HE WHO WOULD VALIANT BE

Maurice Kelly has a history of turning things around: from motorway service areas and golf club chains to internet cafés and Weightwatchers. Now he’s taken on Rileys, the snooker hall business - and has put his third attempt to retire on the back burner.

“As for revenue streams, 30 %of turnover is generated by bar sales with the rest from membership fees, pool and snooker table revenue and fruit machines”

Rileys is slowly changing from snooker and pool hall to swish sports bar, offering those who like darts, English and American pool, snooker and 3D televised sports from Sky with what amounts to the ultimate venue. And with so much doom and gloom surrounding the licenced trade at present, Rileys offers a much-needed dose of optimism. In fact CEO Maurice Kelly believes that the recession works in Rileys’ favour ; he believes that the adoption of 3D television at home will be slow. Furthermore, he argues that Rileys acts as a kind of shop window for Sky - ‘which works to our advantage a bit’.

“This feels like the family business to me,” said Kelly who is a third owner of the Rileys empire. We were sitting in an impressive-looking Rileys in Belgravia, a two-floor space crammed with darts, snooker and pool and offering 3D flatscreen televisions and an impressive 102in cinema screen with surround sound in the Fanzone.

“Sky’s not enough anymore, you’ve got to blow socks off,” said Kelly, adding that 3D projectors are just around the corner for Rileys. Most of Rileys’ new-look outlets offer 10 to 12 English pool and eight to 10 American, with 10 to 12 snooker tables, between six to eight purpose-built ‘dart throws’ - one unit has 10 - and tiered seating in front of a 102in cinema screen. “It’s the equivalent of a really good five-a-side pitch,” Kelly said. “This is definitely not jumpers for goalposts,” he added.

Kelly is doing an excellent job of turning Rileys around, but it so nearly didn’t happen. He was two weeks away from his umpteenth attempt at trying to retire and move to Switzerland, having sold his shareholding in Crown Golf, when, in 2008, the telephone rang. Greenhill and Hambro had bought the Rileys business from Georgica (who also owns Megabowl) and had paid a low price for the chain. At that time, the snooker chain was suffering because of the smoking ban. Turnover was down and Kelly suggested that they sent him the figures, which they did. It seemed like a straightforward job, so he put his retirement on hold (again) and got cracking.

“Within eight weeks of joining, the bank that had funded the debt went into administration. Royal Bank of Scotland had provided a working capital loan and I’m thinking the costs are coming down, but we’re about to hit a brick wall,” said Kelly. That said, he bought in to the project with his own money and owns a third of the business.

“We had the ability to put the business into pre-packed administration and this enabled us to close 35 of the 165 Rileys outlets we’d bought, bringing the number of units operating to 130,” said Kelly.

He was able to re-negotiate realistic rents with existing Rileys landlords - there are no freehold properties - and reduce head office costs. The existing HQ was costing a fortune but has now been streamlined in terms of staffing and moved to a more modest building, but still in Milton Keynes. “It’s nice and tight,” said Kelly.

The original challenge for Kelly was to identify the opportunity. Rileys’ core business was snooker, a sport in decline for a variety of reasons, but largely because of poor exploitation on television. Having said that, snooker ace Ronnie O’Sullivan is sponsored by Rileys and has become an ambassador for the brand.

Kelly argues that snooker has become a ‘sport for geeks’ and that you have to set aside three weeks to watch it. Snooker clubs are in decline and the smoking ban, he said, has blown through snooker’s world like a blizzard. There is, however, light at the end of the tunnel in the shape of Barry Hearn. “I’ll back anything he does,” said Kelly, pondering whether or not Hearn will turn snooker around. “Look at what he did for darts,” added Kelly.

So far, 50 old Riley’s snooker halls have been converted into the new-look sports bar operations with Fanzones and Dart Zones. These outlets, claims Kelly, represent ‘Bloke World’ and are the equivalent of Dave (the TV channel) in the High Street. And the formula seems to work. During this year’s World Cup, 25,000 people turned up to watch the football in the newly converted Fanzone Rileys. “It was fantastic,” said Kelly, adding that in non-Fanzone units it was truly awful.

Put simply, the new-look Rileys are all about ‘beer, balls and banter’ and there are more on the way. With 46 converted now, another batch will be done before Christmas and then the rest before summer 2011. Kelly is looking for new sites too and plans to build the Rileys chain back to 165 units in all four corners of the UK, from Inverness to Exeter.

“We’re not in Newcastle or Leeds,” he said, but it’s not necessarily all about prime sites. While cities like Manchester and Liverpool are big football cities, it’s places like Benfleet, where there is not a great choice of bars, that Rileys will score.

At the moment, Kelly is running two different kinds of Rileys outlet, which he describes as the horse and the cart; the former - the new-look outlets - having sufficient pull for the ‘cart’ as represented by non-converted units. Business is good with sales up 200 %and doubledigit growth experienced in September and October. There have been three months of year-on-year sales growth as a total company, said Kelly.

Rileys’ membership is impressive with 565,000 at present, and it is estimated that it will rise to 600,000 by the end of the year.

In advertising and marketing terms, Rileys is running campaigns with TalkSport and a couple of red tops as well as television advertising on Channel Five and a joint promotion with TalkSport on Samsung’s website. Phil ‘The Power’ Taylor is sponsored by Rileys and makes regular appearances at unit openings.

Food distributor 3663 has done a lot of food development work with Rileys with the aim of providing a range of quality menu items designed for easy preparation. Table talkers and menus promote the food offering to members at unit level.

As for revenue streams, 30 %of turnover is generated by bar sales with the rest from membership fees, pool and snooker table revenue and fruit machines. Kelly describes himself as a ‘turnaround’ guy, somebody who goes into a business and turns it around, making it a profitable enterprise. He has an impressive track record, having started his professional life as the manager of one of Primark’s busiest stores in Belfast and then working with Gerry Robinson at Granada, turning around the fortunes of the motorway service area business before joining Stelios and getting to grips with Easy Everything (embracing internet cafés, car rental and finance).

His first experience of a membership-based business was when he was appointed CEO of Esporta running 70 outlets. The problem there, he discovered while posing as a potential member himself, was not retaining members but attracting new ones. He got the obligatory tour of the club, but nobody took his details or followed up his enquiry. In the end, however, he increased Esporta’s share value by 100 %in 12 months before moving on to Weightwatchers, a $5bn business with a presence in 13 European countries, where he streamlined the operation and created greater efficiencies. Prior to taking on Rileys, Kelly moved into the world of golf with Crown Golf. The company had eight courses and bought the UK arm of Goldman Sachs’ American Golf Corp, which had 23 golf courses. “It was all about outreach and getting people to try golf,” he said, explaining how taking the pomposity out of golf was also a key goal. Some of the courses were re-engineered.

Crown Golf attempted to buy Clubhouse, which was sold to Anglo Irish Bank and became Club Company. A later plan to sell Crown Golf was rejected by its Australian venture capitalist backer, so Kelly sold his shareholding and tried to embark upon his original retirement plan. Along came Rileys and the rest, as they say, is history.