The period between Paul Kinsey and his management buy-out team hearing about the break-up of the old First Leisure and actually acquiring the company’s nightclubs and bars business was nine months to the day. Father-of-four Kinsey says wryly “There were several parallels with a pregnancy - morning sickness, mood swings, headaches, sleepless nights wondering ‘what have I done?’ - and then that overpowering feeling of responsibility when the baby is delivered. It’s awe-inspiring.”

Kinsey was heir apparent to First Leisure’s iconic Managing Director of Operations Mike Payne, and just embarking on a year of shadowing the boss, when the decision was taken by the Chief Executive, former Channel Four boss Michael Grade, to rend the company asunder. “I told Michael I might be interested in acquiring the nightclubs business, but at the time there were several potential trade buyers. So I had to help those deals along, while all the time wanting to do an MBO.” When the only credible trade offer (from Steve Thomas’s Luminar) faltered, Grade gave Kinsey two weeks to come up with a formal offer - “it was a tough call, but we did it!”

“I’ve always been ambitious and the MBO was a step in a natural progression” Kinsey says. “I was sad when First Leisure went. It was a great company. The values on which it was created were values I aspired to. After the buy-out, we kept the name because we wanted to continue the past positive associations with John Conlan and Lord Delfont.” Echoing the feelings of so many of his peers, Kinsey says “John Conlan is a great operator - he’s the closest thing this industry ever had, and maybe ever will have, to a guru.”

The starry-eyed CEO soon overcame his distress at the break-up of the company where he had toiled for some 15 years and he and his executive directors - Commercial Director Roger Dyer and Finance Director John Smith - under the chairmanship of leisure industry über-entrepreneur Nick Irens, knuckled down to the nitty-gritty of being Dad rather than midwife. They now preside over a business that boasts 43 large-capacity clubs, a handful of feeder bars and 2,500 staff.

Grade says of Kinsey “I formed the view very early on that, in Paul Kinsey, we had a potential successor to Mike Payne. He is a born leader, he has an eye for detail and isn’t afraid to be unpopular if he has to be.” Kinsey himself takes a measured view on Grade’s time at the FLC helm. “Michael’s style was empowerment, which works fine in TV where you are surrounded by creative people. But many First Leisure people weren’t naturally creative. They are great operators but they made a limited range of decisions, and didn’t know which direction to go in without being told. The lesson I learned was that empowerment is wonderful as long as you set boundaries.”

Would he, then, as a senior operator, take some of the blame for FLC’s demise? “Let’s just say I used to have lively debates with the other executives! In any big company there are people who believe in playing it safe, but that’s not my style. I stick my head above the parapet and if it gets knocked down, I stick it back up again. That’s the way I am. I don’t fit well into the corporate box of doing as I’m told, I like to take chances when I believe the upside is greater than the potential downside.”

Paul Anthony Kinsey was born in Swansea, south Wales, in July 1960. He left the local comprehensive school with 3 ‘A’ levels and an offer to study at the University of Aberystwyth. He graduated in law in 1983 and was set to join accountants Arthur Andersen until a major car accident caused him to take a new look at his life. Involvement at the sharp end of concert promoting at university led him to consider a career in leisure and he became a partner in the Kings Hall venue in Aberystwyth, where he ran discos at weekends and presented live bands, including China Crisis, Shakatak and UB40, during the week.

He wrote to three companies in his attempt to forge a career with a leisure corporate. “I had a letter back from Bass with a start-date, but First Leisure got in first, with an immediate interview. I’m still waiting to hear from Mecca…” He started with FLC the following Monday as a trainee at the Avenue in Gillingham.

Travelling via Bradford, Watford and Sheffield, and Area Manager-ships in nightclubs and bowling, he landed in Blackpool in 1990, joining newly-appointed MD Roy Page in turning around what Kinsey calls “the basket-case of businesses” that made up First Leisure’s Resorts Division - which included the prototype Brannigans, then an albatross taking a meagre £6,000 a week. “A number of people didn’t think Brannigans would work outside Blackpool - I knew it would work anywhere", Kinsey says. “So we persuaded them to do Chester as a one-off. We opened in 1994 and it did £60,000 a week!” Later that year he joined the company’s Family Entertainment Division as Operations Director, becoming Divisional MD 6 months later, and in 1999 began the trek along the Mike Payne succession trail.

Backing for the MBO came via venture capitalists Candover, who put together funding to the tune of £210m. “Candover has been involved with a lot of sexy leisure deals lately; they see leisure as an underrated sector” he says. First Leisure’s board now also includes new-media sage Damien Harte, the boss of e5, Channel 5’s interactive service. (Kinsey’s fit of giggles at my next comment confirms that the irony of having a broadcaster back on the board is not lost on him!)

“The first thing we did once the deal was done was to explain to everyone what had happened” Kinsey recalls, “after all, the people are the company. We signed at 3pm on a Saturday. By 5pm, all the executives had been contacted and they called their managers. The last thing we wanted was for people to read it first in the press.”

Industry pundits fully expected Mike Payne, now a non-executive director of Luminar PLC, to join Kinsey on the board of ‘new FLC’, but it was not to be. “I have immense respect for Mike Payne, he’s passionate and knowledgeable” is all he will say.

How would he respond to those who claim that Payne has been brought into Luminar with the sole purpose of acquiring First Leisure? “I can’t imagine why Luminar would need Mike if they wanted to acquire us. I think Luminar would love to have us - they wanted us before the MBO - and who wouldn’t want to buy the jewel in the industry’s crown?” So would he entertain an approach? “If someone was to make an offer for the company, we would look carefully at the value for our shareholders” he says, echoing the words of company CEOs since time began. “There’ll always be a lot of talk linking us with other companies, because we’re the only private equity-backed organisation of any size in the marketplace. It’s a gossipy industry and people love to speculate. In actual fact…” he continues objectively “…people might be better advised to pay more attention to wondering who we are going to buy, rather than who might buy us!”

Trade was good in the first half of 2000 and there were few management changes. All the incumbent GMs were interviewed by Kinsey and the then Operations Director Bill McGregor, to set objectives for their businesses and examine strengths and weaknesses in performance. Then came the summer, which slaughtered the whole industry thanks to high-profile sporting events, changeable weather and, not least, the Ibiza/Ayia Napa factor. Was, as was rumoured, the summer worse for First Leisure than for others? “There is no evidence to confirm that” Kinsey says; “take a look at most of the towns where we compete with other businesses and you’ll see that we do better, whatever time of year it is.”

“Candover are very happy with their investment” he says, when asked whether the suits are still saluting one year on. “We’ve over-achieved in our first year. I speak to them weekly and we meet once a month. Venture capitalists are not there to run a business, but they’re always interested in how the business runs. The more they can learn, the more knowledge they take into their next deals. There would be something very wrong with a company if its investors weren’t interested in what was going on!”

But people say, I venture, that First Leisure is still having a tough time. “Absolute nonsense” he retorts. “We demand higher levels of income and growth from our businesses than any other operator. We have a few underperforming units, just like everyone has, and it’s up to us to sort them out.” Disposals are considered “only if we feel we do not want to trade in that particular area long-term and think it better to concentrate management time and skills elsewhere.”

Kinsey owns up to having “a small number of businesses” currently on the market. The company’s debt is, says Kinsey “considerably less than the industry norm” and, to pay this down, he is looking at sale/lease-back deals for a number of properties, including the monolith that houses Equinox in London’s Leicester Square. Grug Davies, the company’s incisive Property Manager, is also addressing other matters - Kinsey’s comment on the rent paid to First Leisure by the Empire cinema is that “it was probably a good deal at the time” - and any additional capital released or achieved will be used to develop or acquire new businesses, adding to the £30m already earmarked for expansion and new-product development.

In a business already identified as gossipy, several of First Leisure’s competitors claim to be in the know regarding turnover figures for Kinsey’s units. He comments “I am a firm believer in the confidentiality ethic and if I thought people were consciously leaking information, I would take action. But I don’t believe it happens. The trouble is that some people in this business are like kids - showing off, pretending they know more than they do.”

The controversial departure in November 2000 of Operations Director Bill McGregor put Kinsey in the operational hot-seat and prompted some to question the wisdom of a CEO running a business day-to-day. The anomaly was being addressed as DI went to press, with Mick Jordan being confirmed as one of two Operations Directors that will split the country by north and south. “There’s no argument about it - it wasn't practical long-term” Kinsey comments. “We could have brought someone in immediately Bill left, but I wanted to get my culture disseminated at first hand, rather than someone else having to learn it and then pass it on.” Clearly happiest promoting from within, Kinsey says "the trouble with our industry is that it doesn’t have a very good track record of developing senior executives. The business needs senior people who understand it - it’s not like selling toilet-rolls!”

Kinsey pours scorn on scuttlebutt that suggests the industry in general - and First Leisure in particular - has a worsening problem with public order issues. “I don’t accept that there’s been an increase in incidents” he says. “FLC sets the industry standards for control and has done for the past 15 years. We talk to the police on a monthly basis in every town and meet with them quarterly. The trouble is that high-street yobbery has become more high-profile - where you have several bars in one high street, there is going to be more of an opportunity for difficulties.

“Our doorstaff team were completely changed at Edinburgh following an incident involving a doorman and a customer, and there was a shooting in Bolton - it just happened to be in our car park, but could have been anywhere” Kinsey says, when I mention two specifics. “You can never prevent things like that, but you have to manage the circumstances.”

“Ian, listen” he says suddenly, leaning forward. “You must understand that there are people who used to work for us, people who would have loved to have worked for us, people who would love to have owned us, all who may chose to magnify, for personal reasons, anything bad that happens at First Leisure. Our reputation with our customers, the statutory authorities and the police is, without question, the best in this industry and it will remain so. We were the first company to use drug dogs and we also employ covert security teams. But some people have a vested interest in having a pop at First Leisure - and if they’re that worried about how we’re doing, it’s flattering!”

On the subject of management recruitment and the hoary old issue of luring opposition management with inflated salaries, Kinsey opens up. “We see managers from our competitors, as indeed our competitors interview our managers - it’s the way of the world. I won’t discuss individual salary levels, but I have heard some preposterous figures being bandied around that we’re meant to be paying! We will always pay the rate for the job and we do pay more than the rest of the industry, because our expectations are very high. Our units are better than everyone else’s - and so are our profits! Our retention rate, operationally and corporately, is high and we have not lost any management of significance recently.

“The challenge facing every major company in leisure today is to attract good people and retain them. Everyone who works at Woolworths knows how to become a Woolworths manager, bank staff know how to become a bank manager - but we have students working behind our bars, intelligent people, and it never crosses their mind to run the business they’re working in. We’re starting to address this internally, but it must be a practical, all-industry effort.”

Kinsey sees the way forward for the industry as one of responding to customers’ demands, with constant attention to quality of entertainment a vital cornerstone. “Music is an integral part of the product we offer. There are a number of people in this industry who believe that, unless you’ve had a genetic implant that makes you a music guru, you can’t understand the nuances of the nightclub market. In fact, learning about music is no different to learning about anything else - it’s not an unteachable skill. People must understand, though, that tastes are different town to town - there can be no single music policy.

“The growing market itself and the effects of deregulation will force every nightclub operator to respond to the public’s mandate - you have to be the best if you’re to succeed” he says. “Without question, there will be rationalisation - and we will be there, as a player. But I will not use our shareholders’ money just to get a headline in the trade-press - we have turned down a load of potential acquisitions recently. We’re only interested in large-capacity venues that have the potential for long-term, sustainable profit-growth.”

“We will” he says, summing up the company’s future succinctly, if cagily, “be involved in large-capacity, late night entertainment venues in a number of different formats. They will be multi-faceted and represent the best in entertainment. When Leeds and Nottingham open, you will see a total departure from traditional First Leisure design. And the next generation of venues, opening in the autumn, will have evolved even more.”

Now that the letter ‘e’ is legal again in the nightclub industry, e-commerce arrives in the shape of Applebelly.com, a nightclub culture and listings website, which is covered elsewhere in this issue of DI. Financed by First Leisure, but operating as a totally separate entity, the company is run by Managing Director John Hazell and veteran former First Leisure Regional Manager Mike Hilkene. Kinsey is clearly an enthusiastic and motivated investor. “Applebelly is an extremely exciting project, the first time there will be a nightclub industry internet opportunity which is well resourced, credible and which independents can be a part of with no risk” he says.

With speculation rife as to the timing and terms of an exit for Candover, Kinsey has identified his three key options - flotation, a trade sale or a re-leverage (where another venture capitalist assumes the financial reins). “What we do will depend on the circumstances at the time. If leisure is, by then, held in higher regard by the City than it is at present, then flotation would appear a sensible route.”

Kinsey names his high point of the past year as the level of take up for equity in the company by management and staff - 87% of the available shares were spoken for. And he thinks for a full minute before saying “There haven’t really been any low points.”

“A year after you’ve had a baby, the pain of the birth is long forgotten and all you can see is this being developing and growing” Kinsey says. “Women scream ‘never again!’ in the delivery room, but they don’t mean it. I’d do it all over again, no question. And, really, it’s only just the beginning.”