Coldplay were "too ordinary" to get a recording contract.
Blur bassist Alex James - who briefly owned a label with friends in the 90s - said he and many other senior music industry figures turned down the chance to sign the 'Viva La Vida' hitmakers, who are now one of the biggest groups in the world.
Alex said: "I went to see Coldplay with Damien Hirst and Joe Strummer - my fellow record company executives - and we all thought they were ordinary and passed on them. I think everyone did, except Parlophone, just like what happened with The Beatles - and Blur!"
Despite his gaffe, Alex doesn't regret not signing the band - fronted by Chris Martin - because he still doesn't understand their appeal.
He added: "I still think Coldplay are a fairly ordinary band, although the singer is good. It's quite hard to make a succinct three-and-a-half-minute pop song. The trick, almost no one in town can do, is to write really good words to simple melodies."
Alex has previously admitted he doesn't believe Blur - who released their first album in 1991 - would have such a long and successful career if they had started out later.
He said: "In the current climate we'd have got dropped after our second album, 'Modern Life Is Rubbish', because it didn't sell many copies."
After releasing 'Modern Life Is Rubbish', Blur went on to bring out another five studio albums, including massive hit 'Parklife', before splitting in 2003.
The group - Alex, singer Damon Albarn, guitarist Graham Coxon and drummer Dave Rowntree - announced last year they were reuniting for a tour and possible new album.