Karren Brady: Birmingham City FC

As told to Startups.co.uk in 2003
Karren Brady’s bosses at publishers Sport Newspapers, the Gold brothers and David Sullivan, plucked her from the role of director to head up their football club, Birmingham City.

She promptly brought glory days and financial stability to St. Andrew’s. Back in 1993 however Brady was he first woman run a football club. She then eclipsed her very public introduction to perhaps the most masculine of industries (she was refused entry to the Notts County board room) by becoming the youngest woman to run an AIM-listed company in 1997.

And her success in turning the club from the brink of extinction to a £30m turnover Premiership team playing to sell-out crowds marks her as business figure of national repute. And she’s still only 33.

How much of an issue is gender for you?

When I started I was something of a novelty. I was young and it made quite a story. But that was nine and a half, nearly 10 years ago. Now it is not an issue. There are lots of women involved in football and there’slots of people who own football clubs and Plcs who have women executives.

Does it annoy you that some are surprised or dismissive about your business nous?

Sport Newspapers was a one-day a week operation, which was turned into a seven-day a week operation and I set up the sales and advertising and marketing for that. During the peak when I was marketing it the circulation was 21m, which it hasn’t seen since. Most of my colleagues, those that I work with, know what I’m talking about and I sit on other boards. As well as that I go round doing business talks telling how Birmingham has gone from a company in liquidation and flagging in the football league to the Premiership, with a turnover in excess of £30m. It’s quite a good story really. But the main success is continuing what we’ve done and running at profit.

You are known as the “first lady of football” has your media profile helped the business?

Well I don’t really have much of a media profile. I haven’t done any interviews for quite a few years because it detracts from what the team’s doing. I obviously did it in the early days because it was important to get the profile across. But now I let the team do the talking for the club. But I do talk about business generally and running a business and having good management practices. I’ve done other things that are media friendly, but there’s nothing wrong with that.

What were the main challenges you have had to overcome when you took over the running of the club?

We had a turnover of about £1m. We were haemorrhaging money. We had an almost all-standing ground. And a team that lacked ambition on and off the pitch. So it involved a complete turnaround from the start, profile, marketing. We self-generated the income to rebuild St. Andrews into the stadium it is today, 30,000 seats and 64 executive boxes, which is more than Liverpool and Everton put together. In terms of raising profile, marketing and raising the gate I think the average gate when I took over was about 6,000, but now we regularly sell-out 30,000. But I think perhaps the biggest challenge was taking over in 1993 and then I in 1997 I floated the company on AIM. At the time it was valued at £25m, but more significantly we raised £7.5m worth of new money, which enabled us to continue to re-build the stadium and team. Also, we made a decision to float in the middle of December and were on the market by early March, which is fairly quick.

Football is unique in a way that most of the stakeholders feel passionately they could do a better job than the manager or perhaps even the board. How do you work within a sector where there is that belief?

We have a mix of wealthy individuals, institutions and supporters who have shares in the club. Our AGMs are always very pleasant and calm. I think that the supporters care passionately about the club and want to know what money you’re going to spend. Institutions want to know what money you’re going to generate and major shareholders want to know how much you’ve made. So each has a different role to play. Football is also quite unique. A Birmingham City supporter is not going to wake up tomorrow and support Aston Villa. So in that sense you have a very captive audience and a unique customer. But what they do do is say they support, but don’t qualify that by spending any money. So they don’t buy tickets, they don’t buy a shirt, don’t buy a lottery ticket and don’t buy a pie. So it’s our job to resurrect that support and qualify it in terms of cash. And for a club like Birmingham we’ve done that very well.

Has this affected your attitude to investing in players?

Well, Sir Bobby Robson once asked how you motivated 11 millionaires?’. And I think it’s a difficult question. Hence, we haven’t gone for players at the end of their careers looking for their last ‘big pay day’. They come for £25,000 a week and end up bankrupting you. If you look at Carbone I think he’s been at three clubs and they’re all in dire straits now. We’ve tended to go for a hungrier, younger, perhaps more unproven player who has been given the chance of a lifetime of playing in the Premier League. It’s an odd world football because at one end you’ve got footballers on £300,000 and on the other hand you’ve got shop staff on £9,000 a year. And it’s the unique ability to be able to motivate the person on £9,000 to the same level as the one on £300,000. But I’ve put a lot of effort into my staff and we have a 0.5% sick day average a year. Plus I haven’t lost a member of staff since 1993. I’ve let a lot of staff go, which is of course slightly different. But I’ve never lost a member of staff that I wished to retain. One of our key successes is our HR director who started under me on the YTS at 16.

Are there any management lessons you have taken from the playing field into the boardroom?

I am opinionated about putting my staff first. I’ve learnt from the most competitive team game in the world where the ability to build a team is absolutely vital. One of the things I want to do here is to build a team of people who can face the most enormous challenges, which we have here over the past few years. I don’t think you can make your business successful unless you have the right staff and you share the burden of running the business among your staff. I think that the key to individual success in any business is that they understand and are recognised for the success they bring to the business. We have a number of different schemes and we’ve been able to retain staff.

And how important is it to learn from other businesses?

Any astute business person could walk into somebody else’s business and pick up at least one thing, whether that be customer service, marketing, the way they operate their stock-taking or any small thing that could make your business better. We believe in networking and it’s not always possible to send your staff on very expensive or long-winded training schemes. So we arrange business exchanges, which involves sending my retail manager to Marks & Spencer and them sending their retail buyer into my business, or us going to Virgin to look at their marketing and Virgin sending someone to us to see how we operate. Business exchanges mean you can learn first hand what other businesses are doing very well. The wheel is never reinvented, it’s just improved and the best ideas are the ones that improve on someone else’s work.

What kind of potential is there left for Birmingham City as a company?

With a 30,000 capacity you’re always going to be limited in terms of how much income the club can generate. Having said that we’re high in the table in terms of TV revenues, which hopefully proves we have something to offer football and that we have a profile that we can build on and improve.

The Gold brothers and David Sullivan have a formidable reputation in business. How do you manage with them in the background?

David Sullivan is unique in that he’s very interested in the way the club is run and airs plans, ideas and views. But they are very successful and committed business people with a number of other businesses. They don’t come here on days other than match days. But I get their input all the time and if a decision needs to be made it’s one phone call from me to David Sullivan.

You were the youngest female boss of an AIM listed company. Has age proved much of a barrier?

It is now I’m getting older. My brain’s going. It’s like anything when you launch a business you put more hours in than you do when the business is launched, but it’s a business I enjoy.

And is AIM still a good place for a football club to be?

There are lots of benefits to having shareholders. Initially of course their investment is very worthwhile. But shareholders take a keen interest in the way the business is run, which keeps you on your toes. And people that invest money in a business deserve to have it run well. Birmingham City’s shares haven’t done particularly well, but in terms of long term growth I hope they recover their investment.

Does the structure run itself now?

You think so, until you take your eye off it.

Does it worry you that for £500,000 someone could buy a place on the board and exert influence over the club and your role?

It has not happened at Birmingham City, but that’s not to say it won’t. A good business person finds out what’s the matter with their business is before their competitor does. You hang on to your practices as long as they’re good, but grab the new ones as soon as they’re better. I always welcome ideas and enthusiasm at whatever level, whether the tea lady or the institutional director. There isn’t enough best practice of meetings in football, whereas at Birmingham there is because we know we’re not the best at everything, but we want to be. So we go to clubs who we feel are the best in certain areas and try to emulate, improve and develop.

Fellow football chairman Theo Paphitis says he’s very big on five year plans. What’s your strategy for running a business?

I don’t think you can have five year plans in football because you never know what’s round the corner. There are different challenges. If you’ve got a string injuries then you may have to re-think in terms of bringing players in. And I think it very much depends on whether you want to be a successful club in terms of league status or a successful club in terms of income. Now I could turn Birmingham from a Premier League to a First Division club and make £2-3m profit a year. But that’s not what we’re in the business to achieve. We’re in the business to achieve greater glory, greater income and greater profit. Cashflow predictions are very important, but in terms of five year plans, the problem in football is that you’re chasing a dream. Everybody feels there’s a simple formula in terms of how much you put in and how much you get out. But sadly that’s not proved to be the case.

How hard is it to balance the need to stay in the top league with the need to keep the bank happy? For example, if I said to you that you’ll definitely stay up if you over spent, would you be tempted?

Oh without doubt. If you told me to write a cheque now for £5m to retain Premiership status I would, because the income next year is £15m, so it’s an easy equation to do. But it isn’t as easy as that. If you look at Wolves, they’ve spent far more than Birmingham, but have yet to be promoted. Then there’s Barnsley, who two years ago spent far less than Birmingham and got promoted. It’s a factor of things working together that make a football club successful and that is directors, shareholders, the team, the manager and the supporters. And when everyone is working together, most of the clubs that are successful have that spirit and togetherness about them. The key to it though is management of the business as opposed to marketing of it. We have to walk that line between risk and reward quite carefully. A lot of clubs that have been relegated, such as Wimbledon, Derby, Coventry, Leicester, Barnsley and Bradford, are in serious financial trouble, administration or on the verge of administration and that is simply because they have overspent trying to retain status.

Football doesn’t have the best reputation for financial astuteness. Have you had to work hard to instil the importance of cost consciousness into the club?

Part of the problem in football is that some seem incapable of saying the word ‘no’. As long as you’re prepared to accept that you may lose somebody you have to learn that word. My role probably saves the club a couple of million pounds a year in terms of negotiating contracts. We have learnt that because Birmingham City is run to the best of the ability of the business. That doesn’t mean we’re a profitable business or that we make money, but it does mean to say we’re not in anything like the kind of debt other clubs are in. We run with an overdraft, but a very manageable one.

KARREN BRADY CV

BORN: April, 1969

1987: Begins career at LBC Radio, before moving to Saatchi & Saatchi as an account handler

1988: Joins Sport Newspapers

1989: Made a director at Sport Newspapers

1993: Joins Birmingham City Football Club as managing director and the club records a trading profit in first year, followed by an overall profit for the first time in modern history in 1996.

1997: Takes the club onto AIM. She is also subject of the documentary ‘Inside Story – The Real Life Manageress’ on BBC1 and hosts her own show, ‘The Brady Bunch’ as well as ‘Loose Women’ and ‘Live Talk’ on ITV. She releases two novels ‘Trophy Wives’ and ‘United’ as well as a factual account of her first season at Birmingham

2000: Finalist of the Midlands Businesswoman of the Year

2003: The club wins promotion to the Premiership after play-off final victory.

I think that the supporters care passionately about the club and want to know what money you’re going to spend. Institutions want to know what money you’re going to generate and major shareholders want to know how much you’ve made.