Читать книгу Virgin King (Text Only) - Tim Jackson - Страница 11
ОглавлениеDo You Really Want to Hurt Me?
IN PRINCIPLE, there was no dispute between Richard Branson and Nik Powell about how they should respond to the harsh economic conditions of 1980. But the two men had different pet projects. In 1978, Branson bought a private island in the British Virgin Islands for $300,000 from a cash-strapped English aristocrat. He then spent nearly £1m buying two clubs: the Roof Gardens in Kensington, and Heaven, a nightclub near Charing Cross that was the largest gay club in Europe. Powell, by contrast, had been the leading light behind a plan to spend a similar sum on converting a cinema in Victoria into The Venue, a combination of restaurant, bar and concert place.
These two interests were a source of conflict: Powell complained that the island was an indulgence, and feared (incorrectly as it turned out) that the two clubs Branson had acquired might not make money. For his part, Branson felt that the Venue made demands on their time that were disproportionate to its importance to the Virgin Group. Everything there seemed to be a problem. Planning permission came only at the last minute, and Branson himself was forced to intervene to get even trusted members of staff to sell tickets for performances there. The waiting staff were paid very low salaries, and had to be placated at Christmas for the absence of an expected bonus with individual presents wrapped up by Nik Powell and Barbara Jeffries, the Venue’s manager at the time. The working conditions there brought bad publicity to the group when Private Eye began to run articles claiming that the Venue’s waiting staff and the bands who performed there were being exploited, and that recipients of free tickets were being denied entrance when the club finally began to fill up. And as if these problems were not enough, it was realized in late 1980 that no proper arrangements had been made for paying tax on staff salaries. Chris Craib, one of the group’s senior accounting staff, had to make an impromptu return to the Inland Revenue, estimating the tax that he believed should have been paid over recent months but had not.
Beneath the blazing rows that Branson and Powell had over these difficulties, there was an underlying issue of far greater importance. Nik Powell’s influence in the group had been waning over the past five years. The retail businesses in which he took greatest interest had proven to be indifferently managed and barely profitable; the record label, with which he had little to do, was the engine of Virgin’s growth. Richard Branson had begun to confide more in Simon Draper and in Ken Berry than he did in Nik Powell. Branson had come to believe that for all Powell’s talents, there was no longer an important job for him to do at Virgin.
The recession of 1980 made matters far worse. For while the triumvirate at the top of the music businesses still felt that he was not pulling his creative weight, Powell’s ability to block decisions he disagreed with suddenly became much greater. No longer was Virgin expanding so rapidly that his concerns could be dismissed; instead, Powell himself was the butcher who was making the cuts, and Virgin was shrinking. As a 40 per cent shareholder in the Virgin holding company, Powell could stop Richard Branson from taking steps he did not approve of. And Branson, who had resisted all attempts to control him – at school, at home, and in his marriage to Kristen – did not like being subjected to this veto.
Branson would later say that it had taken him two years to summon up the courage to write the letter. Nik Powell, after all, was his childhood friend; the man who had dropped out of university to join him in Albion Street; the junior partner in the relationship that they both referred to as a ‘marriage’. But in the end there was no choice. Branson wrote to Powell, telling him that he thought the two should separate.
The weakness in Powell’s position was that although he had a 40 per cent shareholding, his contract with Branson was far from powerful. The key point in the agreement was the calculation that would be used to work out how much Powell’s shares were worth if he decided to sell them back to Branson. Branson would later recall that the calculation was based on the company’s net assets. With the help of his South African brother, Draper had been far more canny; he had insisted on a valuation based on a multiple of pre-tax earnings over earlier years. But the price of Powell’s shareholding was based on Virgin’s net assets as recorded in the company balance sheet. This may have included buildings and cars, tables and chairs. But it excluded the intangible asset that was a decade later to allow Branson to sell the Virgin music businesses for £56001: the Virgin catalogue. The contracts that Branson had signed with the artists – specifying the number of records that each one would have to deliver to Virgin in the future, and the length of time for which Virgin would be able to collect copyright fees on the work that the artist had already done – were the real jewel in the Virgin crown. Yet they were not reflected in the company’s balance sheet; nor, therefore, were they reflected in the sum of money that Powell received when he and Branson parted company.
Neither Branson nor Powell would discuss the settlement in detail publicly. But Powell probably received £1m in cash, plus three assets he wanted to take with him: the Scala cinema, the video editing facilities that Virgin had invested in – and Steve Woolley, a man who knew backwards the film industry in which Powell thought he saw his future.
One million pounds must have seemed a fantastic sum to Powell in 1981. But he could not escape the fact that he had sold out to Branson when Virgin’s fortunes, and hence its value, were at a nadir. Within a couple of years, the new acts that the record label had already taken on, such as Phil Collins and the Human League, would make the group highly profitable once again. Within five years, the 40 per cent that he had sold back to Branson would be worth £96m. Although Powell publicly pronounced himself quite satisfied with the deal, he would have been forgiven for having regrets.
Powell’s friends admired his equanimity: he had become a Buddhist, and managed to curtail his frustration at the increasing friction with Branson during the dying months of their partnership by chanting regularly. But they were convinced that he had lost out all the same. ‘It seemed to me to be an unrealistically small settlement for 40 per cent of such a vast, thriving company,’ wrote Sandie Shaw, a chart-topping singer who later became his wife, ‘but Nik, who considered Virgin to be his “baby”, was highly emotionally charged about leaving it, and was not capable of making rational decisions.’
‘After Nik’s departure,’ Shaw continued in her autobiography, ‘his existence and role within Virgin was systematically written out of its history. The impression given, if any, was that Nik had been some kind of managerial employee.’
Branson defended himself furiously against the allegation that he had treated his boyhood friend unfairly. ‘I can see how it could be said that I eased Nik out at a time when the business was down, so it was easier to make him look bad and [to set a] lower price to buy him out … It was obviously very difficult because of our friendship … The money he received fairly reflected the input he had made. It was difficult for him to find a role to contribute. With Simon and Kenny and others there was really no role for him. He had no particular skills to contribute to the company as it was at that stage.’
Branson also claimed that the subsequent rise in the value of the record company was hard to predict. He pointed out that a few years later, Virgin bought Charisma Records, an independent label that had a fat catalogue including work by Genesis, Peter Gabriel and Monty Python, for only a few million pounds: ‘The contract that I gave Nik originally gave him his shares for nothing but stipulated that when they were sold they were to reflect a minority stake in a private company … he was not selling control. Therefore I believe the price paid at the time was a fair one. I had also agreed to leave him with a small profit share for the future which he decided not to take and to swap for something else.’
After a decade in which the two men spent hours of every day in each other’s company, the separation was very sudden. Nik Powell went off to found Palace Pictures with Steve Woolley, and was responsible for a number of successful films during the 1980s, including Company of Wolves, Mona Lisa, and latterly The Crying Game. Almost exactly ten years after his departure, however, Palace ran into financial difficulties and Powell came back to Branson, cap in hand. Virgin invested some money in the company, allowing it to continue in business for a few crucial months. When Powell returned a second time, however, Branson turned him down in the friendliest possible way: he asked him to go and see Robert Devereux, his brother-in-law, who was by then responsible for Virgin’s film and other media interests. Devereux took a hard look at the Palace books and decided not to invest. Branson consoled himself with the thought that Polygram, the large European record company, were about to take a substantial stake in Palace. But Polygram were interested only in the company’s production arm. By May 1992, Palace had gone into administration, and Powell was forced to start again for the second time in his career. ‘I don’t think we realized how close he was [to going under] at the last minute,’ said Richard Branson afterwards.
‘I gather,’ said the headmaster sternly, looking down his nose through his spectacles at the school’s morning assembly, ‘that some of you are not entirely happy with the musical selections that we’ve been playing. So today we have a slight change in the usual programme. Instead of classical music, I have decided to offer you something a little different.’
The headmaster stepped to one side. A powerful spotlight picked out a circle in the centre of the curtains behind him. The curtains opened. And eight hundred primary school pupils, aged from five to twelve, jumped out of their seats in astonishment and began to scream. Not in their wildest dreams had they expected Boy George himself to perform a number-one hit song, at their school assembly.
Behind the scenes, Steve Lewis gave a smile of quiet satisfaction. He had been at the school since seven o’clock in the morning, helping to supervise as the roadies and technicians assembled the loudspeaker system, and watching as curious teachers peeked into the classroom where George, his make-up already applied, was ironing the shirt that he was about to wear. The ‘concert’, if that was the right word for a performance of a single song at a school in Finchley, was an outstanding success.
It had been set up for a television programme – ‘Jim’ll Fix It’ – and filmed by hidden cameras. Two girls from the school had written in to Jimmy Savile, complaining about the miserable diet of Schubert and Shostakovitch to which their miserable headmaster subjected them at every morning assembly. Long after the girls had given up on their request, the programme’s producer at the BBC had telephoned Virgin Records, just on the off-chance that the world’s most famous pop star might be willing to co-operate in bringing the girls’ fantasy to fruition. He was; the idea tickled his fancy, and his manager and his record company recognized that although he would receive no fee for his performance, the exposure to a television audience of millions of children and adults would help to sell records. The faces of the astonished children – most notably the two who had sent in the letter, who had been identified for the cameraman from school photographs so that viewers could see their disbelief as their dream came true – turned the concert into brilliant television. The only irony was that Boy George, a consummate professional performer who had played all over the world, sometimes to audiences of tens of thousands of people, was more nervous about playing in front of a school assembly than he had ever been before. Only when the curtains opened did the star begin to enjoy himself.
Not even the most skilful A&R person could have guessed in 1980 that George O’Dowd would within three years be topping the charts in seventeen different countries. A former window-dresser and model, who had worked for the Royal Shakespeare Company as a make-up artist, George had almost joined a band under the influence of Malcolm McLaren. By 1980, he was delivering stylishly polished performances in gay nightclubs in London, and had been signed as a songwriter to Virgin Music Publishers – but he had no recording contract. His manager, Tony Gordon, had contacted Simon Draper and offered to provide a fleet of limousines to take Draper and his colleagues down to a rehearsal room where Culture Club, George’s new band, was performing an odd mixture of soul, pop and reggae. Danny Goodwyn, a Virgin talent scout, was one of his most enthusiastic fans. ‘He was an extraordinary creature,’ remembered Steve Lewis. ‘What I liked about it was that there were some really classic pop songs – “I’ll Tumble For Ya”, which I thought was great, and “Do You Really Want To Hurt Me?”, which was brilliant.’ Back at Virgin’s offices in Vernon Yard, however, there were doubts about whether such a clearly gay artist could attract a straight following.
Those doubts were soon laid to rest. Under intense pressure from Gordon – who had agreed with George and his fellow-members of Culture Club that he would either get them a place in the top thirty on one of their first three singles, or lose the right to manage them – Virgin assigned Lewis, who was by then deputy managing director of the record company, to look after the artist personally. There was little that Lewis needed to do. As well as an ability to write elegant songs in a number of different styles, George also knew exactly how he wanted the band to look. The artwork on record sleeves, the T-shirts – all the ideas came from him. An album had been recorded, and two singles from it had already been released in order to drum up public interest. But there was not yet a Top Thirty single. And Tony Gordon was getting worried.
It was the promotion department that solved the problem. A message was passed to Lewis that the song which the disc jockeys at the radio stations would be willing to play was ‘Do You Really Want To Hurt Me?’. At a meeting with George, Lewis reported this. ‘George freaked,’ he recalled. ‘He was convinced that it wouldn’t be a hit.’
‘People will think we’re a white reggae band,’ said the singer. ‘It’ll ruin our career.’
‘Right now, George,’ said Lewis, ‘you don’t have a career.’ George allowed himself to be persuaded; the song duly went to number one.
But Culture Club just grew bigger and bigger. By 1983, with the launch of Colour By Numbers, the album containing the ‘Karma Chameleon’ hit single, George was the world’s most successful musician for more than a decade. Virgin employees, sometimes unable to reach their offices because of the crowds of fans who had assembled outside in the hope of catching a glimpse of Boy George, began to understand what it must have been like to be at the centre of Beatlemania. The sums that flowed into Virgin’s London bank accounts made the Oldfield millions of eight and nine years earlier seem almost paltry. Not for nothing was it later said that Boy George paid for Richard Branson’s airline. There would be trouble later, as George became a heroin addict and attracted the wrath of the tabloid press. But for the moment, he and Virgin Records could do no wrong.
Long before George’s popularity reached its height, Richard Branson had withdrawn from daily control over the record company. In no sense had he lost his touch as manager and deal-maker; only recently he had faced down an attempt to form a staff union by appearing uninvited at the meeting at which the staff were intending to prepare their demands, and shedding genuine tears at the idea. ‘We’re all one family,’ he had said, prompting the plotters to melt away, shamefaced at the realization that they had hurt his feelings so much. But Branson had left the creative decisions to Simon Draper, and the contractual and managerial matters to Ken Berry, since 1978. Branson’s role consisted of two activities: talking to both his lieutenants on the telephone, often several times a day; and appearing at the record company’s new offices on the Harrow Road whenever his presence was required to elicit the signature of an especially big or important star. Even the overseas distribution deals could be left to them; thankfully, Branson was no longer responsible for climbing aboard an aircraft with a suitcase full of cassettes and carrying it exhaustedly from one office block in New York to the other, trying to sell the work of Virgin artists in Britain for distribution in the United States. Draper managed the company by means of informal weekly meetings, first at Branson’s house, then in the coffee shop of the Hilton hotel at Shepherd’s Bush, then at his own house. Steve Lewis, who had become deputy MD of the record company in 1979 after Virgin had withdrawn from the business of managing artists, was responsible for the weekly meetings at which the pop charts would be analysed and strategies for sales and marketing decided.
Simon Draper, taking advantage of Nik Powell’s departure, had raised with Branson the question of his shareholding in Virgin. Pointing out that the record company was overwhelmingly the most profitable business in the Virgin Group, and that its profits were for years being reallocated to other areas for expansion, Draper suggested to Branson that his shareholding in the subsidiary record company should be converted into an identical shareholding in the parent. For until he owned part of the Virgin Group, Draper knew that he would never be financially secure. ‘I used to get terribly anxious about the profits,’ he remembered, ‘because they were always massaging them. I remember having secreted away in a drawer a note from the auditors saying, “For the purposes of valuing your shares, the profits should have been x.”’
Branson immediately saw the justice of Draper’s case. But he was far too practised a negotiator to agree immediately to such a suggestion. In return for Draper’s 20 per cent shareholding in the record company, he at first offered only 10 per cent of the group. It required a number of painful meetings between the lawyers for Branson to raise his offer to 15 per cent, and to accept Draper’s demand for a payment of £100,000 in cash and for a watertight agreement on profits which guaranteed Draper’s share of the money that the music group would make, but protected him from losses presided over by Branson elsewhere in the group. Draper’s lawyer, who appeared not to recognize that it was the record company that was making the vast majority of the group’s profits, was horrified. After all, Draper seemed to be parlaying a fifth of the record business for an only slightly smaller share of what seemed to be a much larger business – including retailing, films, clubs and a number of other interests. ‘He didn’t realize what a strong position I was in,’ recalled Draper. ‘He didn’t realize how valuable the record company was in relation to the record shops … I should have asked for £300,000.’
Given Branson’s normal business methods, the negotiation was conducted in a strange way. Branson felt that the sums of money were so vast that he did not want to deal directly; his cousin, however, saw things differently. ‘We hardly ever spoke face to face,’ said Draper. ‘Neither of us enjoy it. [When we did meet] I’d just say that’s what I want, and he, very tightlipped, would always agree.’ For Branson knew that Draper had too often seen behind the facade that worked so well with outsiders. His cousin, his most trusted business partner, preferred to negotiate with Branson by letter and through lawyers.
Perhaps for this reason, the deal turned out to be satisfactory to both sides. Draper no longer felt so anxious about the precariousness of his financial position. Part of the agreement was that Branson, as before, would have the obligation to buy Draper’s shares in the event that he decided to sell them. But since Draper now owned almost a sixth of the whole Virgin group, it no longer made sense for the price at which Branson would buy him out to be based on profits. Instead, the two cousins agreed that the price would be set at ‘fair value’ – a phrase whose meaning would be determined by a firm of independent auditors, with an appeals process written into the agreement in case Branson and Draper could not agree on the auditors’ conclusions.
