Chrysallis: Chris Wright
The music label entrepreneur is now one of sports most active investors
“QPR was like catching a falling knife,” says Chris Wright, of the West London football club he took over in 1996.
The man who started Chrysalis in 1968 and turned it into one of the world’s largest independent record labels is clearly still haunted by what he describes as “the only abject failure I’ve had”.
During his spell with Queens Park Rangers, Wright tried desperately to gain re-promotion to the Premier League, having taken over soon after their drop. But an ill-fated merger with Wasps Rugby Club and AIM-listing under the name Loftus Road Plc (the ground both clubs were to share), was followed by relegation to the Second Division, and the club went into administration struggling for its survival.
They eventually re-emerged and regained some stability on the playing field. But Wright, already a hated figure with the fans, departed in 2002. Ironically, with £10m worth of debts cleared by directors, the club sealed a return to Division One this year. Given he lost £15m of his own money though, it may seem harsh that he remains unwelcome at the club. But, unfortunately, fans rarely recognise good intentions when those running a club take it to the brink of extinction.
He’s moved on, of course, but it’s hard not to let the one major blip on his CV rankle with a man so obsessed with success. After all, to many in the general public this may have been the one time they were truly aware of one of Britain’s most prominent entrepreneurs. Prior to that his major successes, including launching the careers of Sinéad O’Connor, Blondie, Spandau Ballet and Jethro Tull, plus television programmes Midsomer Murders and Football Italia, and a burgeoning portfolio of radio stations, had done much of the talking for him. Even the company’s recently acquired publicity for making the Sunday Times 100 Best Companies to Work For was reflected glory.
Taking a gamble
But that’s what investment in sport can do. It’s a gamble too often taken with the heart and not the head (see Investing in Football, p46). Business nous counts for little and, refreshingly, Wright is ready to admit his shortcomings. “Administration was a result of me overextending to try to get success on the pitch, trying to get re-promoted and spending money the club simply wasn’t generating. I’ve never speculated with Chrysalis like I did with football. Your brains go out of the window. But I’m not the only one.”
Of that there’s no doubt. It’s fair to say that, since taking on the role of social secretary at Manchester University in the mid-1960s and booking the cream of rising talent to play on campus, Wright has generally had a sixth sense for what the public want. After starting Chrysalis with Terry Ellis (the company was an amalgamation of their names, Chris- Ellis), who he eventually bought out in 1985 for £17.3m, Wright has channelled virtually all his energy into the business. The fruits of his labour are borne out in the annual rich lists, where he is estimated to have amassed around £112m. And last year, the London Stock Exchange-listed company recorded a turnover of £246m, made a £10.4m profit and is now valued at around £320m, making it far more popular with the City than when it floated in 1985 amid controversy.
At the time, a director of Management Agency & Music Plc, which Chrysalis merged with, refused to support a circular announcing the deal to shareholders. This coincided with Spandau Ballet telling the world it was suing the company for alleged breaches of contract. The timing couldn’t have been worse. And to compound matters, the stockmarket had also fallen sharply after plans to float were announced.
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Moving into radio
But Wright’s able to accentuate the positives now. “Building a record company to being one of the largest independents in the world from a standing start is, in retrospect, a pretty amazing accomplishment,” he says. “Building a TV business up was a fundamental thing too. We’ve also gone from a standing start to being one of the country’s largest radio operators.”
The TV arm was recently disposed of for more than £50m and, in radio, Heart FM is among the fastest-growing stations and continues to threaten Capital FM’s leadership in London. Galaxy and LBC are also part of the stable that has pulled in revenues of £33m in the six months to April of this year. And despite Chrysalis selling its record label to EMI in 1991, it subsequently started another, Echo. This has signed OutKast, and Moloko. The music publishing division has also been successful, boasting rights to over 50,000 songs.
It’s easier now, in a way, to grow new brands given the company has the finance to support an idea for longer. But does he feel he could have grown the business in today’s climate, or were there more openings in the creative industries for entrepreneurs back then? “It’s a different environment now. The way we did it would be more difficult. We didn’t have any money, but had a decent idea and built a business without any help,” he says. “The fact there aren’t local provincial bank managers now would be the main hindrance,” he says.
Aside from talent spotting and creating brands, Wright’s other major strength is inspiring in his workforce a strong sense of identity, which he feels remains despite its size and public status. As well as the standard ‘work hard, play hard’ mantra, Chrysalis retains the smaller business mentality, which starts with Wright. “Unless we can be the best there’s no reason to exist, because we’re not the biggest and there’s no value in being a smaller version of a major,” he argues.
Somewhat unusually though for an owner-manager, where conviction in what you’re doing is essential, he’s more than aware of his deficiencies. But as he considers his tendency to delegate and give others responsibility his main weakness, it suggests the end result would have been better had certain decisions been made by him.
It’s probably a reference to his other main disappointment – Chrysalis’ internet investments. Overall, the company made a £27m loss on attempting to build or back successful dot coms and ultimately only one investment made a profit. “I never wanted to do any of the internet investments we did anyway,” he says. “But we raised money specifically for internet ventures and there was a feeling that unless we spent it on that, the City would have been very unhappy. But actually, in hindsight, they might have been happier if we’d said we’re not going to do it and are instead going to establish another radio station.”
Wright decided against using his right to veto, and instead went with the consensus. He still holds a significant stake of 28% in the public company – more than enough to maintain a reasonable say in what direction it heads in. “If it happened again then I’d say that, in my view, the business is best served by saving the money and that it would be better spent elsewhere…and that’s that.”
When it comes to the City, you get the impression he doesn’t waste much time worrying about forecasts or the share price, which is not to say he won’t do what’s necessary. Instead, unlike many public companies, Chrysalis is run as it sees fit and a strong performance in the Square Mile should simply be a positive by-product of a successful business. “You can make a huge mistake in trying to second guess the City. They’re there to make money and have a responsibility to the client base. Our focus is building and running businesses, not worrying about the City. I’d much rather the share price was going down but know the company is healthy than the other way around.” And it’s an approach that, give or take the odd failure, has worked so far.
INVESTING IN SPORT: WRIGHT?S QPR EXPERIENCE
Chris Wright paid ?9m for Queen?s Park Rangers in 1996 having been a fan of the club for more than 20 years. ?When it went up for sale I couldn?t resist. If I hadn?t had a go I?d have regretted it for the rest of my life. As it is ? I?ll regret it for the rest of my life.?
The problem with football, says Wright, is that everyone?s afraid of the fans and spends their time trying to pander to them. ?Decisions are made not by the directors or the chairman, but by the fans. The pressure group is so strong. Claudio Ranieri?s recent departure was probably the first time ever that the fans have not fired a manager. And this makes it difficult to run things sensibly.? So it?s no surprise he blames the hiring and firing of managers during his tenure on them.
Given Wright?s problems with QPR, you might think he?d rate football a complex business. But it still strikes him as being remarkably simple. ?It?s not brain surgery ? it?s pretty easy really. You need a good manager who looks after the players. The marketing takes place on the football pitch. Having said that, there?s more emphasis now on players? contracts.?
However, despite raising ?12m in a stock market flotation, when the club went into administration they had accrued losses of ?27m over four years. They owed ?4m to the VAT tax man and creditors, and ?11m to Wright who had secured debts using the club?s property.
He also realised late on that there?s much more to a player?s transfer than first meets the eye. ?It?s a dishonest business with back-handers going on all over,? he says. ?I was not aware to the extent I ought to have been at the time, but the whole bung process is rife in football.?
If he had his time again, Wright feels he would probably be more hands-on. But as he says: ?The main thing in my life is Chrysalis. Without a healthy Chrysalis I couldn?t afford something like QPR anyway.?
He remains a QPR fan and likes to go to games occasionally, but the circumstances had changed when he returned recently. ?The existing board refused to let me sit with them,? he says. ?I?m not supposed to be their friends ? I?m more the anti-christ, as far as fans are concerned ? so they made me sit with the opposition directors.?