Monday, 29 April 2013

Mike Tye ... the new voice of Little Britain ?

I picked up on this little piece in the Propel Info daily newsletter this morning, which, I reproduce below:

Spirit chief executive Mike Tye has condemned the consultation on statutory regulation of tenanted pub companies as a “waste of government time”. Tye, whose company operates circa 450 leased pubs, reported that the company had not had a single dispute with a licensee leading to arbitration. He argued that the voluntary code had not been given enough time to work. A recent meeting with Chancellor George Osborne on 4 April had centred around a “growth and jobs” agenda, Tye reported. “Making it (an) uncertain (environment) for licensee and pubcos – that will constrain growth,” Tye said. He argued, with some emotion, that the consultation was a “waste of government time” before adding, “Not that I feel strongly about it.”

So the consultation is a waste of time Mr Tye? Easy enough for you to say as your company makes some £78,000 per leased pub (according to your 2012 company report) and you personally trousered £475,000 salary, plus a bonus package of up to 150% of salary ... for those of you without a calculator to hand that's a staggering £1,187,500 ! By the way this handy little graph demonstrates what it might truly be:

No doubt you are worth every penny of the 79 times you get compared to thousands of tied tenants in Britain's pubs Mr Tye, after all you oversee a large managed and leased pubco. Who knows you may even be worth a maximum of 133 tied tenants ... but I sincerely doubt it.

You say that there's not been a single dispute resulting in arbitration? How many didn't get that far, with perhaps the tenant being evicted without arbitration? Maybe you want us to believe that the Spirit Group is so benevolent a landlord that all of its tenants are entirely happy with the way your business model operates? Who knows, having inherited some of the crown jewels of the Punch estate on Spirit's demerger from the boys in Burton, perhaps all your tenants are earning enough to make a decent living. In which case good on them, however, I find that difficult to believe either.

For thousands of tied tenants (sic) the government consultation is long-overdue as the self-regulation process isn't limited to the past couple of years, it's the result of over a decade of investigations by Parliament into the tenanted pub trade. Exactly how much time did you expect to be given, to make self-regulation work? 15 years, 20, 25? 

I wonder which emotion was evinced at your meeting with the Chancellor earlier this month? Could it be fear? You believe regulation will create an uncertain future for pubco and tenant, I believe it will create a more certain future with at least the £102 millions of value being transferred from pubcos to tenants. A future where tenants may earn a living, invest in their businesses and who knows, maybe the seed money will result in jobs and growth in the sector. The fear I sense is that perhaps your vast pay packet may be somewhat in jeopardy? Perhaps that's too crass of me but hey ho ... as younger voices would say ... bite me!

Maybe Mr Tye isn't exercised about the consultation as he believes his company will escape the mooted 500 floor for tenanted pubs before a pubco becomes a designated pubco under the proposed legislation? I feel there will be plenty of representations from tenant groups and others to ensure the legislation applies to all landlord companies irrespective of size; something I will push for and encourage others to do as well.

The Propel Info soundbite makes you sound like Vicky Pollard ... "yeah but no but yeah but no ..." and I would put as much stock in her, albeit fictitious, promulgations as I do in yours. One can only hope that the Chancellor has time for a cosy little sit-down with representatives of tied tenants who Vince Cable recognises as having their lot made much worse by pubcos ... "Whilst the financial crisis has brought into stark relief the slow process of sectoral decline, it is undoubtedly the case that the activities of the major pub companies, with their highly leveraged business model, have intensified the crisis"

 (P.S. for the sake of clarity I should point out the picture at the top of the piece did not come from Propel Info)


Perry Mayer said...

Sam, possibly one of your best, I enjoyed the read.

It is important that the consultation on statutory regulation of tenanted pub companies is exactly that - a consultation - from BOTH sides.

For most who shout and stamp their feet, "get rid of the tie" is their only solution but, having read the initial proposal, it's clear - in my opinion - that cannot and should not be the case.

Both sides will lobby and debate their cause - that's democracy.

It's just a shame that the issues couldn't be solved voluntarily because now, instead of a win/win solution there will almost certainly be a win/lose.

Keep up the great work.

Publican Sam said...

Glad you enjoyed reading it Perry, I enjoyed writing it ... just wish the current state of affairs in the pub trade didn't dictate I speak out.

My position is quite clear on the tie, it has and must continue to play a part in a developed pub trade, however, the over-arching principle that a tied tenant should be now worse off that a free of tie tenant is what this consultation is all about.

Abolishing the tie would put not only brewers but pubs at risk; reforming the current market by reigning in the pubcos to achieve the over arching principle (sic) does not necessarily preclude the tie. Having a genuine guest beer option, where the tenant buys one beer from any supplier of his/her choice (who knows if the price were right it might even be their landlord) is one of the proposals.

The most important thing this consultation (and hopefully the following legislation) does is address, for once, the fundamental imbalance in risk and reward shared by tenant and pubco. The former seems to take all the risk and the latter all the reward (or an unsustainable portion thereof) and this has exacerbated the problems faced by the pub trade ... hence the quote from Vince Cable's foreword in the consultation document.

Parliament and tenants have been trying to get the pubcos to reform or self-regulate themselves for over a decade ... during which time thousands of lives have been ruined by some of the more rapacious business models employed by some pubcos and brewers. I for one hope the thousands of tied tenants in the UK take part and have their say ... you can be sure the pubcos/brewers will do.