Mark Daniels: Sometimes, it's better the devil you know...

Related tags Pub companies Formula one

In Formula One at the moment, there's a heady political game being played. The FIA, the sport's governing body, have decided that a budget cap must...

In Formula One at the moment, there's a heady political game being played. The FIA, the sport's governing body, have decided that a budget cap must be introduced next year to provide a fairer playing field. Ferrari, a company founded solely for the purpose of going racing - especially in Formula One - are not happy about this and have thrown their toys out of the pram. It's unsurprising, given that the cap reduces their budget to just 10% of their current spend.

Declaring it anti-competitive they've announced that, if the cap stays in place, next year they won't come out to play.

Max Mosley, head of the governing body, has stated that Formula One can exist without Ferrari. This is a brave thing to say: certainly, as a business, the sport would survive without them - but it would not be the pinnacle of motorsport as it is today. Ferrari is synonymous with Formula One, the sport owes them a lot of credit, and although there are other teams waiting in the wings to come in if the cap goes ahead, F1 without Ferrari will not be as marketable as F1 with a team called iSport.

In a high-powered game of brinkmanship, the FIA and Ferrari are locked in a staring contest, waiting to see who blinks first.

This week, the Business & Enterprise Committee (BEC) have announced that the beer tie is unfair, that it is biased against the licensee, that it is anti-competitive and that the situation must be put before the Competitions Committee.

A victory cheer was raised across all tied licensees - and their supporters - as the report emerged, and a slap on the back is definitely due to the people who worked hard to get this serious matter raised before those who can help make a difference.

As a tied-licensee, I couldn't help but smile with some relief when I thought about what this might mean to my bottom line.

And then a shudder crept across my spine. What if the pubcos, faced with a potential 'budget cap', decide to throw their toys out of the pram?

I have never argued against the tie in its purest form. Without the tie, I wouldn't have been able to buy in to my business, in to a pub my wife and I adore. The principal idea of the tie is not too far removed from the idea of a franchise - if you buy in to an ATS franchise, they're not going to be best pleased if you choose to stock Kwik Fit bits; likewise, a Greene King tied tenant is not going to be allowed to stock Adnams. (Much to the disgust of my mate Jimi.)

The huge flaw in the tied model is the stifling cost of product that we are contractually obliged to buy from our pub companies. Without doubt it makes making a living ridiculously difficult and, during quiet periods when high dray bills and rents are still being sucked from the bank account, things can get very frightening.

But it's easy to be swept up in the emotions of running your own small business, and that makes it harder to step back and look at the wider picture. It brings a tear to your eye when you wander in to Booker and realise that the beer you are buying from your pub company is more than double the price of that in the cash & carry and, combined with high utility and running costs, making ends meet whilst providing a competitive price at the tap is bloody difficult.

With the threat of the tie being removed now looming imminent, some pub companies may well be looking at their options. Some may consider selling off small or poor performing pubs to management companies; some may consider changing the contracts of their existing tenants, possibly to the detriment of the small business man.

Right now, my rent constitutes roughly 15% of my weekly turnover; the threat of that increasing is worrying to me. But I get free cellar and property maintenance. If something goes wrong in my cellar, I pick up the telephone and a man turns up and plugs it back in for me. I don't get charged for even the most basic of service or property needs. Pub Companies may choose to fore-go these inclusive services in the event of the tie being removed, and instead introduce punitive maintenance contracts or call-out charges to make up the difference.

As a tied-tenant I already pay through the nose for these 'free' services, but take away the tie and I might end up paying more in insurance policies.

I have a good relationship with both my landlords and my BDM. We're working well together at the moment and I am receiving an excellent level of support from them; I'm aware that there are many out there who aren't, and I would never go so far as to say I'm happy with the price I have to pay for product. I don't mind paying a bit more as a tenant, but when some products cost in excess of 100% more than other areas of the trade that is clearly grossly unfair.

The beer tie certainly needs to be reviewed, then, and I welcome that with as hearty a cheer as any tied-licensee would. But whether you work well with your pub company or not, in the absence of being able to tie you to their beer they may well tie you to other exceptionally high costs for maintaining or servicing your premises and equipment, not to mention a readjustment in the rate of rent you pay...

Like Ferrari and the FIA, a battle-of-the-blink contest is about to be played out by the pub companies and the Competitions Commission.

Cautiously, then, I think the BEC's findings are excellent news for the industry, especially those of us who are tied. But, sometimes, it's better the devil you know...

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