David Gold: Gold Group International, Ann Summers and Birmingham City FC
We speak to the leading light of the UK's adult entertainment industry
David Gold oozes success – and not just out of his initialised diamond cuff links.
Of humble East End beginnings, he's accumulated a £500m fortune, has a fleet of private jets, co-owns a newspaper, is the chairman of a Premiership football club and recently bought the oldest existing FA Cup for a cool half million. At 68, he could be forgiven for enjoying the easy life. Ten words in his company and you realise that's not on the agenda.
“I have got such a burning desire to carry on,” he insists. And by ‘carry on', Gold's not talking about merely keeping his businesses ticking over. He's currently busy restructuring Gold Group International, he and his brother Ralph's holding company. Gold Star Publications, the adult magazine and puzzle book company that has been so lucrative, is subject to a management buy-out, enabling Gold to focus on expanding Gold Air International, a luxury private airline, and the group's ‘jewel in the crown', Ann Summers.
“There's such enormous opportunities for Gold Air and Ann Summers to grow,” he says “It's exciting and I want to be part of it. It's the same as when I started my original business all those years ago, once you see something really special you give your all to it.” For Gold that ethos has already seen the collapse of a marriage – his biggest regret – and now it's impinging on his retirement; that's assuming there was ever going to be one.
It's not that Gold can't let go. He just knows there's bounty to be collected. Look around you: Adult channels were the fastest growing TV genre in Europe in 2004, two of the best selling weekly magazines in the country differ little to topshelf titles, society makes celebrities of promiscuous nurses and shops that previously had blacked out windows and were derided as places of shame now sit unashamedly on our high streets. When you own the leading chain of such shops and a national newspaper that draws its revenue from the adult industry, you know the market's ripe for profit.
Indeed, Gold's decision to part with his adult publishing company suggests there's more money to be made from the increasingly acceptable face of the industry. He's welcoming of the Nuts and Zoo phenomenon – “they've made the public more comfortable with the product” – and credits them with helping win his campaign to get the Sunday Sport and Daily Sport, which he co-owns with David Sullivan (also co-owner of Birmingham City Fooball Club), stocked in Sainsbury's stores.
Gold is determined to strike while the consumer is turned on. Ann Summers is opening 20 new stores and refurbishing another 20 each year. “It's three successful companies in one, and that gives you great potential,” says Gold, referring to the company's combination of retail outlets, of which there are currently 126 in the UK, party plan business, which is the largest in Europe with 8,000 agents, and internet business, which has grown at 25% for the past three years.
Acquired in 1972, Ann Summers' path to £110m turnover and £8m profit has been a winding one. Originally appealing to the male mindset, it wasn't until the appointment of his daughter Jacqueline Gold as chief executive in 1987 and the launch of Ann Summers Party Planning, where women view merchandise in the privacy of their own homes, that the company found its true customer. Growth over the past five years has been intense, and bolstered by the acquisition in 2000 of lingerie business Knickerbox, which has 30 UK stores and concessions in Ann Summers stores.
Gold insists Ann Summers has potential left to exploit. It recently ventured overseas, launching in Valencia and will open three more stores in Spain in the next year. Further international openings are part of the expansion strategy and Gold says the company is well equipped for growth.
“You can easily see the synergies behind the businesses, i.e. they're essentially selling the same product, but behind the scenes there's great synergy too,” he says. “The warehousing, administration and computer systems are all the same and that of course enhances overall profitability.”
Responding to market forces
For Gold, the key to growth is putting infrastructure in place and then having the flexibility to move with market forces – a mantra that can be seen throughout Gold Group's history. Indeed, Gold moved into the adult industry by accident when keeping his bookshop open late one night he noticed the flood of customers arriving late to buy top-shelf material. The adult industry is renowned for shifting quickly with swings in licensing laws, attitudes, and technology – only the astute survive. “You can see all the way back in the development of all our businesses that one emerges from the need of another,” he says.
Gold has applied a similarly responsive touch at Sport Newspapers. Launched in 1985, the Sunday Sport, followed by the Daily Sport, became synonymous with outlandish headlines such as ‘World War 2 Bomber Found on Moon' (see above) mixed with a dose of saucy topless models. There's been a clear shift in recent years to the latter, but Gold makes no apologies. “It was a wonderfully exciting time but things run their course and people began to question whether there really was a bomber on the moon,” quips Gold, before adding: “The red tops are all in marginal decline, but Sport Newspapers has done extremely well in maximising profitability through an advertising niche.”
Other Gold Group companies, such as Broglia Press, have been a natural metamorphosis from the group's needs. “With Gold Star Publications we had a massive requirement for print and were sick of delays and late deliveries so attempted to circumvent that by having our own printers,” tells Gold. Similarly, there's also a magazine distribution firm called Mags Express, a book wholesaling firm named Petbridge, and a manufacturing arm for Ann Summers, Knickerbox and brands such as Letitia Allen at Harrods and Debenhams.
Gold Air International best displays Gold's eye for common sense business. “Birmingham we're playing Newcastle and I had to be back that night so I decided to get an air taxi,” says Gold. “When I arrived for the flight I was directed to a dilapidated shed and met by what looked like a 14-year-old boy in charge of this ancient Aztec twin engine. I'm a pilot of 30 years and it left me with some concern.”
On returning to Biggin Hill he ordered a new plane and helicopter and hired two pilots with thousands of hours flight experience. The purchases weren't intended as the birth of Gold Air, however. “It was meant just for myself and the company to get to matches and meetings,” he says. “But we built such a quality product that when we took clients with us they said ‘this is great, can we hire it?' Before we knew it we needed a second aircraft and now we've got seven.”
To be precise, Gold Air has six Lear Jets and one Hawker 125-800, from which it offers the ultimate in convenience travel. David Beckham is a regular customer and Gold says demand is growing. “Most of our customers are rich and famous. It's an unrivalled way to travel and offers a degree of anonymity which appeals to a certain type of person.” Turnover for Gold Air will hit £10m this year.
It's a truism that every man has a blindspot and for someone so financially savvy, the decision to buy a football club – sure-fire cash burners – exposed Gold's. A frustrated footballer who missed out on a playing career after his father refused to sign a contract from West Ham United, Gold's rescuing of Birmingham City from the brink of bankruptcy has exorcised a personal ghost. But the buzz of the boardroom aside, Birmingham City is just another business.
While results on the pitch have improved, commercially, the club has produced a World Cup Final-level turnaround. From a position of debt and virtually zero commercial income, the club has a turnover of £45.3m, operating profits of £5.6m and is one of only five Premiership clubs not losing money. Shirt sponsorship has increased from £30,000 to £1m a year and the club now has plans for a new 60,000- capacity stadium.
“We've achieved steady growth by applying sensible policies and not saddling the club with debt,” says Gold. He's also quick to emphasise that the club has had to leverage business away from its local rival, or in business terms, competitor, Aston Villa. “Nine years ago, the gap between us was 50 places – two whole divisions. When you also consider Villa had a 10-year quarter of a billion pound head-start on the great wealth created from Sky TV then you can see how hard our commercial people, led by Karren Brady (MD), have worked.”
Like Birmingham's supporters, Gold longs to win a trophy, but the real bit between his teeth at the moment is the stadium proposal which would regenerate the east side of the city and create a multi-purpose sports village unrivalled in the UK without costing the club or its council a penny. The only snag is that the project is funded by the Las Vegas Sands Group – an exclusive deal brokered by Brady on the premise there is one of the government's new Super Casinos on site. As a result, there's been opposition from certain councillors who are reported to favour an alternative bid from the NEC Group. Gold's not for budging, though. “The most famous thing about Birmingham is it's known as the Second City and people are almost joyous about that – well I'm not,” he says. “It's about time Birmingham came first. Not second to Manchester in getting the Commonwealth Games, not second to London in getting the National Stadium. It's time Birmingham grasped the nettle and built this fabulous stadium on 55 acres of land desperate for regeneration.”
Keeping it in the family
Despite a single-minded determination to succeed, Gold's leadership hasn't been a lonely one. Along with the support of his brother, Gold has carefully installed strong leaders and let them have their head. Placing Jacqueline in charge of Ann Summers went against the rest of the board's opinion and introducing a 23-year-old Brady as ‘the first woman in football' sparked controversy, but both have proved rewarding and lengthy appointments.
In Sullivan he's found another close ally who's partnered him and Ralph in numerous companies over the last 25 years – and a friend he holidays with twice a year. “I still look at us as a family business,” says Gold. “If you come into the business you come into the family. The key to business is about maximising the people around you and keeping them on board.”
And as for that FA Cup? Gold puts it down to a rare moment of “pure indulgence”, but more typically can't help pointing out it was also a shrewd investment.