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If offered a free of tie option it seems the pubcos will have to offer a rent review to accompany it - in some cases this will mean an increase in rent BUT to open market rental value assuming free of tie. My pub income to the pubco is around £130,000 (rent plus £200 per barrel) split roughly 38:62 (that's about £50k and £80k). I know my tied rent is 'toppy' and my free of tie, independently valued by three different surveyors, would be a little more, average valuation £63k (around a 26% increase). I have shopped around and estimate on my barrelage without joining any 'purchasing group' I can get an average discount of £150 per barrel. I seem to be better off by around £60k although I will have to forgo all those fantastically attractive 'countervailing benefits'. I don't doubt some skeptics amongst us will sat there are unforeseen consequences, however, my choices are 1. remain on the poverty line 2. take a flyer on going free of tie which thus far I have seen nothing but smoke and mirrors trying to discourage me. Let us consider Enterprise Inns income, published in their accounts, £818 million of which £231 million (28%) is rent and £564 million is profit derived from the tie (69%). Lets increase the rent 26% (like mine) across the board = free of tie rental income £291 million and lose the profit derived from the tie to 0. In exchange for a £60 million increase in rental income they have lost £564 million in profits. Obviously an extreme scenario but looking more realistic every day ! ROBIN

James Am I missing something ? What's the big deal - who ever 'leaked it'. As the article says, it was Chatham House Rules - do you even know what that means. Let me educate you, as clearly you don't; "When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed". Talk about making something of nothing ! Get a life. For the sake of clarity perhaps the MA would like to sor this whole sorry affair out and either confirm their source or that Fair Pint was or was not the source - Ewan ? Robin

“The tie is not the issue for most of our tenants." If I recall correctly Mr.F you have sold off over 20% of your tied estate in the last 3 years, whilst proposing a £140 million expansion of your managed house estate, thats 60 new MANAGED pubs. Why not give your tenants the option of going free of tie then ? Surely you have nothing to fear - they all love it and would not dream of losing all those wonderful countervailing benefits (beermats and bunting !) "I would separate the price of beer from the issue of the tie." Why not introduce a price structure that mirrors the wholesale price offers, effectively putting your tied tenants in the same position, price wise, as being free of tie ? You could then offer benefits as bolt on's to those that want them. "The issue is the price of beer plus the level of the rent. At Marston’s, we’re trying to deal with that through some of the new lease agreements we’ve introduced in the last year. The aim is to take pricing off the agenda, but that can be done without looking at the tie.” It can be done by getting rid of it far easier and the rent would simply reflect open market rental value free of tie instead of a pre determined inflated rent that you are prepared to accept in the absence of the tie. "Ending the tie would put the power in the hands of the big global lager brewers, who would ramp up prices." What poppy ****, over a third of the pubs in this country are not tied the 'big globals' do not control that market why should they control it if it were all untied ? Still quite an admission that you consider there is a problem, it is price related and your tenants are unable to alter things as they are tied. Well done for stepping away from the pubcos who still maintain everything is rosy. Robin

"Has anyone considered the fate of licensees if a pubco put into administration ?" I have - I could buy my pub freehold from the administrator free myself from the tie, rip out that stupid Brulines system that is about as much use as an inflatable dart board, and dare I say it make myself a decent living ! Sold off to "...property companies, who would immediately and brutally enforce their agreements." rather than stay in the hands of the property company that is consistently brutally enforcing their agreements now, sometimes beyond the law. Erm, Phil, HELLO !! where you been ? Robin

Hi Sam I think on issues as complex as rental valuation you probably do need to be an expert to fully understand them - and I don't doubt some experts have differing opinions. As for passing comments, fair enough you don't need to be an expert to say you think your rents too much. Old Nick though is commenting as an apparent expert and some readers may be reading his article in the misguided belief that he is the font of all knowledge on the subject. He has obviously been well advised on some of it, the split should not be formulaic - despite ETI relying on that for the last 15 years or so the RICS report quite clearly says that 50:50 split is not set in stone so I guess they have to at least appear to agree with the word from on high. "Every pub is different and rental bids should be a reflection of profitability, desirability of business, the sustainability of future business and prevailing market conditions." Again I reckon this is a clear regurgitation of the RICS report and seems like common sense to me. Yet still ETI are going in to rent review negotiations, BDM to tenant with the mythical 50:50 split - have you ever heard different ? "It should be based on what the open market would pay for the profit opportunity of that business" Almost - if you read your lease it assumes a COMPETENT tenant and I think we all agree with the principle, outlined in Brooker, over optimistic bids do not necessarily make appropriate open market evidence. A competent tenant would not over estimate turnover and GP or under estimate costs and would, in all but a few cases, seek professional advice before signing a lease. The pubcos are seeking to rely now on 'open market' as their method of keeping rental levels up since the 'split' loophole is closing as we speak. I for one will be happier to rely on the outcome of the revised RICS guidance rather than the manipulation of the valuation model by a pubco rep. Robin