This piece is from someone calling themselves El Nino Luminoso, I like that name, I think it means something like 'little enlightened boy' but has a sinster ring because of El Nino, the Pacific current that causes storms, starvations and havoc all over the world when it goes in one direction, and brings bounty of fish and joy when it goes the other way, I got it from the Morning Advertiser website:
"As long as the big pubcos are around there is no way this industry has any mileage. There is a meltdown among the pubcos’ estates - been coming for a long time – which the smoking ban has accelerated. (while I know nothing of the smaller groups that together take up a large part of the national estate I have it on good authority that pubcos do exist where lessees/tenants have good relationships with their landlords, where there is a genuine 'partnership' and joint risk element to their activities, and where the people at the coal face actually make a healthy living for their considerable input). It would be good to hear stories from people who know about them.
The big pubcos know the gravy train is coming into the sidings. And they aren’t that bothered, they knew it was coming. Well, the ceo's know it, one could hardly credit the foot soldiers with that level of perspicacity. The ceo’s are surprised it has lasted so long without breaking. These companies are run by people who are ruthlessly on the ball - they didn't get to their positions of incredible wealth and power by being either stupid or nice. They have been reading the runes of a fat flabby stone age pub industry since the late eighties/early nineties. They took the whole thing apart and put it back together the way they wanted it so the next generation of bosses - them – could milk it dry. And this is just what they have done.
These guys are in the business of maximizing profit by whatever means necessary. It is raw capitalism; there is nothing paternal about their outlook. Everything they do is logical for maximizing profit. Growth cannot continue indefinitely in a declining marketplace and when innovation isn't your greatest talent and where innovation actually increases risk why bother innovating, why bother changing your spots? The straight line for increased profit is to increase income and reduce costs at the same time. Everyone knows this but few manage to do it. These guys are masters. They aren’t publicans. They are accountants and lawyers. So what is the easiest way of doing that? How do they do it?
1) Pull cash out of the estate by selling it to property companies and leasing it back to yourself.
2) Charge the companies you sold the property to for managing their estate – someone has to do it.
3) Buy more property with the money you released from selling the estate.
4) Borrow against the future value of these bricks and mortar.
5) Borrow against the income stream from the entire estate.
6) Devolve responsibility for maintenance of the estate and for a workforce through more and more FRFI leases. Make your lessees take all the risks and pay for them too. And don’t bother training them – they are entrepreneurs (Graham!) and know the risks of being ill prepared for the onslaught of business.
7) Wring every last drop of cash that is generated by those lessees. (A big part of that cash used to be kept by the publicans/lessees/tenants as their income. Now the pubcos get it). Push rents aggressively higher, increase supply prices at greater than inflation rates (they’re onto oil shale now and they know it).
8) Screw down supply prices to rock bottom and whack on a handsome mark up when selling on to your bonded labour force.
9) Acquire other avenues of supply – spirit and wine wholesalers - and force your estate to buy those as well.
10) Sell off apparently no mileage units as suitable for change of use.
11) Juggle more balls than you have hands for but pass them among your competitors knowing that outsiders will never know what you are doing and that insiders will stick with the programme because a) they (publicans) never have time to see what’s going on because they are working so hard to keep alive or b) they (some of the pubco workforce and some of the shareholders) are part of the gravy train and don’t want it to stop, even if they find it repellent.
12) Never publish CSR statements because all that touchy feely stuff is up the individual, entrepreneurial lessees to take care of and it is not your job to tell them how to run their business. Even if it would save them money.
13) Pretend to care about the tradition of the pub. Drink trebles all round. Keep a straight face, even when leaving the bank.
That's why there's such a deafening silence from the pubcos at the moment. They are completely on top of the game, they know what is happening, the only thing they aren’t quite, completely sure about is how to handle full scale revolt from their lessees. Mitchell and
This is a sensitive moment. People are suffering. This time has been a long time coming; they knew it would; right from the start, when they thought it would have come sooner than it has. These people are not interested in building sustainable businesses, their exit strategies have been on the back burner for a decade at least, flexible enough to accommodate the limited range of scenarios that would unfold as a result of their carving up the market for themselves. They have been in charge of all this since Nomura began chopping up the estates in the mid nineties. Once settled in, they got the beer orders dropped, they sidestepped the T&ISC hearings, they divvied the estates between themselves, according to how it suited them and sold off the rest – titbits – to pals from the old days – ex courage and grand met boys – and let them make small fiefdoms of their own. They knew there would be an end to this gravy train’s journey, they just couldn't be sure of where and when it would be.
It’s foggy right now but there are buffers ahead, can’t you feel it?
At least that is what I think is happening. Or have I been getting confused with an Ibsen drama. Når vi døde vaagner!" (the Dead Shall Awaken!).
Ooh I like it"