Tenant AWP income to fall £1.50 per machine

Pubco tenants will earn £1.50 less per week for every gaming machine when VAT rises in January.

That's according to Ken Mullarkey, national sales executive of the Independent Operators Association (IOA), whose member companies supply 30,000 machines at pubs owned by major tenanted and managed operators.

The IOA earlier stated that tenanted groups would earn £3 less per machine when VAT rises to 20% on 4 January 2011.

Mullarkey has clarified that this applies to tenant and pubco combined. The £1.50 figure for tenants is based on the assumption that income is split equally between them and the landlord.

In managed pubs, the figure is estimated to be £5 per machine per week.

Mullarkey said: "Whilst other industries and retailers are able to pass on [the VAT] increase to the end-user, we are not.

"Price of play is fixed and so our customers will be asked to dip into their pockets yet again.

"This comes on top of the 3.6 per cent hit on Amusement Machine Licence Duty announced in the last Budget, which will impact from September in most cases."

Mullarkey added: "The IOA Group is concerned that this erosion of income is creating an environment in which rentals are coming under pressure, at the very time when operators' costs are rising steeply, particularly fuel prices.

"With the introduction of new technologies and pressure to introduce new income enhancing solutions such as note recyclers to our machines, recovering the cost of these will become that bit more difficult."

IOA companies supply operators including Punch, Marston's, Greene King, Scottish & Newcastle Pub Company, JD Wetherspoon, Town & City Pub Company and Barracuda.