Pubcos slated over AWPs

By The PMA Team

- Last updated on GMT

Related tags Machine income Enterprise inns Pubcos

Income share: machine tie is said to be unfair to tenants
Income share: machine tie is said to be unfair to tenants
Machine suppliers have accused Punch and Enterprise of increasing the share of machine income in the five years TISC.

Machine suppliers have accused Punch and Enterprise of increasing the share of machine income in the five years since the original Trade and Industry Select Committee report into the pubco/tenant relationship.

Chairman of the British Association of Pool Table Operators Alan Boswell wrote to the Business & Enterprise Committee claiming Punch increased its royalty charge from £11 per week per machine in 2004 to £16 in 2008.

Enterprise, BAPTO claimed, has upped its royalty charge per machine per week from £22 per week in 2004 to £24 per week in 2008.

BAPTO estimates that the two major pubcos have increased their share of machine takings within their estates from 79.6% in 2004 to 91.4% last year.

The trade body, whose members are largely excluded from supplying the large pub companies, claimed that pubcos realise that the machine tie "is the easiest way to increase the pubcos' income at the expense of their tenants — and the approved suppliers are willing accomplices".

Boswell told MPs: "BAPTO members see many pubs closing, most of them pubs owned by the pubcos.

"We are not suggesting the ending of the machine tie would prevent all these closures but it certainly makes a difference to many tenants.

"The main beneficiaries of the present system are the pubcos who by one means or another are taking up to 90% of AWP machine income and the small number of machine operators who supply the pubcos (approximately 15% of potential suppliers)."

Boswell told the Morning Advertiser: "The system is totally unfair. It's a classic example of the strong taking advantage of the weak."

Kossway, which claims to be the third largest supplier of gaming and amusement machines in the UK, told MPs: "Nominated suppliers have experienced a squeeze of their margins due to the greed of both Punch and Enterprise, who have demanded increased fees paid to themselves in return for allowing the suppliers access to their tied estates.

"Pubcos are, in effect, receiving a double payment in respect of the same space.

"The tenant has already paid for the space occupied by the machine in his lease.

"The pubco is then charging the tenant a further rent on the same space by way of royalties and income share received from machines."

A spokesman for Punch Taverns said: "We are disappointed by the recommendations of the Bec Report and are currently examining the evidence in more detail.

"At our interim results presentation in April we announced that we were in the process of evolving our leased business model, which will include our approach to machines. We will communicate plans in due course."

Enterprise Inns wasn't able to comment.

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