Times Online 15 Nove 2009



While the headline is about indebtedness the article contrives to miss the main point of failure in the pub industry which is that pub companies are collapsing NOT because of the recession, the smoking ban, beer duty and cut-price competition from supermarkets but because their underlying 'business model' is totally unsustainable.
Previous profits of pub companies like Admiral (and they are, mostly, just like Admiral) have been built on foundations of massive debt - loans used to buy enormous pub estates at ridiculous prices when general property values were sky high, and pub values in particular grossly inflated due to the peculiar valuation methods of the pub sector.
The larger UK pub companies are all built on frightening debt they can only repay by squeezing every last drop of profit out of thousands of individual pubs through overcharging tenants for rent and beer supply.
Anyone noticed a lot of pubs boarded up? The underlying reason is they are not making money because they are too expensive to run – because of the pub companies’ irresponsible financial greed and rapacious debt levels. Pub companies are struggling with their indebtedness; other factors – as outlined in your article – are factors but they are NOT the main reason for pub and pub company failures.