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News Article Comments : Pubcos bite bullet on AWP tie
A host of tenanted pubcos are to make changes to the AWP machine tie in the wake of the critical Business & Enterprise Committee report on tenant/pubco relationships.
The MA has spoken to a number of tenanted operators who have changes planned, largely based around not rentalising machine income. One operator, though, is considering rentalising AWP income, but allowing its tenants 100% of the machine earnings.
Charles Wells Pub Company this week followed the lead of Punch in promising not to rentalise tenants’ machine share. It will still share the income with licensees, but no longer take machine earnings into account for rent calculations.
A Charles Wells statement said: “The company has reviewed its machines policy, covering retailer agreements on amusements with prizes, skill with prizes, pool tables and jukeboxes.” The company said while it will continue to share machine income, the licensee’s income from all of these machines will not be taken into account for rental calculati
14 Posts(s) found for this thread: Now displaying page 2 of 2
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info man 25/06/2009 11:24:13  |
RE: Pubcos bite bullet on AWP tie Under the current system the pubco take 50% of your profit, royalty payments, admin charges and 5-10k on your rent. Do you really think this will hurt them? They get their money in rent even if you dont make it. This post replies to Philip Sambell > RE: Pubcos bite bullet on AWP tie |
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Brian Jacobs 25/06/2009 11:34:46 |
RE: Pubcos bite bullet on AWP tie Some of the pubcos take a royalty from the AWP operator and that royalty is then applied to the rent thus increasing the rent to a much higher figure than a free of tie tenant would pay. That is pay pot one. Some pubcos then make sure that when the machine is emptied they take a slice of the income.That slice should be accounted for in the profit and rent assessment but frquently is not. That is pot two. Then the income that the tenant receives is included in the profit assessment, then into the rent computation and the pubco takes a half. That is pot three. The total of those three pots can be the equivalent of 90% of the income after deducting what would be the fair and proper rent. It follows that by releasing the tie on the AWP machines there is every possibility that there should be no amendment to the rent payable by the tenant. Any pubco that wants to go down the road of reviewing the rent should at the same time make sure that a full "Value Equation" is produced to demonstrate that cost of the tie to tenants, the wet rent (wholesale price differential) plus AWP income paid by tenants to their pubcos, is exactly counterbalanced by the benefit of the tie to tenants, lower rent plus special commercial or financial advantages (SCORFA). This ‘value equation’ is essential to prove that the countervailing benefits that the tenant receives leaves them in the same position as if they were not tied at all. Removal of the tie for the AWP machines is just the first step. The second is to remove all supply ties!!! This post replies to this thread |
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| info man 25/06/2009 11:40:06 |
RE: Pubcos bite bullet on AWP tie The pubcos are not willing to entertain what was asked of them five years ago and have sought to cover the issue with smoke and mirrors and misinformation. I signed an agreement where we were to share 50/50 in the profit, i did not sign to have an additional 5k added to my rent for the pleasure of having an updated shabby machine which we pay top price for. This goes against everything the pubcos said at the TOSC inquiry and proves they will not change. Join the GMB, group up and kick them out. This post replies to Brian Jacobs > RE: Pubcos bite bullet on AWP tie |
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Ewan Turney 25/06/2009 13:11:26 |
RE: Pubcos bite bullet on AWP tie Just to clarify, there is a small correction on the article in regards to Marston's. We would like to clarify that Marston’s gaming machine income previously published in the above article was incorrect. The AWP income is £5m, 7% of EBITDA and not £8.3m and 12% as previously reported. Thanks Ewan edited by: Ewan Turney at: 25/06/2009 13:11:35 This post replies to info man > RE: Pubcos bite bullet on AWP tie |
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