Yates’s honesty in sharp contrast to evasions of our politicians
The “former” prelude to politician is important because it seems to have been liberating, at least when it comes to the honest expression of his position. On Tuesday he did something that few serving politicians would ever dare: he confessed frankly and fully to his personal failings in explaining how his Celtic Bookmakers business tumbled into receivership with debts of €6 million to AIB that the business, and he and his wife Deirdre as its owners, are unable to repay.
His brutal honesty endeared him to many people who heard him and provoked many comments to my radio programme asking why current day politicians would not be as frank about their own performances in office; instead many of them blame others, or circumstances, in an effort to limit their responsibility for their own actions or inactions. They seem to believe that any concession of failure will result in punishment by the electorate.
Let me tell you that privately many politicians say very interesting, enlightening and honest things that might change your opinion of them were you to hear them say them: put them in front of a microphone and they act as if they believe meander and half-truths serve them better.
Yates did a round of radio, television and print interviews explaining how his family business had accumulated its debts before the appointment of its receiver. I conducted possibly the longest of these broadcast interviews, giving Yates more than 15 minutes to explain what had happened and why — and what he fears the future holds for him and his family as a consequence.
Essentially, there are a number of interlinked stories: how the business could not cope financially with the downturn in consumer spending and how, at just the wrong time, he overstretched it with new borrowings to facilitate a dramatic expansion. Now he faces personal financial ruin.
It is a devastating tale, for Yates, for his wife, who has been even more active than him in managing the business, and the 230 or so employees who now face the loss of their jobs, having already endured pay cuts in the effort to save the company. Judging by the tale Yates tells of trying unsuccessfully to find new investors and of failing to sell the chain’s stores then much, and possibly all, of the business may be lost.
Yates bought into the myth of the continued riches and expansion of the Irish economy, investing heavily in it as the bubble expanded in the expectation that the heightened levels of consumer spending would continue and expand further. The very thing that fuelled that catastrophe was central to his own business and its expansion: gambling.
One of the less commented upon aspects of the so-called Celtic Tiger was the willingness of people to speculate in general and not just on property “investments”. While gambling is part of many people’s nature — and has wrecked more people than it has benefited — the willingness of more and more people to “have a flutter” characterised much of the excess of the last decade.
It could be said that Yates’s business was cynical — in that he tried to take advantage of weakness in people — but if he hadn’t then there were plenty of others willing to do so. The opening of hundreds of new betting shops throughout the country emphasised this, at just the same time as many others indulged their gambling weaknesses through use of the incredibly easy to use internet and phone accounts.
Yates suffered from the same weakness himself. He took his gambles in his business expansion. He knew they could go wrong but didn’t believe they would: he could only see himself winning. Why else would he have pledged all of his personal assets and given personal guarantees to the banks in exchange for the loans he took to build the business? How could it go wrong when his business had made profits of €4m in 2006 and had increased its annual revenues to €180m and had 63 shops? And when he had a bank that was encouraging him to borrow because it made profits out of him doing so? He never really thought that he could lose it all.
In hindsight it is easy to see where it went wrong. Despite its dash for growth, Celtic was too small to withstand a downturn that wiped out half of its revenues. It may also have suffered from a fundamental flaw that it did not have sufficient expertise in calling the odds correctly in its favour while pricing its bets. I remember in 2007 bumping into a prominent and highly successful retired bookie who predicted serious problems for Celtic because Yates, while interested in business theories, did not have the instinctive flair for being a bookie himself. The people who run Paddy Power, for example, have that, which is why it has prospered despite the recession.
That is almost beside the point now. Yates fears personal financial ruin, saying AIB want his house, his farm, even the house that his 78-year-old mother lives in. Clearly he has assets — and his Enniscorthy home pictured in this paper on Wednesday looks both wonderful and valuable — but it is a dreadful time to be trying to sell a highly priced asset. I wonder how far AIB will go in pursuing its debts. It may take the approach that Yates be left enough for a smaller home.
There are people who won’t feel sorry for Yates. They will point to his annual receipt of State pensions worth about €50,000 — which are ludicrous given his age of just 50 — but also to the income he earns from media work. I have no problem with his earning money for work as he does it. But it seems that no matter how hard he works and earns in the future he will get to keep very little of it, for the foreseeable future anyway: instead, the money will be diverted to his creditors at AIB to settle his debts.
But what is in his favour is that he did not squirrel money or shuffle money to his wife or other family members. Contrast Yates with the behaviour of former Anglo boss David Drumm as described in his bankruptcy hearing in the US on Wednesday. He had moved over €500,000 to his wife as the house of cards at Anglo began falling. What did she do to earn this? And what of Sean Dunne’s wife property dealings? I should emphasise that I hardly know Yates. I read what he writes for this newspaper each Thursday, and even if I don’t necessarily agree with it I can see that it is argued cogently. We used to have him as a guest on The Last Word as a political commentator, but stopped that when he went to work for a rival station. I see him occasionally around Marconi House where both Today FM and Newstalk are based.
But that doesn’t stop me from being sympathetic. As he wrote in this newspaper on Wednesday, Yates feels as if he has suffered a bereavement — he feels demoralisation, dejection and sadness. I don’t doubt him. The strains of owning and running a family business are underestimated too often. When some people talk of wealth taxes on the owners of business they fail to understand that most have to work extremely hard and long hours for whatever rewards they get — and that when things go wrong it can be catastrophic.
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