Because he was desperately seeking out the New Order or Happy Momdays to pay the bills, and the dance scene wasn't producing one. THe Madchester thing, which was still rock based but with growing dance influence, was still producing cash, lots of it to others not Factory. The Smiths, The Stone Roses, Inspirals, James.808 State...more of those bands should have been Factory.
He'd come from punk, which was over in a year or so, but produced a bigger money making scene in its wake. I think he thought the same would happen. I reckon he took his eye off the ball and misjudged it a bit.
He got wise after a while but he should have been putting out Factory compilations of the house sounds being broken in The Hacienda. His brand name was there. But he likes if Ministry of Sound got there before him and moneterised the music better.
I understand why people think he was a bellend. We all did back then too. He is, in lots of ways. Pretentious, a bit silly, a bit up himself. The financial control he had on those businesses, whilst everyone laughs about the Factory chaos, in truth was pathetic.the amount of cash he generated and the amount he spunked through bad decisions.
But he was a bellend with massive bollocks, and front, and vision and flair, who didn't give a fuck what people thought...he went out and did it, and lived a life worth fucking living.
"Any fool can make money, but not many make history."