Equipment retailer Direct Golf is on the brink of collapse after one its major shareholders, Sports Direct, refused to pump any more money into the ailing company, which has suffered a fall in profits in the last financial year.
Administrators Duff & Phelps, appointed to the holding company of Direct Golf, have called for all parties interested in acquiring the business to contact them by noon today (9 October).
The UK’s second biggest golf retailer is at the centre of an extraordinary tug-of-war between PGA professional John Andrew, who founded Direct Golf in 1991, and billionaire retail magnate Mike Ashley, whose Sports Direct giant owns a 25% stake in the business.
Ashley went to the extraordinary lengths of changing the locks on Direct Golf’s headquarters in Huddersfield without telling Andrew or any the 40 staff that work there. Andrew had them changed back and put in his own security guard to protect the business against further interference.
Andrew has since filed a notice of intention to appoint administrators and desperately needs new investment to stay in business. Working with advisors from accountancy firm Begbies Traynor in Leeds, Andrews said filing the notice gave protection from creditors while the company sought a way forward.
“I am prepared to invest in the business by putting up personal security of £1.8 million, and we have a letter of support from Sports Direct, but nothing else,” said Andrew. “Now it’s put up or shut up time. We are trying to save the company with investment. We need a cash investment to keep it going. The whole thing is a farce. Sports Direct are pledging support, but have not given us an offer of some cash.”
Andrew, who also own golf brand John Letters, couldn’t say how much money the company needed or how long it had left without investment. “This is a plea to Sports Direct. I want to save this business. All the creditors are screaming for money. The business cannot trade if we have no money to pay anybody. Sports Direct must pledge more than just its support.”
In its latest accounts, covering the year to September 2014, sales at Direct Golf fell from £23.8m to £20.8m, while pre-tax profit dropped from £639,091 to £329,003. Sports Direct took a 25% equity stake in Direct Golf last July and provided funding to help it pitch into the European market. The deal came two years after Direct Golf secured a £3.5m funding deal from the Royal Bank of Scotland.
The company, which employs 180 staff, has suspended sales of equipment on its website, but is continuing to trade at its 20 stores in the UK, which include shops in Tunbridge Wells, Southampton and Reading.
The position for customers who have ordered and paid for goods online remains unclear. One customer in Scotland who has ordered equipment worth £2,500, said it had not been delivered as promised.
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