Forget Coronation Street, the UK's North West is home to a new soap opera with a plot far more gripping than anything on TV. Joe Ayling reports.

Set at the headquarters of Wigan-based JJB Sports, it tells the story of an iconic sporting goods chain battling against insolvency during the worst downturn since The Great Depression.

Its teaser shows a JJB spokesperson telling journalists last week: "The company believes that a number of factually incorrect and defamatory claims have been made with a view to de-stabilising the company just as the board attempts to rebuild the group's business."

The lead characters include Sir David Jones, a retail veteran brought in as chairman to shore up operations, Chris Ronnie, chief executive, and Ronnie's entrepreneur friend Mike Ashley, the founder of rival chain Sports Direct.

A series of plot twists see Ronnie dismissed, Ashley amass a 16% stake, and Sir David confess he borrowed GBP1.5m (US$2.46m) from Ashley in 2007.

Even Microsoft billionaire Bill Gates makes a guest appearance, snapping up a 3% stake in JJB from across the Atlantic.

The difference between this and many soap operas is that the JJB story is not fiction.

The Ashley assignment
The atmosphere at last week's shareholder meeting in Wigan was tense, with rumours that Ashley - who now has a smaller shareholding in JJB - might attend.

Relations between Sir David and Ashley have been strained since Sir David's admission in early July that he arranged a personal loan for his Advanced Network Technologies company in September 2007, shortly before joining the JJB board.

Ashley has reportedly written to the Financial Service Authority about the issue. JJB's board and Sir David stress to shareholders they refute allegations that it presents a conflict of interests.

Chairing the AGM, Sir David clearly has the spat at the front of his mind, beginning with a joke: "We will wait another 50 seconds because Mr Ashley is always late."

However, Ashley has a different trick up his sleeve - sending representative Chris Emerson along to give Sir David a grilling. Emerson refrained from asking questions about the loan, but was armed with photographs of under supplied JJB stores, asking when Sir David - former chief executive of Next - last held down a management role.

Emerson, who claims the company is "cutting its nose off to spite its face" by refusing to take excess stock from Sports Direct, was eventually asked to leave by the head of security at the Challenge Way HQ.
 
"I can see no purpose commercially in taking stock from a competitor where he charges royalty for having supplied it. The JJB customer, in my view, is not the Sports Direct customer," reasons Sir David.

"A sad year for the company"
Emerson was not the only attendee to grill Sir David last Friday, although many shareholders also stood up and voiced their support for the man who became executive chairman there in January.

He has some pedigree, as former Next boss, non executive deputy chairman of Wm Morrison Supermarkets, and non executive chairman of Shop Direct Ltd (Littlewoods). Since taking over he has assembled a new-look executive team including Peter Williams, formerly the CEO of Selfridges, and Richard Manning, an experienced corporate lawyer, following the departure of former CEO Chris Ronnie in March.

The CEO role has not yet been filled, but Sir David's team promptly took action to appoint administrators to failed purchases Original Shoe Company and Qubefootwear in February, and sell JJB's fitness clubs business to company founder Dave Whelan for GBP83.4m (US$121.6m) in March.

In May the company announced a pre-tax loss of GBP189m (US$295.3m) for the 2009 fiscal year, compared to profits of GBP11m in 2008, as restructuring and impairment charges hit home.

Sir David tells shareholders: "The year to January 2009 was a very sad year for the company. It was a year in which a series of bad management decisions brought the company dangerously close to insolvency.

"Chris Ronnie tried to emulate the trading philosophy of Sports Direct by introducing mass-market items and products at discounted prices. These were significant diversions from the trading policies that had established JJB as a great company."

JJB's silver lining was announced in April, when it was saved from a possible collapse by a vote in favour of company voluntary arrangements (CVA) proposals its creditors. It means the company fends off administration, by paying off landlords of closed stores with one-off payments instead of ongoing rent.

Goodie or baddie?
As the JJB shareholder meeting draws to a close, Sir David seems to have won shareholders over as he reads out statutary small print for no less than 15 resolutions.

They're not so forgiving that retail revenue for the 25 weeks to 19 July is down by 40.4% on the same period last year though, with like-for-like sales 26.5% lower. Or that the company sees no sign of improvement until the final quarter of the year.

However, there is a general feeling that embattled JJB has the right man at the helm. The company's war of words with Ashley will continue, but Sir David has now paid off the loan and seems determined, albeit on a part-time basis, to rescue JJB.

Sir David is taking a central part in the JJB story this year, and emerged very much the goodie - at least until the Sports Direct shareholder meeting in September perhaps?

The plot thickens.

By Joe Ayling, news editor.