A "Mad Mike" Ashley Run at HMV Is a Deal Too Far

(Bloomberg Opinion) -- Mike Ashley, the founder and Chief Executive Officer of Sports Direct International Plc, is often dubbed "Mad Mike" for his forays into disparate parts of the British high street. There is usually a method to his madness.

Even so, acquiring HMV Group Plc, the music chain that went into administration after Christmas, looks like a step too far for the maverick retailer. Ashley’s bid is one of a number of offers.  

The playbook is probably straightforward. Sports Direct owns 25 percent of Game Digital Plc, the video games chain, and there could be some logic in putting it together with HMV. It’s similar to a potential scenario for House of Fraser – Sports Direct acquired the department store chain last year, and could combine it with Debenhams Plc, in which Ashley has an almost 30 percent stake. 

There are few places on the high street that offer a large selection of music and entertainment products. So putting them in Sports Direct, House of Fraser or even Ashley's upmarket retailer, Flannels, could have value. Indeed, it is rather fashionable for boutiques to have a vinyl section these days.

A "Mad Mike" Ashley Run at HMV Is a Deal Too Far

As HMV has already gone into administration, Ashley probably wouldn't have to pay that much for it. And music companies may be willing to provide support to maintain a physical presence in shops.

Still, this looks like a deal too far for the entrepreneur.

He has his hands full with House of Fraser, where he is still trying to convince the brands that have a relationship with Flannels to supply the department store – it lost 31.5 million pounds ($40.6 million) between Aug. 10 and Oct. 28, so there is much work to do. 

After Sports Direct voted to remove Debenhams' chairman and CEO from the department store's board, the odds are shortening on some kind of combination of the two businesses.

While Ashley may be an expert retailer, even he may struggle to stem the tide of factors that crippled HMV, including the rise of streaming.

Given his fondness for left-field investments and his self-depreciating style, it's easy to underestimate Mike Ashley.

His palace coup at Debenhams shows that he is not a man to be trifled with. And some of his more outlandish moves actually have sound logic – the purchase of upmarket lingerie retailer Agent Provocateur by an investor group in which Sports Direct has a stake is a great example. That brand would be perfect to sell in House of Fraser.

HMV, however, looks like one instance where Ashley is in danger of stretching himself too thin, and for too little gain.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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