Thursday, 6 December 2012

Smoke and Mirrors ... Solihull Style ...
Rob Wilcock, esteemed editor of the Publican's Morning Advertiser challenged Ted Tuppen to back up his comments that the average Enterprise tenant earns £45,000 a year ... you can see TT's analysis,  the PMA headline, summary and link below:

Enterprise Inns caused much derision and some cynical comments on the PMA’s online forum when it announced last month that the average Enterprise licensee achieves a profit of £45,000 a year (including a £10,000 estimate of the value of accommodation), while Enterprise gains an income of £67,000 and the Treasury takes a whopping £145,000"

As you say, Rob, the figures come from Enterprise. No doubt the methodology of extrapolating figures from their own shadow profit and loss model for prospective tenants and then claiming these as "average" across the estate may well come up with tenant profit at £45,000. As I have posted before using average is not generally very helpful, median or mode values are more meaningful in the real world.

You are also right to point out the trends ... but I have to seriously question whether increases in turnover can be attributed to pub disposals ... maybe on the capital investment front, although I should imagine a significant proportion of this would have been on remedial works to keep Enterprise's oft crumbling pubs open. More likely increased turnover is directly attributable to tenants having to increase prices to keep match with increased supply prices due to the increases in duty and VAT.

A more rigorous approach to comparative figures is to use the earlier figures as a base and to calculate the later figures net of inflationary pressures and then see if there have been changes to the tenant/landlord equation. Perhaps the £9,000 benefit to tenants in the last year is not quite as generous as it would seem.

One cannot dispute rent rolls as published in company accounts so I am gratified to see Enterprise adapting a more reasonable approach to rental values over the four years nor can one dispute the essential tenet of Tuppen's analysis that the Treasury is the biggest beneficiary from the average pub. However I think it is somewhat disingenuous of Tuppen to claim that his (and his company's) critics are either "ill-informed" who have neither the wit nor ability to apply "genuine analytical rigour" to the "self-interested nonsene spouted by a handful of campaigners". Would these "unprofessional" campaigners include highly respected and successful figures in the industry and the entire BISC? Probably.

But my most serious opprobrium has to be for Tuppen's bare-faced cheek in claiming to be the model of virtue by jumping on the "responsible UK-based tax paying company" bandwagon... like his tenants aren't!

If the evidence to BISC that 67% of tied tenants earn less than £15,000 is taken as true and by using Ted's reckonings, then none of them can be Enterprise tenants and must all be tenants of the other pubcos and brewers.

My verdict in this "trial by hearsay and innuendo" ? That Tuppen made some inadvisable comments and his management team, knowing perhaps a little more about life in the real world of the Enterprise estate, advised him to do some back-tracking and the best way is to wrap it all up in estimates and more importantly distract our attention from the inequality of divisible profit by some crafty legerdemain and putting all the blame on the Treasury.

Nice try Ted ...

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