Dave Whelan: Playing to Win

In January 2007 I shocked the market by selling £50m of my shares in the company [JJB Sports]. Business commentators had their own thoughts but they all missed the point. It wasn’t a random sale - in offloading that amount of shares it brought my personal holding down to 29.9 per cent.

That’s a crucial figure in the City because it’s the maximum you can buy of a company without being obliged to make a bid for the rest of it. I knew what I was doing. I was putting it out as bait. I knew that somebody would come along for that 29.9 per cent because they would control the company but with no pressure to buy the rest of it.

It worked just as I expected. But I didn’t predict who the buyer would be.

I don’t have a secretary screening my phone - if someone wants to get through to me, they can. And about a year after the OFT trial I took a call that made me sit bolt upright.

“Hello, Dave. It’s Mike Ashley.”

I could think of a few things I’d have liked to say to him but instead, through gritted teeth, I said: “Hello, Mike. What can I do for you?’

“I’d like to have a meeting.”

That came as a shock, and as I flew to the Midlands in the JJB helicopter to meet him, I wondered if I was wise to be going at all.

We met at a big country house with lovely gardens and a terrific stable block. I’m a keen rider myself and I could tell this set-up was owned by someone who really cared about their horses.

Ashley was dressed as he always is, in jeans and a casual shirt, and his manner was the same as ever. He acts like he doesn’t have a care in the world - and maybe he doesn’t. By contrast, I was wary of him to the point of frostiness.

But Ashley is a very shrewd operator - I knew I wouldn’t be there without good reason, so we chatted for a few minutes. Then he got down to business.

“Dave, I want to buy your shares in JJB.” I was taken aback. I don’t know if he thought I’d become tired of the business, especially after the OFT verdict, but he couldn’t have been more wrong. I may have been in my 60s, but at that time I felt as hungry to grow JJB as I ever had.

I said: “You’d have to make me a very good offer to sell.”

But he couldn’t and so we parted.

Then six months later, he approached me again. This time we met at the Wrightington Country Club, my hotel where I’d signed the Three Amigos, and after the sandwiches and the talk about Wigan andSpurs, he came out with another proposition. This offer was more to my liking, but I still rejected it, albeit for another reason.

“Mike, if you try to buy JJB the OFT will be swarming all over you. The monopolies commission will never allow it. There’s no point in going forward.”

I must have had about six approaches from him over a couple of years and each time my answer was the same. The only time I came close to wavering was when he suggested I keep the fitness centres - the aspect of the business I cared most passionately about. But still I said “no”.

And then one day in June 2007, after I’d turned 70 and I really thought I was on my way out, I got an offer that I couldn’t refuse. But this time it wasn’t from Ashley. Not quite. It was from Chris Ronnie.

I’d first encountered Ronnie when he was a buyer at Tom Hunter’s Sports Division. Subsequently he’d gone to Umbro, before becoming Ashley’s right-hand man at Sports Direct. But it now turned outhe’d quit Sports Direct and, he claimed, had put together his offer with personal backing from the Icelandic bank Kaupthing.

I was interested, but thought: “If I go ahead with this I will need guarantees that Ashley is not involved.” I could not afford the OFT to think I was conspiring to break their rules.

First, though, Ronnie had to come up with a price that suited me. To my astonishment, he did. He said, “How much per share do you want?” I gave him a figure and he came back and said, ‘I’ll give you 270p.’

And that is what I took. I kept the dividend, which was 7p, so I got 277p per share. We did it all face to face at the Wrightington. Then everything moved very quickly. They did due diligence over a period of 14 days, then we met in London and signed it off.

At that point some of the big manufacturers started getting jittery. They were scared Mike Ashley was secretly backing Ronnie and understandably didn’t want the creation of a company that would effectively control the entire British sports market. So to put their minds at rest, Chris Ronnie provided me with documentation stating that his old boss was not involved in any way, shape or form, and Roger Lane Smith [former JJB chairman] counter-signed it.

Telling Roger in the first place hadn’t been easy, but, I said, it was for the best. “I’ve got to sell now or I’m going to fall out with you and everyone else on the board. I’ve known you too long to do that, so I’m just going to walk away now.”

And that was it. With £193m in my pocket I walked away from the company that had been so much of my life for 29 years.

Like everyone else, I watched in horror in autumn 2008 as the ‘credit crunch’ took its toll on companies all over the world. But one company had been in trouble before the international recession hit - and that company was JJB.

Every day I opened a newspaper there seemed to be more bad news. Stores were being closed - they shut 80 just like that, but still had to pay rent on them even when there was no income coming in.

Good staff, who I had employed, were being sacked. And they’d bought some very bad businesses: Qube from Tom Hunter, for £1, and the Original Shoe Company from Ashley. Those two alone were losing £16m a year when Chris Ronnie agreed to buy them. Why on earth would he do that?

Worst of all, in my opinion, he struck a deal with Ashley to stock Sports Direct’s own brands from China.

It appeared the market didn’t like the way the company was going either and the share price plummeted to 12p.

It was an awful thing to see happen.

A once proud company, and an important employer in Wigan, was going to the wall. I wished there was something I could do.

And then one day Chris Ronnie rang me with an offer, which again I couldn’t refuse.

When I first did the deal to sell my shares to him, I’d said: “If you ever decide to get rid of the health clubs, I would like first option on them.”

I never really expected that call, but here it was. Unfortunately I wasn’t given an exclusive option and there were a number of other interested parties - Ashley, of course, was one. But I’d seen enough of my company being destroyed - if there was a chance I could save just a part of it, I’d do everything I could.

But I had a problem. The money I needed to make the deal was in a bank in Iceland - and that bank was just about to go into receivership.s

Because Ronnie had borrowed the money from Kaupthing to buy my shares, I decided to leave £76m in one of their fixed-term high interest deposit accounts. In 2008 I took out £20m. The remainder had been due to be released the week after the bank stopped trading. What could I do?

I have to say, the next few days and weeks were very uncomfortable. Like everyone else, I was watching the banks in America get into trouble and wondering where it would all end. Then
suddenly it looked like Kaupthing was going down - and there was nothing I could do to get my money out.

To say I was worried is an understatement. But as the confusion of the first few days eased I tried to be phlegmatic. Yes, I was about to lose an awful lot of money. But there were people worse off than me.

My problem wasn’t life-threatening - and if I’m honest, I could live without that money.

Fortunately our Government guaranteed all UK depositors that we would get our savings back. I can still remember the relief of hearing that news. Even though it was my money in the first place, it felt like I had won the Lottery.

I filled in a claim form and waited for my deposit to be returned. And waited and waited. By the time the offer for the health clubs came up I was still £56m short of the £76m, plus stock at value, that I’d agreed to pay - and JJB were in dire need of that cash. The bank had refused to renegotiate a £60m loan. Things were looking very bleak indeed - especially for Ronnie, who found himself parting company with the business he’d run.

That’s when I decided to get our local MP, Neil Turner, involved. He didn’t need asking twice.

It wasn’t just a case of one rich man wanting his savings back. He knew that what I intended to do with my money could help secure hundreds of jobs in Wigan. He got straight on to the Chancellor and things started happening instantly. My money arrived from the Treasury 10 days later.

A few days after that I was the proud owner of 54 of the best health clubs in Britain - all part of the brand new DW Sport and Fitness company. I couldn’t have been happier.

There was one other complication in buying the fitness business, however. They were all located on property leased for a JJB store. But if, as was looking increasingly likely, JJB ever went into receivership, then those leases would revert to the landlords.

JJB would lose their shops - and I would lose my gyms. There was only one way around it. If I was serious about securing the health clubs then I had to buy the shops as well. I have to admit, it was a means to an end, nothing more. I honestly thought I was finished with the sports retail business, but it seems that I’m not.

As I write today, more than 30 years after I founded JJB, I am once again the owner of 51 sports superstores and the employer of 1,500 people all over
the country.

And I can’t wait to get started.