What Next for Mike Ashley’s Patchwork Retail Empire?

The lush green fields, scattering of farm buildings and 12th-century splendour of nearby Coombe Abbey that surround the small village of Ansty in Warwickshire are a long way from the neon football boots, giant mugs and piles of tracksuit bottoms of Sports Direct’s busy stores.

But the two worlds will soon meet. On Christmas Eve the sports fashion chain’s owner, Frasers Group, received an early festive gift: planning permission to build a 371,600-square-metre headquarters near Ansty. The vast development — which will host a hotel, shop and recreational facilities for its 7,600 workers — puts the business on a collision course with concerned local people and thousands of existing staff who the Unite union say are unlikely to be able to move from its current East Midlands head office.

The plans for Antsy are a typical shock and awe move for Mike Ashley, who owns 73 percent of Frasers. Over four decades, the billionaire has built a reputation as a relentless deal-maker who has seen off a string of powerful rivals to become the de facto king of the high street and an enigmatic figure whose motives are frequently guessed at.

However, with Frasers recently ejected from the FTSE 100, cutting profit forecasts and Ashley thwarted in an attempt to join the board of the online retailer Boohoo, are there signs his disparate empire is beginning to creak?

From Squash to Shops

Ashley may no longer have a seat on the Frasers board, but by many accounts, which are denied by the company, he still calls the shots at the group he built from a single sports store in Maidenhead, opened in 1982 with £10,000 from his parents.

He left school at 16 with no qualifications to become a squash pro and, although that did not work out because of injury, he can now be consoled with an estimated fortune of almost £3.8 billion ($4.9 billion), according to last year’s Sunday Times rich list.

His group has grown to about 1,500 stores across 20 countries and employs 30,000 people with brands selling sofas to luxury casualwear, gyms and personal finance.

The far-reaching collection of interests, typically collected through deals for distressed assets, has been amassed at breathless pace. In only the past three months, Frasers warred with Boohoo, launched and ditched a cut-price bid for the Norwegian sporting goods chain XXL, bought South Africa’s Holdsport, and paid £53.5 million to take ownership of the site near Ansty.

Last year, Frasers attempted a hostile buyout of the luxury bag brand Mulberry and snapped up a string of down-at-heel shopping malls in Luton, Doncaster and Exeter.

Frasers’ array of brands — from Evans Cycles to Flannels — enables it to use its scale to make ailing companies more viable.

The group also has an ever-changing portfolio of stakes in listed companies that now runs from the electrical goods retailers Currys, AO and Marks Electrical to the fashion groups Asos, Hugo Boss and Mulberry.

The £100 Million Prize

A series of controversies have often threatened to derail Frasers’ relentless expansion. Only this month MPs raised concerns about the group’s recent admission that two-thirds of its retail staff were on zero-hours contracts and three-quarters of its warehouse staff were still agency workers, putting the company squarely in the sights of new legislation that aims to improve employment rights for the least well-off.

The high level of agency workers has concerned Unite, which also hopes to secure a boost to pay for staff. Frasers pays above the legal minimum wage but still lags behind some rivals.

Ashley is no stranger to such controversies — from the early days of his company’s flotation when it emerged he had played a game of spoof over a hefty legal bill — to winning a bruising court battle with the former adviser Jeff Blue over the apparent promise of a £15m bonus, during which he described himself as a “power drinker”. Frasers’ Shirebrook headquarters in Derbyshire was described by MPs as a “Victorian workhouse” in 2016. As the owner of Newcastle United, he went from hero to hate figure over decisions including the temporary renaming the football club’s historic St James’ Park stadium the Sports Direct Arena.

Today, Frasers is officially run by Ashley’s 35-year-old son-in-law, Michael Murray, who signed up with the promise of a £100 million bonus should he be able to take Frasers share price to £15 by October this year. It currently stands at less than half that — and has fallen 27 percent in the last six months — so pursuing potentially tricky takeover deals is not a surprise.

“[Murray] always needed to make quite big leaps to get the share price up there, and the incentive encourages more risk-taking,” one analyst says.

However, Murray’s strategy is in line with that laid down by his acquisitive father-in-law.

Buying brands and acquiring the rights to distribute them has long been part of his playbook and key to Ashley’s dominance of the sportswear market, pushing out major rival JJB and putting pressure on JD Sports.

He started with the ageing brands Donnay and Dunlop Slazenger and is now a shareholder in the fashion label Hugo Boss. The buyout of Flannels in 2012 helped build relationships with luxury labels and a much more upmarket world than his then largely cut-price Sports Direct. On buying House of Fraser in 2018, he set a mission to become “the Harrods of the high street”.

Many of the latest deals, such as Findel, now known as Studio Retail, and the tilt at control of Boohoo have been designed to build up the group’s online, financial services and logistics operations.

Mike’s Motives

Ashley who has a long history as a gambler — he produced a wad of £50 notes from his pocket when taking journalists through security screening on a visit to Shirebrook — is not averse to risk. However, most deals are underpinned by the value of stock and or property, which can be traded to raise cash to pay for the deal or bring a big profit if other tactics fail.

His strategies to gain influence over target companies range from offering loans or snapping up debts to buying strategic stakes in publicly listed entities.

One former associate says of Ashley: “He rarely has a single game plan, he looks at it in quite a complex way. If something is not working he pivots.”

Unlike most other companies, negotiations often go on in the public eye, with Frasers willing to publicly admonish companies that do not bend to its will.

“He is a natural disruptor,” another former associate says. “He is impish in the extreme. He can use a bit of trouble to shake things up and make money at the same time.”

Several of those who have worked with him agree that Ashley is also motivated by wanting to win against certain people: business rivals such as the former JD Sports boss Peter Cowgill or the Boohoo founder Mahmud Kamani.

Even those he has been closest to — such as Blue or the former lieutenants Karen Byers and Dave Forsey — have found themselves out in the cold after fallouts. Forsey, the former chief executive, has now returned to the company to spearhead Frasers’ international operations.

“He has burnt bridges with people. The mistake people can make is they think they are in the tribe but they can be thrown out,” a source says.

With the explosion of online retail and thousands of vacant shops across the UK, Ashley has far less competition for deals these days. “Virtually everything on the market or in trouble comes across his desk and he doesn’t have to ask for it,” a former associate says. “It has been a perfect field for him.”

The company denies that Ashley still calls the shots and says “decisions in relation to the operation and strategy of the Frasers Group” are made by its board. Ashley will only “provide advice by way of a consultancy arrangement” on instruction from the board, it says.

A New Kingdom

In Ansty, people are worried about traffic and noise from the giant facility, but the move from Shirebrook could also be life-changing for thousands of workers. About 4,000 of them are on agency contracts and so will have no rights to a payoff.

Unite predicts few of the Shirebrook workforce will be able to make the move south and will lose their jobs. “They would be unwilling and unable to afford to travel 70-plus miles to attend the new site,” Unite’s Gary Groom says. For Frasers, staffing the giant new facility is the next frontier for an empire always in flux.

By Sarah Butler.