June, last year which granted the Mike Ashley run company the rights to manufacture, sell and distribute Rangers branded football kits and other merchandise.

The issue at stake in earlier hearings was over whether Rangers were free to do retail deals with third parties.

Sports Direct bosses subsequently made further complaints in February relating to other agreements involving Rangers and Elite and Rangers and Hummel.

Judge Lionel Persey in February while making rulings on a number of legal issues following a preliminary hearing in January heard that further lawyers' bills running into many hundreds of thousands of pounds were likely to be run up by the time the trial ended.

The judge said Sports Direct alone were budgeting for more than £400,000.

The court had previously been told how fans had become angry over a merchandise deal with Sports Direct in the past after learning the club got about 7p of every £1 spent and had staged a merchandise boycott.

William McCormick QC, who led the Rangers' legal team, said fans thought Mr Ashley pocketed too much of their money and said there was a widespread view that no "self-respecting" Rangers' supporter wore a replica shirt.

READ MORE: Dave King group to get controlling interest in Rangers after vote

Mr Justice Phillips was then told the boycott was over.

At the end of June, last year, Rangers had announced that Mr King's dispute with Mr Ashley was over while confirming a new one-year kit deal with Ashley's retail firm has been agreed.

Mr King then hoped the deal would encourage supporters to end their kit sale boycott and provide a major financial boost as Rangers aim to challenge for the Scottish Premiership title.