John Powell, one of the elder statesmen in the UK machine supply sector, has called for a full and thorough review of the business model dictating the operation and supply of gaming and amusement machines in the pub sector.
Mr. Powell, who as well as being Chairman of the IOA, is also Honorary Treasurer of BACTA, and Managing Director of Select Gaming, one of the UK’s largest independent machine operators, believes the existing model is not fit for purpose with the sector facing a ‘potential meltdown’.
He said: “We are facing a situation in which machine costs have increased by 40 percent, operator revenue per unit has fallen and where operating costs such as wages, transport and the new pension regulations have all escalated. Operators have taken every measure possible to remove costs but there comes a time when it is no longer possible to sustain what is an outmoded business model.”
Mr. Powell, who has a reputation for operating a tight ship based on pragmatic business principles, added: “Historically the commercial model was broadly based on a two thirds/one third principle in favour of the pub. This enabled the operator to maintain the standards of service and level of investment necessary to build machine income.
“The current model is no longer ‘commercial’ and we have operators being forced to basically buy turnover, which is the vanity of the business world. This is ultimately destructive for everyone, operators, the Pub-Co and most importantly machine players,” he said. “To avoid what I would describe as an ‘Armageddon scenario’ we need to sit down with our colleagues in the on-trade and have a meaningful dialogue in order to resolve all of these issues and establish a clear, reasonable and progressive way forward. This is not sabre rattling on behalf of the operating side of the business in order to gain a limited commercial advantage – it is far more important than that, it’s about our very survival.”