Reporter Harry Wallop goes undercover to investigate Sports Direct, and its owner Mike Ashley, listed as the twenty-third richest man in Britain, with an estimated fortune of £3.5 billion. I must admit a conflict of interests here. I own three-supersized Sports Direct mugs. Indirectly, I’ve contributed to Ashley’s fortune.
The first half hour (or excluding adverts, twenty minutes) of the programme was hokum. Wallop found that it didn’t matter what Sports Direct store he went to he could purchase the same goods for the same price. Sports Direct were using a marketing trick of saying the shop, for example, in Glasgow, was about to close and everything must go. Whisper it. It wasn’t about to close. And the discounts weren’t really discounts. Sports Direct products were just cheaper than most anywhere else. A consumer lawyer was brought in to bang on about consumer rights.
The next half hour (twenty minutes) was more interesting. Mike Ashley owns Newcastle United football club and he also owns just under ten percent of Rangers football club. This allows him to promote Sports Direct at no cost and he owns all merchandising rights. Those were estimated at £3.4 million from Newcastle United in the last financial year. Figures for Rangers were not available, but not only does he own the merchandising rights for all goods sold by the club shop, he also owns the rights to the mascot, Broxi Bear, and there are rumours that Ibrox stadium and Murray Park have been put up for collateral for the loans he has made to a club he has never visited. Mike Ashley does not need to explain himself. Newcastle and Rangers football clubs are small beer in Ashley’s business empire.
The secret of Sports Direct success is quite simple. Economies of scale with horizontal and vertical integration. Ashley bought sports companies such as Dunlop. That gave him license to manufacture goods with that imprint. Sport Direct doesn’t just sell goods. It also manufactures them in China and ships them over to shops in Britain. This cuts out the middle man. It also allows the company to employ a ‘just in time’ system in which the appropriate discounted goods appears in all the shops at the same time. Mike Ashley has total control of buying and selling his products.
Mike Ashley also has total control of the workers involved in manufacturing and selling his goods. An estimated three-quarters of his 14 500 British employees are on zero-hours contracts and this is why he was asked to appear before the House of Commons, select committee. Keith Hallawell, a former high-ranking police officer, and chairman of Sports Direct appeared in his place. Zero-hour contracts give employers the flexibility to employ workers when and where they are needed. That’s the official jargon.
Zero-hours contracts are a legal and immoral way of screwing workers into the ground. Minimum wage is maximum wage. Workers are employed on a day to day basis. They do not know how few or how many hours they are expected to work. What workers do know is they will be expected to work flat out. An undercover reporter working in Sports Direct Shirebrook’s plant, which employs over 5000 workers, was told he wasn’t working fast enough. He was also told he was near the bottom of some spurious league table that monitored workers’ output and he was likely to be sacked if that continued. An atmosphere of fear added to by supervisors spreading company propaganda that some worker had been sacked on the spot for not working hard enough.
But of course these workers on zero-hour contracts aren’t directly employed by Sports Direct. They are employed by two agencies—that cancer in our society—set up to keep workers from having any rights. Sports Direct are not directly responsible for its workers. They are directly responsible for its profit and they are directly responsible to Mike Ashley. Mike Ashley is responsible to Mike Ashley. He’s doing very well for himself. A model businessman running a model business.