// Mike Ashley wants all new rent deals across his Sports Direct retail empire are linked to sales
// He is demanding landlords for deals that link up to 15% of the rent payable to turnover
// The Sports Direct group operates 700 stores across the UK
Mike Ashley has reportedly pressured landlords to agree that all new rent deals across his Sports Direct retail empire are linked to sales.
According to The Sunday Times, Ashley has demanded of landlords to agree to turnover-based rents, where up to 15 per cent of the total charge payable is linked to store sales.
This pertains to both new stores and stores were leases are being renewed. Ashley’s company operates from around 700 stores around the country.
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Turnover-based rents help tenants by transferring some of the risk of future falls in sales to landlords, rather than locking the tenant into a lease that can last years.
Turnover-based rents are widely used in the US, and are known to be standard practice fashion retail giants H&M Group and Zara parent company Inditex.
Sports Direct would not be the first UK retailer to seek turnover-based rents.
In February, Paperchase began linking turnover to almost half of its store estate while Clintons has plans to switch 206 of its 332 stores to turnover deals as part of a CVA that is pending approval from landlords.
Given Sports Direct’s vast store estate – which includes brands such as House of Fraser, Flannels, Evans Cycles, USC and Sports Direct itself – a switch to turnover-based rent could have domino effect.
Major landlords such as British Land, Landsec, Intu and Hammerson have all reported declining rental income or property write-downs due to a wave of CVAs and administrations.