RANGERS are expected to make a fresh damages claim worth £1 million amid claims its Mike Ashley-controlled merchandising arm has breached an agreement over the use of its trademarks.

Auditors Grant Thornton have now raised questions over the future of Rangers Retail, after the new legal row was revealed. 

It is understood the claim centres on how the merchandising body was being run before the club regained legal ownership of its precious trademarks this February. 

Read more: Legal branding enforcer for Mike Ashley becomes new Rangers retail board director

Rangers Retail was unveiled in 2012 as a joint venture between Rangers FC and Mike Ashley's Sports Direct by then chief executive Charles Green.
Its aim was to enable Rangers "to once again control its retail operation and give supporters the chance to buy direct from the club and in doing so, continue to invest in its future".


But the Ibrox board has voiced its displeasure about its return from the deal with Rangers Retail holding an exclusive licence to exploit the club's name and trademarks.

Rangers FC has already triggered a seven-year notice period to terminate the contract.

Read more: Legal branding enforcer for Mike Ashley becomes new Rangers retail board director

Annual reports for Rangers Retail have now revealed that damages of up to £1 million may be payable to the club's operating company, The Rangers Football Club Limited, over a breach of intellectual property agreement made last January.  

But Sports Direct, which has effective control over Rangers Retail, has said it has seen "no credible basis" to suggest the Intellectual Property (IP) deal was breached or that they were liable for any damages.


Sports Direct considers that Rangers Retail should "fully defend itself against any allegations of breach of the IP agreement asserted by TRFC".

Rangers FC has already moved to secure its intellectual property rights from Rangers Retail which holds the licence to exploit club-related trademarks and logos including the club name, Ibrox and The Gers. 

Intellectual property experts have said that the move looked destined for a courtroom battle.

Read more: Legal branding enforcer for Mike Ashley becomes new Rangers retail board director

The new claim pre-dates the row over Puma and Sports Direct putting on sale new Rangers kit two weeks ago despite opposition from the club which and supporters. It was previously understood that new Rangers strips could not be sold because of Rangers' move to terminate the merchandising contracts.


Marc Summers, a senior auditor with Grant Thornton, said in his "disclaimer opinion" that they had failed to obtain all the information and explanations that were "considered necessary" for the purpose of the audit and were "unable to determine" whether adequate accounting records have been kept.

Auditors have refused to provide a 'going concern' audit opinion on the financial statements.

They said the audit evidence over the purported breaches was "limited" as Rangers Retail has not taken legal advice on the situation due to "inherent conflicts of interest between the company, the appointed directors of TRFCL and the appointed directors of [Sports Direct]".

Read more: Legal branding enforcer for Mike Ashley becomes new Rangers retail board director

"As a result of this we have been unable to obtain sufficient appropriate audit evidence concerning the quantum of any provision which may be required in respect of the purported breaches and the impact on the going concern basis of preparation of these financial statements should damages be awarded and the IP License and Rights Agreement be terminated, "said Marc Summers, a statutory senior auditor with Grant Thornton.

"Because of the significance of the matter described.... we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly we do not express an opinion on the financial statements."


During the latest financial year to April, 2015, it was identified that there were 200 shares in Rangers Retail, not the 100 stated in 2014 and in previous records.  

The account report says 100 shares were allotted in error, and that steps will be taken to cancel them.

The accounts show that while there was a boycott of merchandise in protest over Ashley and Sports Direct's involvement, turnover had dipped by 11.8 per cent to £4.26 million.

But post-tax profits more than doubled from £877,662  in 2014 to £2.17 million as costs were cut from £4.32 million to £3.45 million.

Read more: Legal branding enforcer for Mike Ashley becomes new Rangers retail board director

It is understood most of that money has gone to Sports Direct as Rangers Retail is buying Rangers merchandise, including replica kits, gifts, polo shirts and track suits from the Ashley-controlled firm for use in club outlets.

Rangers Retail has provided over £3.8m to Sports Direct in both 2013/14 and 2014/15 through such sales. 

The accounts also reveal that £554,280 was put aside as of April 28, 2014 to fulfil Rangers Retail's "obligation" to buy stock at a cost higher than its value for the 2014/15 season.

The obligation, is described as an "onerous contract", which is a deal where costs to fulfill its terms are higher than the financial and economic benefit that is received.

The new dispute is separate from Rangers' £4 million legal claim against former Rangers directors and executives Charles Green, Imran Ahmad, Brian Stockbridge and Derek Llambias. The claim alleges that they negotiated commercial deals with Sports Direct below market value.

They also believe Mr Ashley unfairly benefited from the alleged negligence.

The action came to light earlier this month at the Court of Session where Mr Ashley's legal team succeeded in a bid to get Rangers to disclose documents to them.

Rangers hope to recover a total of £4,106,470.83 from the action and want a judge to declare void, the Partnership Marketing Agreement with Sports Direct which allowed the business advertising space at Ibrox.

The Rangers Retail set up has been a long-lasting area of controversy and at the end of 2014 the Rangers Supporters Trust launched an alternative shirt for fans as they took on Mr Ashley - and said all profits would be ploughed back into an increased shareholding in their club.

A previous 10-year licence merchandise agreement with sports retailer JJB Sports rubber stamped in 2006, was worth a minimum of £48 million to the club. The club got an initial payment of £18 million when they launched an Umbro home kit and were guaranteed a minimum annual royalty of £3 million in each year of the licence.