Hubris by Ray Perman

Author:Ray Perman [Perman, Ray]
Language: eng
Format: epub
ISBN: 9780857902290
Publisher: Birlinn

The only reason I didn’t do it myself was that I was in Wellington Hospital in the intensive care unit when I got the call. When I was offered it, I was in the hospital. So I said: ‘Can’t do it this week, can we do it next week?’ I had other things on. Couldn’t do it. But it worked out well. Tom did it. Worked well. Everybody won.1

Like every good story, it contains some truth, but the actual circumstances of the purchase may be more prosaic. The Tom in question was the Scottish entrepreneur Tom Hunter. When he left university in 1984 Hunter had borrowed £10,000 from his father and the Royal Bank of Scotland and started selling trainers from the back of a van. By 1995 he had built the business into a chain of shops named Sports Division and was making £4 million a year in profit. He was looking for ways to expand when one of his suppliers tipped him off that Sears wanted to sell Olympus. A purchase would more than double Sports Division’s number of outlets, but Olympus was losing money. Hunter, then 34, went to see Philip Strong, Sears’ chief executive, but was shown the door. Strong did not believe Hunter could come up with the money and would not negotiate with him.

Hunter and Green had met when Green had bought the Glasgow budget retailer What Everyone Wants, so Hunter called him and asked him to front the deal. Green went to Sears and secured an option to buy Olympus. (The call telling him he had the option may have come while he was in hospital.) Hunter received the call from Green saying the deal was on while he was holidaying in Barbados with his family, but now his problems started. To buy the company he needed to borrow £20 million, but the Royal Bank turned him down. Racking his brains, Hunter remembered meeting someone from Bank of Scotland while on a trip to Turin organised by David Murray, then owner of Glasgow Rangers, to see his team play Juventus. He called Murray to be told that the man he had spoken to was Gavin Masterton, the Bank’s Treasurer. On his return from holiday, Hunter called Masterton, who sent one of his corporate managers to see him – Peter Cummings.

Hunter and Cummings had a lot in common. Coming from modest beginnings, both had done well in their chosen careers, but had remained rooted in the communities from which they came. Cummings still lived in Dumbarton, Hunter in the South Ayrshire community of New Cumnock. Hunter knew exactly what he had to do to turn Olympus around and took Cummings through his figures in detail. If he could make the new stores perform even half as well as his existing shops he would be able to repay the loan with ease. Cummings had been told by Masterton: ‘Be hard, but don’t lose the deal.’ He fulfilled both parts of his brief. The Bank agreed to lend the £20 million but Cummings demanded security over Hunter’s business and his house.

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