Sir Philip Green: King of the high street

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1:24Welcome to Good Bad Billionaire, the show where we pick apart a billionaire story and tell you how they got to the top. And then we judge them on a variety of categories, try and figure out whether they're good, bad or just plain wealthy. I'm Simon Jack. I'm the BBC's business editor. And I'm Zing Zing and I'm a journalist, author and podcaster.

1:45This week, king of the high street at one time, notorious owner of retail empire Arcadia, you know it, owns Topshop, Burton, Miss Selfridge, etc. Mr Philip Green. Sorry, Sir Philip Green. I think you were saying you had some dealings with Sir Philip Green. I've been listening to a few clips of my own interviews with him over the years. I've got a slight bit of PTSD about it. It was not a straightforward experience. In fact, let's have a little clip. This is me talking to him in 2016. I can't wait. Why do you think the British public, for one reason or another, doesn't trust you? Because you lot make them all f***ing jealous.

2:20That's why. It's quite basic. Like, these people writing all this s*** couldn't spell 50 quid. They'll get jealous. Come on, Simon, you know that. Are you having a visceral kind of reaction to it? I think my heart rate's just gone up. It was not a straightforward experience. In fact, sometimes he would call me in the middle of the night, and go, hello, literally three in the morning, and I go, who's this? It's Philip. And I'd say, Philip who? Because I was a little bit disoriented. said Philip F in Brown. Who the F do you think it is? Liberally used the F word. Sometimes dropped the C-bomb about people he particularly didn't like.

2:58Right, okay. I think we're in for a treat with this episode because he certainly sounds like what you might call a character. Colourful is one way of putting at it. Other people called him the unacceptable face of capitalism because he did not mind displaying the wealth and we're going to figure out how he made it.

3:17let's break him down into a few key numbers so at his peak sir philip green was worth 4.9 billion pounds that was in 2006 he paid the highest ever dividend out of a company in uk corporate history to his wife 1.2 billion pounds to tina and he bought bhs which is a name that will come up later on in this episode for£200 million. And he sold it for£1. I mean, we are going to have to get into that because I do not understand how a deal like that works. He also left the company with a massive pension fund deficit, which basically jeopardised the retirement of thousands of his own workers. Parties, in terms of his spending, I mean, you do not get more lavish than Philip Green.

4:02No, he liked to surround himself with pop stars, with supermodels, with heads of state. Certainly like to put on a very ostentatious party. I think there was a series of three big birthday parties, right? And the talent list of the people who performed at these parties is just crazy. It's George Michael, J-Lo, Ricky Martin, Stevie Wonder. Bill and Hillary Clinton. I mean, I would see that Glastonbury, to be honest. He even spent£4 million on his son's bar mitzvah where Beyonce and Andrea Bocelli performed. Wow. And, of course, he was never far away from the other person who he shares the birthplace of Croydon with, which was Kate Moss, the supermodel, who also became an important part of his fashion empire.

4:42Whom he met after he paid£60 ,000 to get a kiss from her at a charity dinner, and he donated it to Jemima Khan. Yes. I don't know how to respond to that, really, other than to go, wow. Yeah. I think if you can afford to throw away£60 ,000 on a kiss that you don't get and decide to give to someone else. Although I think that that Kate Moss kiss, That was the beginning of a commercial relationship, which was actually quite an important one at the height of his fashion power. And certainly for people from my generation, it's what we were first introduced to Sir Philip Green with, you know, the Kate Moss Times Topshop collaboration.

5:16Yeah, no, that was at the height of his powers. But let's start right back at the beginning, that zero to a million pounds. So he's born in 1952 and he's one of two kids. And interestingly, the family has a history of bankruptcy. So both his grandfathers actually ran shops selling different things. One was a furrier, but they were both at one point declared bankrupt. Peppered throughout the history of this family is a kind of entrepreneurial streak, including his mum. Yes, so his mother actually opens the first coin-operated laundrette in the area. She also opens, I think, a parking garage and she kind of starts investing in buy-to-let property.

5:56And, you know, at the time, Philip Green is born in the 50s. So, you know, it's quite unusual, I would say, for a woman to be running sort of separate businesses, you know, hustling and making money for herself. Yeah, but she was reasonably successful. So they weren't poor by any stretch of the imagination. This is not a ranks to riches story. No. So she actually makes enough money to send him to prep school. And he ends up going to what was called then the Jewish Eton, which is Carmel College. And I'd not heard of it because it closed a while ago. But if you look at the list of alumni, you're talking people like the philosopher Isaiah Berlin, the M &S chairman, Israel Seif.

6:33But he drops out of Carmel College, goes to a local grammar school, and then he then drops out with no O levels to his name. Right. And actually, throughout his career, he talks about, as some billionaires do, about being up against the establishment, doing things a slightly different way. And sometimes he says that there was a flavour of anti-Semitism in the criticism that was directed at him. I mean, it's worth also mentioning, I think, that some of his most vocal critics, I think some journalists were Jewish themselves. Yeah. So he leaves without any qualifications, as you say. But then his mum tries to set him up in business to learn the import export trade.

7:08Yeah. So she gets him a job with a family friend at a wholesale shoe importing business in Old Street. And he spends five years kind of learning the ropes. And he starts deciding, oh, I want to set up my own businesses. I want to do my own thing. He does this with the help of his mother as well. Yeah, in fact, she actually lends him money several times in the early years. And those early years feel to me a bit like Del Boy. There's a buying a lot of goods on the cheap over here, trying to sell that off, setting up a business. It fails. He sets up another one. What really strikes me is that quite a lot of these early businesses don't do that well, right?

7:41At 23, he founds these jeans importers with his mother, but he closes it six years later and he ends up owning creditors£239 ,500. pounds. That seems like quite a big loss. Yeah, that wasn't uncommon in those days. It doesn't mean he personally went bankrupt. It means the business went bankrupt. And it wasn't uncommon in that industry at the time in the 80s in the kind of North London fashion, not far from where we're sitting right now. This was the centre of that trade. And everyone was looking to try and get an edge. And this is when he went into some celebrity endorsement, which became a big thing for him later.

8:17Yeah, I mean, he ends up buying Marilyn Monroe's dress to display in the window. You know, Kim Kardashian would be proud. It's a very Kim K move. He even collaborates with Joan Collins, who at the time was a big actress. He puts out a denim range that she endorses. And there's actually a great photo you can look up of him and Joan Collins cutting into a jeans shaped cake. Yes. And he's also talking up to the press, right? So he's telling the press that the Joan Collins range has 250 ,000 orders in the first four weeks, and it's going crazy and it's going incredibly well. He's kind of showing these first inklings of using the press to fan his own publicity machine.

8:53He became an absolute master of manipulating the press to his own benefit and became very friendly with some newspaper owners at the time. And, you know, it's worth mentioning as well that the John Collins range was a flop. It did not succeed. It had to be wound down. So, you know, he's ducking and diving. He's a real dull boy character. But at the end of 1985, he makes his first million. That's right. He finally lucks into something where he buys a bankrupt clothing company called Bonanza Jeans. One of Bonanza Jeans' customers was a chain of shops called Jean Genie, which I'm afraid to say I'm old enough to actually remember.

9:28So Philip Green found out that chain of shops was close to bankruptcy, so offered£65 ,000 for the option to buy the owners 65 shops. He didn't actually buy them. He bought the option to buy them. And that option became very valuable. In fact, it was Lee Cooper, a jeans brand, bought that option to buy the stores for three million pounds. So there he is. He's a millionaire. I'd never heard of this thing of buying an option before. Is that quite standard in business practice? It happens all over the financial world that basically I can buy an option to buy something. I'm not buying it at the moment, but I'm paying a little bit of money for the right to buy it at a future date.

10:07Let's say I don't know whether I want a turkey for Christmas this year or not. I'll reserve a turkey at the local butchers, but I'll say I'll give you£5 now for the option to buy it for£50 at Christmas. What happens between now and Christmas is avian bird flu breaks out and all the turkeys in the world pretty much have to be killed, which means the turkeys that are left available for consumption now cost£500 each. I paid£5 for the option to buy it for£50. So the£5 I spent is now worth£500. So it's 100 times more than the money I originally put down. It's huge leverage in a deal. Right. OK, that makes sense.

10:48So it's sort of like reserving a Tesco delivery slot in the future. Then the pandemic happens and all of a sudden the delivery slots are like gold dust. That's a brilliant example. You get it exactly. So this is how Philip makes his first million. Yes. He could have actually earned a bit more than that because they said if you stay on with the business, you can earn some more money. But in fact, he decided within 12 months to move on, always moving on to a new thing. So he's got his first million and he's about to get a lot richer. So he's a millionaire and it was around this time he meets what will be the most important woman in his life.

11:24Christina Palos, also known now as Tina Green. Lady Tina, if you don't mind. Yes, Lady Tina. And believe you me, hanging on to that title meant quite a lot to her and to him, as we'll see. So at the time, she's running a clothes boutique, so she's also in fashion. So Vanity Fair reports that the first time Tina met Green, she thought he was dreadful and an arrogant pig. And the second time round, she fell in love with him. But then they become quite a formidable double act. Yeah. So they marry in 1990 when she's already pregnant with their first child, Chloe. But already they start displaying a taste for extravagance.

11:58So at the wedding, they get a Motown singer, Edwin Starr, to serenade the guests. They pose for photos of doves on their fingers. You know, it's all very kind of, I hate this term, but it's all quite nouveau riche. Well, yeah, it's sort of proto-bling, isn't it? I mean, bling hasn't really arrived as a term yet, but they were in the vanguard of it. Always mattered to him that people knew how successful he was. So how does he start getting to a billion now that he's got his girl Tina aside? There was an important bit actually in the story. It was in 1988. He just had this big stock market crash and there were lots of companies going cheap and he bought a stake in something called Amber Day and made himself the boss.

12:40Up to now, he's been raising money from friends, acquainted with his mum, as we've seen earlier. But at this point, because Amadeu is quite a significant business, you get big city investors raising money from fund managers and property companies and whatever. So he's moving into the financial big leagues at this stage. Right, and Amadeu is still a clothes retailer, right? It sells menswear, but then it starts getting into perfume, into accessories and what have you. There are pictures of him around the time with little bottles of scents looking at it. I'm not sure that he'd be the poster child that I would use.

13:11I think I'd much rather use sort of Cate Blanchett than Philip Green to sell perfume. But there we go. So how usual is this kind of move, you know, to kind of get money in from outside investors, like big kind of funds and stuff like that? Well, they were very interested in retail. And I think that when we talk about the billionaires, you know, we often say that they're in the middle of a trend. And at this time, you've got, you know, the 1980s, this conspicuous consumption going on. people are borrowing and spending money fast fashion is beginning to arrive and so people you know the big investors of the day can see what's going on in front of their very eyes so they want in so this becomes not so much a kind of if you like cottage industry in north london where people all know each other and are ripping each other off and what have you this is the big city boys saying hang on a second something's going on in retail right now and we want to get a part of it and they were quite excited by philip green because he was a very persuasive charismatic energetic person.

14:07So things were going pretty well at Amber Day. But by 1992, the UK was then in recession. People in the city were talking about losses at Amber Day. Philip Green said people were ganging up against him. He called them raiders, people who bet against the success of a company. And eventually he resigns as chief executive. And probably pretty galling for him, the share price actually goes up when he announces his resignation. So Philip Green isn't exactly untouchable at this point. But he bounces back, you know, in 1995, he ends up partnering with an entrepreneur called Tom Hunter, and they buy a sportswear chain called Olympus, which they then sell to JJB Sports.

14:44And they make a tidy personal profit in the process. They make 36 million pounds. And this is also conveniently, some might say the point where Green moves his family to Monaco. Tina Green has always said that Philip was allegedly mugged outside their London home with a knife, which is why they decided to leave the country for security reasons. So make of that what you will. Yeah, there are restrictions on how much time you can spend in the UK without paying UK income tax. And so with her being resident there, rarely visiting the UK, meant he could come back and forth to UK, but the family wouldn't be taxed on the money.

15:21So that was how it was all set up like that. Right. So sounds dodgy, but it's not illegal. It's not illegal. And that proves to be very useful to him in the future? Because at this part, he's moving into the really big financial big leagues because he teams up with the Barclay brothers. Reclusive billionaires. They are genuinely brothers. And to give you an idea of how fabulously wealthy they are, they later on go on to buy the Telegraph. And together, Green and the brothers buy the ailing Sears empire for£548 million. Now, you might be thinking this is the same Sears as the Sears catalogue, but it isn't.

15:54It is, however, still involved in retail. So it owns Wallace, it owns Warehouse, it owns Selfridge. And within months, these are the brands that Philip Green and the Barclay brothers end up selling to a little group called Arcadia. And they sell it for 800 million pounds. They sell off all the little bits of the company. And that's going to be an interesting feature. You buy something and you sell off the little bits of it. Some call it asset stripping, other call it asset optimisation. Right, which I I think gives you an idea of the fact that some people may view this as a bad thing and some people may view this as simply a way to make a tidy profit.

16:31And this is what Philip Green's genius is, actually. It's not really being a very good retailer. It's finding stuff with a hidden value in it. For example, in something like this, it had these stores. That property is worth quite a lot of money. If you ask me to describe in a nutshell what Philip Green is, I would say he's a brilliant property financier. Not a retailer at all. That's where he makes his big money. And in 1999, he makes his first attempt to acquire M &S, good old Marks and Spencers. But the attempt failed because Tina Green had been buying shares in M &S before the news of the takeover was made public.

17:08And that is a big no-no in corporate world. If you know someone's about to make a big bid for it and you buy shares before that bid is announced, shares will go up, you make a tidy profit, you're using what they call as material non-public information. Code for you knew something was going on before anyone else did. Right. Really, your wife should probably not be buying shares in a company that you know you are attempting to take over. The regulators think this is an absolute no-go area. So he never got to buy Marks and Spencers that time. But it's around this time is the thing that really makes the big money for him.

17:40This is when he becomes a billionaire. So in 2000, he buys BHS for 200 million. and BHS at the time was, you know, I don't know, would you describe it as a kind of shop that your mum and dad might go to? Certainly not the trendiest of stores. Middle market, get your basics there. You would find it on most high streets and that's important, property on most high streets of the UK. Sensible flats and ballet pumps. Something along those, something like that. But they sold other things as well as clothes. A budget John Lewis, if you like. But so he bought it for£200 million. and in the early years things go pretty well sales go up and actually from reading around what he was like at this time you know he seemed to put in a lot of hard work into it you know he was putting in 18 hour days with his team i think there are stories of him famously kind of working away for hours and hours and then when the day finishes they decamp to the casino to the way he just smokes cigarettes and just holds court so he is putting in the graft yeah But he's also taking stuff out.

18:41In fact, he took out£414 million in dividends between 2002 and 2004. And that is double the amount of profit the company was making. OK, well, you need to explain to me at this point what a dividend is. Because I do not understand how you could be paying yourself dividends when the company is making half of that. OK, so a dividend is basically you just take money out of the company and pay it directly to yourself. You say, if the company's making a profit of 200 million, how can you take out 400 million? There's two ways you can do this. If the company's got lots of assets, like property, for example, then you can get loans against the property.

19:19And you can lend the money to the company and use that money to pay yourself out as well. So actually, you're taking more money out of the company than it's actually making. And remember, this is all going basically to his wife, resident in? Monaco. Which is? Tax-free. Correct. But all of this is legal, right? Because speaking to a layperson here who doesn't really deal with any of this business stuff, paying your wife the money that a company is making that you're taking out against the value of what they own, like property, that just seems like it shouldn't happen. No. Well, listen, it is legal.

19:53Yes. People do it all the time. Yes. Can you do it forever without destroying the value of a company? No. And these dividends are going to him and his family because they're the owners. That's right. This is a private company. The family owns it, so they get the dividends. And this is where Philip Green really does enter the big leagues, right? In 2002, he gets put into the Mail on Sunday's rich list and his personal fortune is valued at 1.07 billion. That's right. So he is now officially a billionaire and they throw a party in billionaire style. I think there was a series of big birthday parties, right, which he called PG50, PG55.

20:30try to think of the most ludicrous idea you could have for the party and then just double it. So all these guests are flown out to a luxury resort in Cyprus. It all costs£5 million. Tom Jones performs. They buy 1 ,000 bottles of wine and 40 kilograms of caviar. I mean, you just don't get more extravagant than that. And the thing is that most business people didn't live that kind of life. A lot of business people like to live under the radar, the rich ones. I mean, the Barclay brothers we mentioned earlier, they live like recluses in a tiny little channel island called Sark. You almost never see them.

21:06He's appearing and wants to appear in the pages of celebrity magazines. I think also one thing we should mention about the party in Cyprus is that there's a night where everyone dresses up in togas and he comes out dressed as the Roman emperor himself. Yes, wearing a little fetching little sort of, what do you call those things? Laurels, I think. Like a laurel wreath, but made of gold. You can tell this is a guy who loves to show off.

21:33So he's a billionaire. Where do we go from here? Where are we going to go next? We are going to go to Arcadia. So now at this point, Philip Green is kind of hailed as this hero of the high street, right? He's turned around BHS. Philip Green, who's seen as this kind of dynamic, vigorous kind of guy, you know, a bit flashier, but can turn things around at BHS. he sets his eye on Arcadia and he buys it in 2002. You won't see the name Arcadia on the outside of any shops but you will know some of the brands, right? Yes, so Topshop, Topman, Burton, Evans, Dorothy Perkins, Miss Selfridge, Wallace I mean these are the high street stores of my youth and it's worth flagging as well that not so long ago he actually sold quite a lot of these shops to Arcadia in the first place.

22:18Yeah, but with that list of names you just read out there no wonder people were calling him the king of the high street. He stands like a colossus over the British High Street right now. He's got it sewn up. And certainly, you know, when me or any of my friends when we were teenagers walked into any number of those stores, we had no idea that a single guy was responsible for all of them. Yeah, the illusion of choice. I'll go to this store, I'll go to the other store. Guess what? You know, they're all part of the same group. And in 2005, Arcadia pays off because Tina Green gets a 1.2 billion dividend and the couple become billionaires twice over.

22:52When that dividend was paid out, there was an audible gasp around financial journalists like myself. People went, how much? To whom? And I remember at the time he sort of joked, you've got to really trust your wife to pay her£1.2 billion dividend. So alarm bells kind of ringing in people's heads. Were people going, wait a second, why is this guy the owner of Arcadia, but his wife is named on the check? Yeah, I think people were realising that, you know, as he said later on when he was hauled before MPs, I don't think it's any secret that there's no tax paid in Monaco or Jersey. I don't think it's any secret.