by Sugar, Alan
A load of people from the football world congratulated me, David Pleat being one of the first on the phone. John Ireland, with all the efficiency of a corporate lawyer, took it upon himself to send a memo around Tottenham Hotspur Football Club informing all the staff that the chairman Alan Sugar had been knighted and his title in future would be Sir Alan. Up till then I was called Mr Sugar or Mr Chairman.
Unfortunately, his efficiency and correctness backfired. Someone at Tottenham had given the memo to the training ground people and they had passed it on to a tabloid journalist, who spun it as me insisting upon how the staff should address me. I asked John why he’d bothered to do it and he quite innocently said he’d thought it was the right and proper thing to do, especially as some of the staff had asked him how they should address me in future. No one at Amstrad had thought of sending out memos about this, as they knew it wouldn’t be necessary – most of the staff had called me Alan for years. It was only those that were new who addressed me more formally.
The Daily Mail, of course, was not going to write anything positive by way of congratulating me on being a worthy recipient of this honour; instead, they chose to go with the story that I’d got the honour because I was a contributor to the Labour Party – that effectively I’d bunged them some money to get a knighthood. Certainly, it was true that over the years I’d made political contributions to both the Conservative Party and the Labour Party, but I’ve always stated that my donations were given (prior to elections) to assist in funding the party in question to promote their policies.
The Daily Mail’s negative publicity, together with the tabloid back-page journalists harping on about my insistence on being called ‘Sir Alan’, took the shine off the moment a bit. Regrettably, we live in a country where you’re not really allowed to enjoy success. Nevertheless, I’ve always thought the negative stuff is outweighed by the genuine positive stuff.
The official knighthood ceremony wasn’t until June 2000 and it was a great day. Once again, I was about to meet the Queen. Unfortunately, they wouldn’t allow me more than three guests. It was a toss-up between Simon, Daniel and Louise as to who could come along with Ann. It was a terribly embarrassing situation – at one stage it was so horrible I suggested that none of the children come along, just Ann. The boys insisted that Louise went and then decided between themselves that Daniel would go, while Simon would meet us afterwards at a special lunch Ann had laid on for friends and relatives in a small banqueting suite near the palace. Of course, Ann and I would have liked all our children to come, but reluctantly we agreed to this compromise.
At Buckingham Palace, I was escorted away from my family and taken to an area where all the people receiving honours were assembled. We were given some quick training on exactly what we had to do when we addressed the Queen and practised how you positioned your shoulder before the Queen knighted you with the sword. There were hundreds of people receiving honours, the knights being the first. There were only four or five of us being knighted that day and because the awards were presented alphabetically, mine was one of the last. Martin Sorrell, the businessman famous for his advertising company, was knighted just before me. I waited until my name was called out.
I noticed that the people arriving in front of the Queen would have a little chat with her. Here I was once again in this embarrassing situation, thinking to myself, ‘What am I going to chat to the Queen about?’
As I arrived in front of her, I noticed one of her equerries, dressed in a sort of military uniform, whisper something in her ear. When the Queen spoke to me, she said, Ah, Sir Alan, not only are you known for your exploits in the computer industry and the wonderful contribution you’ve made to information technology, but I’m also informed you are in the football industry, which must be rather interesting?’
I replied, ‘It certainly is an interesting business. However, it’s sometimes not very rewarding and can also be a little demoralising, in a similar way that Your Majesty must have felt last night when England was knocked out of Euro 2000. So bearing in mind this terrible result against Portugal, Your Majesty, perhaps we should move on and let me say how honoured I am to accept this knighthood.’
Well, at least that was a little bit better than the first time I’d met her back in 1987. Not bad off-the-cuff stuff.
We had a great time at the lunch afterwards at Searcy’s in Pavilion Road, Knightsbridge. All my friends were invited, together with the family and some of my oldest and most respected employees. It was a real milestone in my life and a great honour.
A week or so later, Piers Morgan, the then editor of the Daily Mirror, invited me to the boardroom at Mirror HQ to have lunch with the executives and some senior columnists. This is something national newspapers do from time to time. During lunch, Piers congratulated me on the knighthood and asked that I explain what actually goes on in the ceremony, in particular what the Queen said to me and what I said to her.
I thought that recounting the real conversation would be boring, so with a serious look on my face and the attention of the guests focused on me, I explained the whole ceremony up to the part when the equerry whispered in the Queen’s ear.
Then I said, ‘The Queen said, “Sir Alan, apart from your obvious involvement in the world of IT, I understand you are also involved in football?”
‘“Yes, Your Majesty, that’s true – a strange business, but in view of last night’s terrible result for England against Portugal in Euro 2000,I feel on this great occasion the least said the better.”’
Then I paused until someone asked, ‘What did she say to that?’
‘Well, she said, “You’re absolutely right, Sir Alan. In my opinion, one should have played Beckham in front of a flat back four as a playmaker, with two wing-backs raiding up and down the flanks.”’
There was a stunned silence. I smiled and they all burst out laughing.
A few months earlier, Piers and I had been dragged into a scandal, a story from the heyday of the dot-com boom. Two journalists, James Hipwell and Anil Bhoyrul, who ran the ‘City Slickers’ column in the Daily Mirror, had reported in January 2000 that Viglen had started an internet division known as Vigicom. Nick Hewer had organised an interview between Bordan Tkachuk, Viglen’s managing director, and Bhoyrul and Hipwell. During the interview, Bordan innocently aired our plan for a new internet division, Vigicom, and mentioned we were recruiting an internet entrepreneur to run it. Viglen’s shares were tipped on the strength of this story and the share price shot up dramatically.
This event became part of the City Slickers scandal, exposed by the Daily Telegraph a few weeks later. Apparently, James Hipwell and Anil Bhoyrul were regularly hyping up companies in their column and it transpired they were in cahoots with City brokers, tipping them off on what they were about to write the next day. There was a lot of illegal trading on shares they’d written about. Morgan was dragged into the matter, as he’d bought some Viglen shares, as did the paper’s deputy editor.
The City Slickers revelations in the Daily Telegraph blew up into a full DTI (Department of Trade and Industry) investigation. Both Nick Hewer and Bordan had to give evidence to the DTI at the inquiry about their meeting with the two journalists. The inquiry also wanted to see whether anybody at Viglen, including Nick Hewer, Bordan or I (or any member of my family holding shares), were party to this share-hyping practice.
Nick got very nervous; I never understood why. He was also very protective of me. I told him, ‘You’ve done nothing wrong – none of us has done anything wrong. The DTI can investigate till the cows come home and they’ll see nothing untoward.’
The DTI has very deep powers. They can summon records from people’s banks, mobile phones and credit cards and, of course, can obtain details of all dealings in shares. They carried out a full investigation to see if anybody related to me had bought or sold Viglen shares within the period that the City Slickers had written about the company. Funnily enough, a few weeks before the City Slickers write-up on Viglen, my son Dan
iel had disposed of his Viglen shares. This would conclusively prove our innocence to anybody with half a brain; if the Sugars were in collusion with this share-hyping, there’s no way they’d have sold shares at a low price beforehand.
The knives were out from all quarters. The DTI was after people’s heads, including Piers Morgan’s. However, the Daily Mirror set up their own internal inquiry and exonerated Piers from any wrongdoing and the DTI also concluded that he had no claim to answer. At the same time, the mischievous media was making a lot of capital out of the fact that Viglen was my company and I was a so-called friend of Piers, in the sense that I was a columnist for the Daily Mirror (I had agreed to write a weekly column on business, advising readers on their business ideas). While none of their allegations held any water, these sorts of rumours stirred up the authorities to pursue their inquiries.
One inquiry we had to answer to was from the Stock Exchange. They intimated: ‘Viglen should not have told journalists of their intention to start a dot-com company – information like this should have been sent out to all shareholders, as it was price-sensitive and of importance.’
Total nonsense! This was the Stock Exchange attempting to flex its muscles and get in on the scandal. It is not necessary for a public company to give notice to its shareholders when it intends to start up a new division. In this case, there was no meaningful deal, no transaction of money, we weren’t acquiring anything and therefore no notification was required. However, some jobsworth, wound up by the newspapers, decided to interpret the rules differently. Eventually, we pointed out to him that we had placed an advertisement in the Sunday Times, weeks before the Daily Mirror article appeared, stating quite clearly that Viglen was looking to recruit personnel for a new division. As such, the information was in the public domain. After a lot of argy-bargy, they agreed to back down. Hipwell got nicked and had to go to prison; Bhoyrul was let off with a slap on the wrist.
*
It had taken about nine months to get it ready, but the email phone was launched on 29 March 2000 at quite a big bash organised by Nick Hewer. On the day, the share price rose to 610p, putting a market capitalisation on the company of £500m. There was no rationale behind the share price rise; we were simply caught up in the internet boom, which had just about peaked out by then. The fact that the email phone was perceived to be a joint venture between Amstrad and British Telecom attracted a lot of attention in the City on the day, but the rise in the share price was very short-lived. Soon after the launch, the so-called ‘dot-com boom’ imploded and the Amstrad share price fell rapidly. The penny had dropped: some companies whose values had risen to great heights actually had no substance – people had just been dragged in on a whim or a hope.
The business model of the email phone was all about consumers sending emails and us receiving a share of the call charge. On top of this, we were going to sell advertising to display on the screens of the phones, a kind of electronic billboard in consumers’ homes. The idea was that we would subsidise the cost of the phones so they’d sell at a low retail price. Bob Watkins, in his capacity as managing director of New Amstrad, had worked out the potential revenues based on projected sales. On paper, it looked quite good. There was a break point where the revenues coming in would cover the cost of the hardware – after that, we would move into profit.
Sales of the phone went quite well – over 400,000 were sold. However, some people only realised after purchase that sending emails was not free and we experienced lots of disconnections. Also, the advertising model was not attracting the attention of potential advertisers. It seems we had launched at a time when most advertisers were sick and tired of what they called ‘internet advertising’.
The first wave of internet advertising came during the dot-com boom. Everybody thought this was a major breakthrough and advertisers threw a lot of money at advertising on various websites. It turned out to be a disaster and the advertising fraternity pulled away from it very quickly, reverting to conventional media. By the time we launched the email phone, the term ‘internet advertising’ was like the kiss of death in advertising circles.
I argued with advertising agencies and media buyers that they needed to convince their clients that advertising on the email phone was not internet advertising – our screen was like a miniature version of a street hoarding which sat in people’s homes. Where else could you guarantee consumers would get to see the advert? Despite these arguments, we failed. We had a great technical solution to send targeted adverts to users’ screens; we could profile different regions and change the adverts quickly. Yet in spite of all this, the advertisers did not cotton on that we were offering them, in advertising terms, a Trojan horse into consumers’ homes. The only company who actually understood the concept was BSkyB, who spent a lot of money on advertising these phones and proved they got new subscribers from it. Yet even with BSkyB’s testimony, we still weren’t able to convince others.
Bob Watkins also wanted us to embark on developing our own mobile phone. Having spoken to Dancall’s former chief engineer, Per Christianson, Bob told me that mobile phone technology had become much simpler now and it would be easy for us develop a phone and get a share of the market. I agreed that we should go ahead with this on the basis that we worked hand in hand with Per Christianson, who had now joined Infineon, a chip manufacturer wholly owned by Siemens.
Bob had seen his return to New Amstrad as a last throw of the dice to be a businessman rather than just an engineer. His first project was the email phone, on which he did spend most of his time handling the engineering side. I left him to this mobile phone business on the basis that he would try to replicate what we’d achieved at Dancall.
Around that time, Virgin had decided they would start a mobile phone service. Unlike Vodafone, Orange or Mercury, they didn’t have a proper network infrastructure with their own antennas in the streets, but would buy wholesale volume from Mercury, a main network operator. I set up a meeting with Richard Branson and the chief executive of Virgin Mobile to discuss the possibility of us supplying them and as a result they became our first customer. I left the whole thing in Bob’s hands, thinking it was a done deal. All he had to do was develop the phone and get it into mass production.
Unfortunately, Bob’s assertion about the technology no longer being rocket science turned out to be untrue. Bob had laid on production with a sub-contractor in China and promised them we were going to make millions of these phones, but as time passed, the software was nowhere near finished and there were terrible technical problems.
As a side issue, Margaret Mountford had decided she’d had enough of being a corporate lawyer, working every hour of the day, and wanted a less demanding but interesting challenge. I was eager to get her on the board at New Amstrad, and she joined Jeoff Samson as a non-executive director.
Cracks started to appear on the mobile phone project. Pressure was coming from Margaret and Jeoff to the effect that Bob’s adventure was burning money and putting the company in a vulnerable situation. On deeper investigation, it seemed we’d committed over a million pounds for parts with the sub-contractor in the Far East. Additionally, Infineon had been given a contract for half a million chips, but Infneon’s senior management had instructed Per Christianson to no longer communicate with Bob Watkins, as we were constantly breaking our promises on accepting delivery of the chips. It was another disaster, which resulted in me having to ask Bob to leave for the third time, which he duly did in September 2001.
It was crying shame that this man was not satisfied doing what he was best at – engineering. He had this unshakable conviction that he was a businessman. In the early days after bringing him back to New Amstrad, I gave him his head and let him get on with things, as he’d learned a lot about telephones when he worked for Gulu, and he decided we should continue with the traditional Betacom business of selling ordinary fixed-line telephones. For the first couple of years, I went along with his scheme, but it was peanuts selling £5–6 phones to people like Ar
gos and every year the division lost money. I’d made the point to Bob so often – that the effort involved in selling items for a fiver is a waste of time – yet he convinced me to continue with it. After losing money for two seasons I gave him six months to sort it out. Bob finally realised I was right and I managed to sell the division, with the staff included, to the company Alba – a nice, elegant way out. Now it was again left to me to get us out of trouble, this time on the mobile phone venture. It cost us a lot of money to pay off the sub-contractor in the Far East. Fortunately, Richard Branson was okay with the situation and was able to buy his phones from other suppliers. That was the end of our romance with mobile phones.
*
Back at Spurs, George Graham had become something of a silent assassin. He would pretend to be trying to work professionally with me, but at every press conference he would tell the media that the Tottenham team was not capable of winning things, saying that he needed at least three new players. If we bought three players, he would tell the press he needed another three players. I decided, from past experience, to keep my mouth completely shut when questioned by the media about Graham’s opinions. Thankfully, some journalists could see that Graham was constantly buying players yet continually saying he still needed more, and it was mildly heart-warming to see the sensible ones picking up on exactly what I was thinking. Nevertheless, Graham sang the same old song at every press conference after he’d lost a match.
I recall one particular game in the League Cup, in December 1999, when we were drawn against Fulham, who were not in the Premier League at the time. It was one of those games that Graham and his squad thought would be a walk in the park. We’d roll over this lower-league team – no problem at all – and march into the next round.