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Hydro chief's legacy will live on after he goes out on high note

As legacies go, a 12,000-seater arena is pretty good going.

HIGHLIGHT: Opening night at the 12,000-seater Hydro has been the high point of John Sharkey's time as chief executive. Picture: Martin Shields
HIGHLIGHT: Opening night at the 12,000-seater Hydro has been the high point of John Sharkey's time as chief executive. Picture: Martin Shields

And the SSE Hydro's achievement in its first year of making the list of the top-five concert and event venues in the world has ensured John Sharkey, who has run the Scottish Exhibition and Conference Centre site since 2008, can exit the stage on a high note.

The announcement last November that Mr Sharkey was quitting as chief executive of Scottish Exhibition Centre Limited, a company 91%-owned by Glasgow City Council, came as something of a surprise.

It was made only weeks after he had been able to declare victory in the race against time to complete the 12,000-seater Hydro in time for Rod Stewart's opening concert on September 30. And he is leaving before the SECC site plays its crucial role in this summer's Commonwealth Games.

There has been plenty of speculation about friction between Mr Sharkey and the council, notably over the issue of his pay. The SECC chief executive became a headliner himself in summer 2012 when it was reported that he had been paid a bonus of £85,000 on top of a salary of £190,000 for the 2011/12 financial year.

Sitting in his office at the SECC, Mr Sharkey seems relaxed as he reveals his plans for the future.

Perhaps not surprisingly, the 48-year-old is planning to develop a private equity-backed venue management business. Mr Sharkey aims to run this from Glasgow, alongside a consultancy business that he also plans to create. He declares that he wants to "leverage" the contacts and skill-sets he has built up during his time at the SECC.

Mr Sharkey, who joined the SECC in 2002 before being promoted to the chief executive post in May 2008, highlights the fact that the NEC venue at Birmingham has been put up for sale by that city's council.

He views this as a "real test case" for other cities in which there is public ownership of major venues.

Mr Sharkey believes that, amid tight public sector budgets, owners of venues might welcome a cheque and some private sector participation.

He highlights the potential for a private equity-backed management company to run several venues, in conjunction with some local input, declaring that it would be dealing with the same supply chains and commercial partners.

Mr Sharkey steers clear of passing an opinion on public versus private ownership in the context of the SECC site.

However, there is no doubting that his experience of what makes a major venue tick will stand him in good stead as he goes off to take up what he describes as his next challenge.

He declares that he and his team "definitely over-achieved" in delivering the SSE Hydro. They resisted any temptation to "torque up" the business plan forecasts to make the project fly.

As a result, he says, the management team is able to make decisions based on what is best over the long term.

Mr Sharkey points out that the original target for annual commercial sponsorship revenues was £300,000.

He notes that the Hydro had notched up sponsorship revenues of just under £3 million per annum by the time it opened.

Mr Sharkey also highlights the fact that he and his team have secured a further £1m of annual revenues from the VIP boxes, and nearly another £1m per annum from club seat sales.

He is confident that research by Pollstar magazine will put the SSE Hydro in the top five venues worldwide, in terms of the number of people attending concerts and events.

Beyonce, Michael Buble, Nickelback, Bullet For My Valentine, and The Proclaimers have been among the many other acts to play the Hydro already.

Mr Sharkey cites the SECC's success in attracting conferences to Glasgow. However, he flags up potential to do more to fill the "sheds" with more exhibitions.

And he is in no doubt the SECC site is in robust financial health as he prepares to take his final bows and hand over to Peter Duthie, who has been commercial director since 2008 and was unveiled as the new chief executive this week.

Mr Sharkey, who has a leaving date of April 18, says that SEC Limited will have made a "couple of million" pounds of earnings before interest, tax, depreciation and amortisation (EBITDA) in its financial year ending this month.

He notes that this figure will be down from 2012/13, when SEC Limited made EBITDA of about £2.5m, because of the set-up costs for the Hydro.

However, Mr Sharkey projects SEC Limited will post EBITDA of around £10m to £12m for 2014/15, as it enjoys the benefits of the first full financial year of trading from the Hydro and the Commonwealth Games.

Declaring this anticipated 2014/15 result would be "four or five times our best year ever historically", he adds: "Next year is going to be a pretty spectacular year for us."

If Mr Sharkey worked for a private sector organisation, his pay would be highly unlikely to have generated many, if any, column inches. He appears to respond diplomatically, when asked about the controversy over his pay and whether SEC Limited's ownership by the council has put restraints on his remuneration.

He says: "I would make no particular comment on that, one way or the other, other than to say, whenever you benchmarked the small team in Glasgow against their peer group at other venues in the UK, we were hell of a value for money."

Mr Sharkey adds: "You can't benchmark this business with the public sector, not least because none of the staff are in government-sector final salary pension schemes.

"It is not the main reason for moving on to the next challenge but it is something that people need to understand. There was a lot of heat and a lot of comments about the remuneration of the senior management team and me in particular at the SEC...We were well under comparable venues in the UK, and without the retirement value that comes with public-sector final salary pension schemes.

"We were entirely good (value for) money, especially when we were continually delivering success and a major project which has generated great financial performance for the company, and also great economic impact and wealth creation for Glasgow and wider Scotland."

Mr Sharkey does not have to think for long when asked about the high point of his time at the SECC.

"The first night of the Hydro," he declares.

Asked about his reasons for leaving, Mr Sharkey replies: "There has been a natural break-point with the completion of the Hydro.

"I have been very focused about where my career needs to go, and the challenges I look to get. I see the next challenge and focal point for my career is getting the leverage ... off the contacts I have built up, and skill set."

He adds: "It is right to pass on the baton to someone who can take the completed business model and take it to the next level."

Mr Sharkey, who was employed by transport company FirstGroup before joining SEC Limited and worked previously for Scottish Enterprise's Forth Valley operation and accountant Ernst & Young, is well aware he is not taking the easy route with his proposed new venture. However, he declares there will never be a better time to try.

He voices his pride at the employment created by the SECC. The building of the Hydro, he notes, has increased the permanent workforce by about 20 to 180. On a performance night, another "couple of hundred" people will be working at the site.

The SECC has had its fair share of top-class comedians passing through, including Kevin Bridges and John Bishop.

For Mr Sharkey, the serious business of running the SECC has also provided "comedic" moments.

He reveals: "There was a floor display, an art display, of empty drinking bottles and rubbished-up paper, which the cleaners decided to chuck out overnight, and needed some impromptu reconstruction before doors the following day."

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