Tuesday, March 03, 2009

Reply to post: Pub licensees call for Prime Minister to resign MA 3.3.09

Interesting point George. Essentially it's down to very clever incompetence.

The beer orders opened up a huge property market that came embellished with a historic tie supply system and a bunch of very bright bean pushers figured out that there was a potentially long term double income stream available to them through getting into a vast portfolio of undervalued properties and changing the traditional dynamics of how they were operated.

Property values were increasing apace anyway, as they have done historically, and these properties were preposterously cheap with a guaranteed additional income from the tie supply.

"Let's get into this sleepy old fashioned pot of plenty, smarten it up, make it sexy, revalue the properties make them all someone else's legal responsibility to maintain and improve and make a margin on th esupply side while we're doign that."

It was only after the pubcos had begun to form and got bedded in that it dawned on the bean pushers that what they'd bought into was a totally unsupervised playground, a cornucopia, an unregulated fiscal goldmine they could plunder at will because, having bought the properties and looked into the potential, they found they held all the aces, jokers, royal flushes and full houses.

Since then it's been a process of keeping their heads down under the regulators' vision, polishing the outside of the tin while scraping out all its contents.

Why did the pubcos and BBPA NOT lobby vociferously to stop the full extent of the smoking ban? Because if it ended up decimating the industry they would profit from it by having lots of property they could sell off as residential development potential without change of use planning problems at far higher prices than they would otherwise achieve.

Why did the pubcos all go down the REITS route to some extent?

To answer your question finally.

None of the detail of the business matters to the CEOs. They would be selling peanuts, turds or sand to the Sahara if there was a market. Neither Pubco CEOs, or any of their staff, need to know any of the detail of the pub business and what really makes it work - they leave that up to their lessees, after due diligence about finance availability, business plan and licensing qualifications have been ticked off. All they need to do is maintain and increase income stream by using whatever means are available to them.

Beer volume monitoring equipment is one tool towards meeting that need. The fact that its measurements are not accurate or legally enforceable is irrelevant as long as it can be used to keep people in check and if it can be used to fine people so much the better.

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