The man touted as the new deputy chairman of Sports Direct has rejected the role just hours before Mike Ashley, the embattled retail group’s founder, was hoping to announce his appointment to the City.

Alan Jackson, 62, the non-executive chairman of The Restaurant Group (TRG) — the owner of the Garfunkels and Frankie & Benny’s chains — is understood to have turned down the job offer yesterday.

A source close to the leisure industry veteran said that after long talks with the Sports Direct board he had simply decided against joining the company.

The move could jeopardise a planned boardroom reshuffle that was expected to see Mr Ashley move from deputy chairman to non-executive chairman tomorrow, when the company presents its half-year results.

The latest setback will be another blow to Mr Ashley after a dismal year for the tycoon.

Shares in the business have plunged 70 per cent since it floated in February, after a series of profit warnings, corporate governance failings and a rapidly deteriorating relationship with the City.

The stock last night closed at a low of 89¾p, valuing Sports Direct at just over £540 million.

Mr Ashley pocketed £929 million when he sold a 43 per cent stake at the time of the float.

He used some of the proceeds to buy Newcastle United Football Club this summer.

Sports Direct has been searching for a non-executive chairman since David Richardson, a former Whitbread executive, walked out at the end of May.

The company had promised to find a replacement by Christmas but is believed to have decided the best short-term solution was to give Mr Ashley the role and recruit a new deputy chairman. Simon Bentley has served as acting chairman since May.

Mr Jackson’s appointment would have gone at least a small way to answering concerns in the City about the need for more experience in the Sports Direct boardroom.

He is understood to be a fan of the company, which runs the Sports World and Lillywhites chains, and to have bought shares in the group in the summer.

The Sports Direct board was meeting yesterday to finalise its plans and a spokesman refused to comment.

Mr Ashley’s proposed move to non-executive chairman was widely criticised yesterday by corporate governance watchdogs already furious about the way the retailer has flouted unwritten rules on how to operate as a public company.

It has consistently refused to provide like-for-like sales data or even scant strategical updates to investors.

Chris Bulmer, senior non-executive director, quit Sports Direct in October.

A programme of share buybacks has seen Mr Ashley, who in the summer dismissed his critics as “cry babies”, raise his stake in the business from 57 per cent to nearly 68 per cent and he is widely tipped to take it back into private ownership.

An extraordinary general meeting tomorrow will see Sports Direct seek to extend its buyback in a move that would take the tycoon’s stake to 72 per cent.

David Ellis, corporate governance director at Pirc, the consultancy, said: “A non-executive chairman typically takes on an oversight role in the boardroom.

How would Sports Direct explain that Mr Ashley, the company’s biggest shareholder, is going to do such a job when he’s the one making all the decisions?”

A City source added: “He’s broken every other corporate governance rule going, so why not this one as well?”

As well as his role at TRG, Mr Jackson is also a non-executive chairman of Luminar, Britain’s biggest nightclubs operator.

He is best known for a five-year spell as executive chairman at TRG, where he was widely credited with turning round the fortunes of the business.

Before setting up his own company in 1991 he spent 18 years at Whitbread, principally as managing director of Beefeater steakhouses.

Mal Patel, the retail analyst at Merrill Lynch, last week slashed his earnings forecast for Sports Direct by 30 per cent.

He predicted full-year profits of £130 million. At the float in February, Merrills, joint house broker with Credit Suisse, was forecasting £250 million.

Mr Patel said the City had become “distrustful” of the company and there was “little merit” in holding the shares.

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