Pub Companies - Business and Enterprise Committee Contents

Supplementary evidence from BAPTO

  Following the oral evidence given to your Committee on Tuesday 9 December by Mr Bob Hayward, Mr Nick Bish, Mr John McNamara, Mr Giles Thorley, Mr Giles Kendall, Mr Ted Tuppen and Mr Simon Townsend, we would like to make some observations on replies given by them to questions posed by members of your Committee relating to gaming machines and the machine tie.

  We enclose the relevant questions and our observations (not printed here).

  We also enclose the relevant pubco machine rent schedules and independent information as to what rent pubco tenants/lessees should be paying for their gaming machines.

  This documentation proves that pubco tenants/lessees are paying substantially more rent for their machines than the free of tie landlords as well as the pubco having 50% of the net takings and taking into account the tenants share in the rental calculations.

  The pubco involvement in the supply of amusement equipment via the "approved operator" system also drives up the rent pubco tenants/lessees pay for all their ancillary equipment ie. pool tables, quizzes, digi juke boxes.

  We are sorry for being so late in making this submission, there was a delay in getting some of the evidence together.

  Q181 Mr Bish speaks for his members many of whom are pubco tenants/lessees and are the victims of the machine tie and realise the unfairness of the situation they are in. However Mr Bish underestimates the amount the pubcos actually take from the fruit machine, after taking into account RPI in the rent calculation the pubco ends up with over 90% of the fruit machine takings. BAPTO gave illustration how this works out in our original submission.

  Q182 Mr Hayward comments the pubcos have experts on fruit machines, this is rubbish, the real experts on fruit machines are the players (the pub customer) if a fruit machine takes money over a period of time its good, if it doesn't its bad, it's as simple as that. Operating amusement equipment is not rocket science it is common sense. I feel qualified to pass this comment as I have operated amusement equipment successfully for the past 35 years. Most pubco tenant/lessees would be more than capable of managing the amusement equipment on their premises.

  The comments made by Mr Bish on the differences on the rents of fruit machines is easily explained by the amount of the "royalty payment" demanded by the pubco, this amount could easily vary from pubco to pubco by as much as £16.50 per week, per machine.

  Q183 That is exactly what the pubcos do they tell their tenants/lessees who will supply them with amusement equipment, in most cases with no consultation whatever.

  Punch Taverns recently entered into an agreement with Sceptre Leisure to supply amusement equipment to 30% of Punch Taverns estate. How do Punch Taverns know that 30% of their tenants want to be supplied by Sceptre Leisure? They don't, but the supplier will be imposed on them anyway because it suits the pubco.

  These tenants want to be independent businessmen running their own businesses and making their own decisions, not being told who supplies them and on what terms. The tenants are capable of making these decisions themselves.

  Q185 Enterprise Inns and Punch Taverns expect to make £25 million each from machine income in 2008 the same as they did in 2007 it is interesting at a time when machine income is down the pubco income remains the same, this is achieved by taking a bigger percentage off more machines (ie juke boxes, quizzes, pool tables etc) at the expense of their tenants/lessees.


Punch financial report shows:2007 2008

Total awp25m25m

Total awp25m25m

  Q188 The BBPA and Punch Taverns did in fact make representations to government on the issue of gaming machine stakes and prizes, however the attached list shows that they were by no means on their own and should not be claiming too much credit for whatever is achieved.

  Q212 It is interesting that Mr Tuppen goes out of his way to mention one recommendation of the 2004 TISC but chooses to ignore what is probably the strongest recommendation of that committee, "we recommend that the AWP tie be removed"

  Q290 It would be interesting to know if during his time as club secretary Mr Wright had any difficulty finding a suitable amusement machine supplier and what was his experience of being a "Free of Tie" landlord with respect to machine supply.

  Q298 Mr Thorley claims that Punch Taverns tenants pay less rent for top of the range fruit machines than free of tie landlords. The enclosed price lists prove that Punch Taverns tenants pay between £19.98 and £21.98 more per week for the same machines and Enterprise Inns tenants pay between £20.94 and £23.94 more per week for the same machines.

  Mr Thorley was equally confused and peddled the same lies to the 2004 TISC inquiry as the following extract from his evidence shows.

  Q553 Sir Robert Smith: You have mentioned already that you take a 50/50 share of profits from the slot machines. Do you take any royalties from machine companies for allowing them to put machines in?

  Mr Thorley: We use it to subsidise the rent. The rent in our estate has gone down by seven percent in the last two years as we have negotiated better terms. Because there are reasonable good statistics on the machines.

  Q554 Sir Robert Smith: Sorry, do you charge?

  Mr Thorley: To the extent we get royalties I am not entirely sure because there are a large number of different suppliers and each contract will be subtly different. We have used it to reduce the levels of rent. I can give you some statistics but the levels of rent we charge for machines are materially lower than are available in the free trade and we can give examples of that. Moreover they have fallen I think by seven per cent in the last year.

  The enclosed rent lists (not printed here) cover the period December 2008 to January 2009. The AWP directory (which covers the same period as the rent list) is an independent publication available to licencees to inform them of the quality, date of manufacture and rent they should expect to pay to their machine supplier if they negotiate the terms themselves.

7 January 2009

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