The high court has been given an extraordinary insight into the working practices of Mike Ashley, the controversial founder of Sports Direct, who it was claimed would challenge subordinates to extreme drinking competitions that once ended with the 52-year-old billionaire vomiting into a fireplace.
The “unconventional” working life of Ashley, who controls the Sports Direct retail chain and Newcastle United football club, was laid bare in evidence on Monday in a case alleging that the retail tycoon reneged on a £15m deal with a banker. The lawsuit claims the agreement was sealed during a boozy session in a London pub.
Ashley allegedly held regular senior management meetings during “lock-ins” at the Green Dragon pub in Alfreton near Sports Direct’s warehouse. During other meetings Ashley is alleged to have expressed his “boredom and frustration”with City figures by lying under the table to “have a nap”.
On one occasion Ashley, who is estimated to be worth £2.2bn, is alleged to have challenged a young Polish analyst to a drinking competition at the Green Dragon in which they drank a dozen pints followed by vodka chasers. Jeff Blue, a former banker and colleague who is suing Ashley, said the rules of the drinking game were that whoever left the room first was to be declared the loser.
“After approximately 12 pints and chasers Pawel [Pawlowski] apologised profusely and had to excuse himself,” Blue stated in written evidence submitted to the court. “Mr Ashley then vomited into the fireplace located in the centre of the bar, to huge applause from his senior management team.”
Blue’s multimillion-pound legal claim stems from another boozy meeting at the Horse and Groom pub near Sports Direct’s Oxford Street store in 2013. Blue claims that Ashley agreed to pay him £15m if he could help double Sports Direct’s share price within three years.
Ashley has dismissed everything discussed in the pub as “banter”, denied that any such deal existed and refused to pay up.
Blue, a former Merrill Lynch banker and strategic development director at Sports Direct, claimed that Ashley said: “If he [Blue] can get the stock to £8 per share why should I give a fuck how much I have to pay him? I will have made so much money it doesn’t matter.”
Ashley, who munched on Polo mints while listening to Blue give evidence in the high court, is said to have initially offered the banker £10m if Sports Direct’s share price hit £8 per share but raised it to £15m after he said it was a “high target” and pointed out that the retailer’s Sports Direct stake would be worth more than £1.6bn.
The retailer is alleged to have said it would be “fucking unbelievable” for Sports Direct’s shares to hit that level, which would have meant the group was worth as much as Marks & Spencer.
Sports Direct’s shares hit the £8 price target in February 2014. The shares have since collapsed below £3, in part because of reputational damage caused by a Guardian investigation that revealed the retailer was in effect paying staff in its warehouse less than the minimum wage.
Blue said that in December 2013, when Sports Direct’s shares were approaching £8, he approached Ashley, who referred to him as “Jeffis”, for confirmation of the claimed agreement. Blue said that Ashley replied: “Jeffis, I’ve got it, I’ve got it. We’re cool, we’re cool.”
Shortly after the shares hit £8 at 1.04pm on 25 February 2014 Blue’s wife, who was also in court, texted him to say: “It’s hit 8!!!!!”
Ashley paid Blue a £1m bonus in May 2014, but said this was discretionary and not a downpayment on the alleged £15m deal agreed in the Horse and Groom. Ashley denies that any deal was made. Blue’s lawyers said the payment was “only explicable as a partial payment of the sum that had been agreed”.
Lawyers for Ashley said Blue’s claims were “extremely vague” and pointed out that there was no contemporaneous written record of the claimed deal. They said a “considerable amount of alcohol was drunk in the pub” which led to “banter” on several topics, including business and football.
Speaking in court, Blue claimed that drinking copious amounts of alcohol during business meetings was not unusual for Ashley, and that the tycoon often conducted meetings “in various unusual venues” and agreed deals orally while under the influence.
He said that during the same meeting Ashley was also on his phone finalising player transfers at his football club. “Notwithstanding the venue and the consumption of alcohol, I note that Mr Ashley was able during the evening to conduct other business, including making decisions in regards to player transfers on behalf of Newcastle United,” Blue said.
Blue also claimed that the company’s senior management meeting was held during a boozy event every Tuesday night at the Lion hotel in Worksop. The Lion is a short drive from Sport Direct’s warehouse, which a parliamentary inquiry found Ashley was running like a Victorian workhouse and treating workers “without dignity or respect”.
The meeting “typically commenced in the bar area at around 8pm with Mr Ashley drinking alcohol at the bar while in discussions with management”. Blue alleged that dinner would be served at about 10.30pm with the gathering generally coming to a close between 1am and 3am.
“Meetings were like no other senior management meeting I had ever attended in all my years of investment banking experience,” Blue said. “It was effectively a ‘pub lock-in’ with alcohol continuing to be served well beyond closing hours and fish and chips or kebabs being provided throughout the evening.”
Jeffrey Chapman QC, who is representing Blue, said: “Sports Direct senior management meetings often took place in bars where considerable volumes of alcohol were consumed while Mr Ashley made business decisions. The court must decide whether this was just a night in the pub or an important business meeting.”
David Cavender QC, representing Ashley, told the judge, Justice Leggatt, that Blue’s claim was an “opportunistic try-on”.
The case continues, and Ashley is due to take the stand on Wednesday.
